Thursday, February 5, 2015

Prediction Time

I had mentioned to a friend while going through EndoMondo's site that I thought it looked like they were trying to get bought. Turns out I was right, as EndoMondo and MyFitnessPal were announced as acquisitions yesterday by UnderArmour, who have been on a major spending spree of late. What is still conspicuously missing from their portfolio, is a data provider, and the brains that come with that. In my opinion, the reason for that is because they're currently trying to acquire one and haven't closed the deal yet, and I believe it's Suunto. Of course, I may be wrong, but here's my analysis regardless.

Suunto is a division of AmerSports, a sports conglomerate that owns such brands as Wilson, Solomon, PreCor, Mavic, and others. Suunto have a full suite of what they term 'sports instruments', which for 2014 totaled EUR 125.6 million in sales, with everything ranging from triathlon-minded watches to hiking and climbing watches, running watches, and  - where it all started for them - dive watches (neat, huh?). Being a Suunto owner, I can echo what any Suunto owner will tell you, that the device is built like a rock, lasts forever, and just plain works. That's not what you hear from their main competitors' (aka Garmin) users, which is that the watches sometimes/often work, don't last, and aren't built durably. That being said, the data storage and analysis of the two brands is a stark contrast; Garmin's Connect is a (relatively solid) open platform (albeit for a cost), and Suunto's Movescount is a (relatively solid) closed system, without much explanation for why they don't allow developers to connect to it. I think Suunto loves being in the watch business and hates being in the data business which I would surmise is because that's been their heritage. On the other hand, UA is salivating to get into the data business, and has no expertise in data collection devices. UA wants to deliver the knockout punch on storage and connectivity, but other than acquiring partners, they haven't built their own system (UA Record) out much at all. Could be because they are in the process of taking over Movescount? Possibly, but that's not based on anything other than a guess. Movescount even *looks* like UA Record in font, color, and layout. Interesting coincidence. Further, Suunto is more an EMEA brand than a US one, a market UA has stated was one of the reasons they were interested in EndoMondo.

I took a quick spin around the 2014 financials for AmerSports, and it's not very clear what the financials are for the Suunto division, as it's largely consolidated in with the other brands, so I'll refrain from commenting or guessing as to what the purchase price could be, but UA's appetite for spend looks substantial. If UA wants to be completely vertically integrated in the athletic data world - which it appears they do - that means at some point they need a data collection device. While Apple and Microsoft fumble along to figure out what people want and what they don't in activity monitoring, by acquiring Suunto's technology and integrating their store, they would immediately be in the thick of the fight, and with a much more credible brand (Under Armour that is) in the activity market than Apple or Microsoft.

Wishful thinking? Perhaps. I'm personally frustrated by Suunto's API being locked down but I love their equipment, so I'd love to be proven right.