Garmin's Acquisition of Firstbeat Sends Ripples Through the Wearables Market

On the 30th of June, Garmin announced that it had acquired Firstbeat Analytics, an arm of Finnish company Firstbeat Technologies which provides the heartrate and biometric tracking used by approximately 77% of the sports watch market, including Garmin, Suunto, Amazfit and Huawei. This acquisition from Garmin will likely send ripples through the wearables market, and undoubtedly strengthen Garmin’s enviable position in the sports watch category.

Biometric tracking has been an essential feature for wearables since the inception of the market in the early part of the last decade; while the concept of heart rate tracking was well established in professional and enthusiast sporting circles, wrist-worn wearables commoditised the concept and brought it to the mass market. Initially, inaccuracies abounded, with significant margins of error often rendering any data captured as unreliable at best. As the market progressed, however, Firstbeat has been able to leverage its expertise in this area and support the expansion of the wearables category with high-quality software that produced ever-more accurate algorithms designed to capture and analyse the wealth of data generated on a wearable. The company has supported Garmin for several years, licencing the software that has seen the vendor consistently claim over half the sports watch market worldwide. Firstbeat has also helped Suunto’s development, as well as Amazfit and Huawei as they seek to disrupt this market.

From Garmin’s perspective, this acquisition makes a lot of sense. Primarily, it brings biometric expertise in-house, meaning that they no longer have to rely on, or pay, a 3rd party provider for such a core component of their product offering. Garmin’s expertise primarily resides in GPS technology, so bringing this IP into the company means that they can now fine-tune product development across the gamut of features that now constitute a high-end sports watch.

A corollary of this purchase, however, is the effect it is likely to have on Garmin’s rivals. Looking at the sports watch brands that directly compete in Garmin’s market, it is clear that Suunto, Amazfit and Huawei will all need to react to this news in some capacity. While Garmin maintains that Firstbeat Analytics will still license software to other vendors, it is expected that this will either be ‘lower tier’ software that limits access to the latest innovations on offer, or that this licensing agreement will cease outright after a period of time. Garmin will be looking to leverage this acquisition to gain a competitive advantage over its rivals, so it makes no business sense to continue to support other vendors – unless the revenue generated from licensing is attractive. Nevertheless, it is unlikely that Suunto, Amazfit and Huawei will want to rely on Garmin for their software.

From Suunto’s perspective, its budding relationship with Google and the development of a smartwatch range now gains greater importance. Google’s (pending) acquisition of Fitbit could potentially give them access to biometric-related IP, which partners including Suunto would undoubtedly be keen to support and integrate into future devices, reducing their reliance on Garmin. If Google can integrate these features into WearOS, it could significantly expand its installed base and shipments of WearOS devices, with Suunto its flagship sports brand.

For Huawei, the vendor is likely to be relatively unbothered by this news, given their scale and broad portfolio of products across consumer electronics. Sports watches are a small part of Huawei’s business, and the vendor is not a sports specific brand. For Huawei, connected watches are simply another device that is part of an ecosystem that orbits its smartphone business. Amazfit however, another Chinese vendor, are likely to be impacted by this news. The vendor has seen strong growth in the sports watch market as a result of its low-priced devices and has pivoted away from activity trackers to try and become a connected sports device vendor. Amazfit will undoubtedly hope to continue using Firstbeat software until an alternative solution is found.

That alternative solution could come from Polar. Another Finland-based sports watch company, the vendor has struggled in recent years to grow. The company has restructured its business and continues to produce high-quality sports watches; their struggles seem to be primarily around their go-to-market strategy. What is unique about Polar, however, is the tremendous wealth of IP they own, with a well-established pedigree in biometric tracking software development. Of the major sports watch vendors, Polar are the only company not to use Firstbeat, viewing the company as a rival rather than a partner. While other biometric software providers exist, many of these reside in other product categories such as hearables, with limited expertise in the wrist-worn wearable market. Polar’s established presence and expertise in this market could mean that the vendor adopts a licensing approach to its software, offering to support partners in this space in an effort to counter the hegemony established by Garmin and Firstbeat. While the likes of Suunto may be reluctant to rely on Polar for the same reasons they would not want to rely on Garmin, it is possible that Polar might look to pivot away from the consumer space and focus on professional sports, opening up a path for this relationship to develop. Taken to the extreme, this relationship could even result in a merger between Suunto and Polar, with Suunto’s good go-to-market strategy and respected consumer brand wedded with Polar’s software expertise. On the face of it, such a merger would make sense for both parties, and potentially create a company capable of disrupting Garmin.

Overall, Garmin’s purchase of Firstbeat Analytics will have its wearables rivals worried. Beyond the sports watch vendors mentioned, the acquisition of Firstbeat potentially also has implications in the smartwatch world; Firstbeat’s IP would have been amongst the most desirable in the wearables world, and Garmin’s purchase means that companies such as Apple or Google, both of whom have acquired significant wearables IP over the last few years, must now look elsewhere for biometric software if they choose to develop in this direction. In one move, Garmin has managed to protect its position from smartwatch vendors while simultaneously threatening its nearest market rivals and improving its product proposition. The ripples from this intelligent bit of business from Garmin will likely be felt across the industry for some years to come.

About the author

Stephen Mears

Stephen Mears is a Market Analyst at Futuresource Consulting, and is responsible for researching and reporting on key technology and market trends across the wearables, smartphone, and Extended Reality (XR) market. Alongside this, Stephen is also heavily involved in Futuresource’s retail distribution tracking service, assessing the retail landscape for consumer electronics products across major global markets.

Stephen joined Futuresource in 2018 after graduating from the University of Warwick with a Bachelor of Arts (BA) in Philosophy, Politics, and Economics. He is currently pursuing a part-time, distance Masters of Arts (MA) in International Relations & Contemporary War with King’s College, London.