Google's Buy of Fit Bit for 2.1 Billion

In this episode, Christopher Lochhead takes listeners on an exercise in developing their eye for category creation and category design. Category Design is a new level of thinking in business. It is a whole different approach to marketing and Christopher stresses its importance in building a legendary business. See Things Differently Kevin Mainey wrote in the book Play Bigger, that “category design is a new lens on business. Once you have that lens, you see things in a very unique way.” However, listeners often ask Christopher how can they specifically apply these to their businesses. In this episode, Christopher uses a recent story in the WSJ as an example of how category design is powerful force, that most people don’t know is there. He breaks down a recent story about Google buying FitBit, with the hopes of assisting listeners on how to develop their eyes and ears on category design lens. Google Buys Fitbit: A Category Design Example Headline: Google to Buy Fitbit, Amping Up Wearables Race By Rob Copeland and Patrick Thomas Updated Nov. 1, 2019 Sub-head: Deal to acquire maker of wearable fitness products for $2.1 billion extends Google’s reach in consumer electronics Wearables is a niche in the consumer electronics mega category. Google reached a deal to buy wearable fitness products company Fitbit Inc. FIT 15.53% for roughly $2.1 billion, a move that intensifies the battle among technology giants to capture consumers through devices other than smartphones.  Category name before company name, its an example of the fact that people need to know what it is, before knowing who it is. The second sentence is framing the category battle. For Google, the deal marks a further push into health. as it faces regulatory threats to its massive internet-search and advertising business. Underscoring Google moving into mega category of health tech, then stating Google’s category king positing in search. It also puts Google in renewed and direct competition with Silicon Valley neighbor Apple Inc., which in the past week said rising sales of wearables and related services were becoming a bigger driver of its business. Framing the competition in new wearables category and wearables category growth. Google’s parent Alphabet Inc. will spend just a sliver of its $121 billion cash hoard to branch out with Fitbit’s products. Alphabet’s $2.1 billion bid was for $7.35 a share in cash, a 19% premium to Fitbit’s closing price Thursday and more than 70% above where the stock was trading last week before deal talks were first reported by Reuters. Speaks to the premium price category queens get in M&A. Fitbit shares rose more than 15% to $7.14 on Friday, while Alphabet’s shares ticked up slightly. The deal lands at a moment when Google and other tech giants are under scrutiny on a number of fronts over their competitive practices and dominance of certain businesses, “certain businesses” means categories. This points to the domination category queens achieve. including through acquisitions. But the Mountain View, Calif., company continues to expand aggressively. Translation: moves into new categories through internal efforts and M&A. Founded in 2007, Fitbit makes so-called wearables, or watches and bracelets that primarily track health information like heart rate. Such products have fascinated Silicon Valley Speaks to early adopters embracing the category. where technology executives of all ages proudly wear rings and other devices to track sleep and “hack” their own personal performance. Wearables (category name) have proved far less popular with the broader public. Google several years ago launched a brand of smart glasses that attracted as much ridicule as buyers, and Snap Inc. likewise got a lukewarm response to its hyped Spectacles line. Speaks to the trouble the “wearables” category have had breaking past early adopters to hit a main-stream tipping point. This is normal in the early days of a category. Also note,