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Google Is Buying Fitbit -- Here's Why it Will Compete Or Not Compete With Apple

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Google Is Buying Fitbit -- Here's Why it Will Compete Or Not Compete With Apple

Google Is Buying Fitbit -- Here's Why it Will Compete Or Not Compete With Apple

Google's purchase of Fitbit propels Google into the wearables business, but how effectively can it compete with Apple in the category?

Google is buying Fitbit for $2.1 billion, or $7.35 a share, which is a 30% premium over Fitbit's 20-day moving average.

Google has historically not had much success with hardware.

Now, it's looking to get into the wearables space, a segment (Wearable, Home and Accessories) where Apple just beat quarterly revenue expectations by posting sales north of $6 billion, representing impressive 54% year-over-year growth.

"[The deal] gets [Google] into an area of the market where they don't have a strong presence, wearables, health-related devices, which is an area where Apple does have a huge presence," said Nelson Wang, TheStreet's tech editor.

"So it's a way for the to get into this area in a strong way." TheStreet's Tech Reporter, Annie Gaus, breaks down the key factors in determining Google's likelihood of succeeding with wearables.

"The pro here is that Fitbit already has good market penetration in this market -- there are about 28 million active Fitbit devices, so this deal would give Google instantaneous access to that.

On the other hand, Google doesn't have the greatest track record when it comes to hardware, nor do they really have much of a presence in health or wellness related services the way Apple does." Gaus also noted that Google's data presents an opportunity to realize synergies with the product, but that it may run into concerns that the company hasn't been fully transparent with its data practices.

Google and Apple are holdings in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio.

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