Fitbit is reportedly in talks with an investment bank about the possibility of exploring a sale amid challenges in successfully pivoting from fitness trackers to smartwatches.
The smartwatch market is dominated by Apple, with Samsung also making big strides with its Galaxy Watch series. These are the two titans with more money to spend on marketing and R&D than Fitbit could ever imagine.
On the other end of the market, Fitbit’s dominance in the basic fitness trackers is being challenged by low-cost device makers from China, namely Xiaomi and Huawei.
According to Reuters’ sources, Fitbit has held discussions with investment bank Qatalyst Partners about whether it should engage with potential acquirers. The company has still not decided whether to pursue such a deal, though.
Nonetheless, bankers want their piece of the pie and have been arguing it could attract acquisition interest from Google owner Alphabet as well as private equity firms, Reuters reports. Unsurprisingly, none of the parties mentioned in the report wanted to comment on speculations.
We would argue Google is not the best suitor for Fitbit as it already has its own wearables platform – Wear OS; rather it would be Amazon, Microsoft or even Facebook.
Amazon has already started working with Fitbit over the integration of Alexa in the newly announced Versa 2, and could use more devices and form factors to bring its vast catalog of products to more users.
Microsoft, on the other end, has been playing with the wrist-worn wearables in the past with its Microsoft Band product. That offering led nowhere and acquiring Fitbit could help them regain their place in this growing market, while at the same time pushing its digital assistant Cortana to some wrists — where it’s currently not present.
Finally, there is Facebook which is always on the lookout to expand into new markets. The company has even tried to make its own phone and has also acquired Oculus VR in 2014, hinting the world it is open to new ideas and platforms. And while Facebook notifications are already available on Fitbit smartwatches, owning the platform paves the way for new capabilities while keeping users even more engaged with the social media.
The market loves this sort of speculation, prompting Fitbit shares to rise 22% to $4.48 on the news.