Nokia buys e-health company for $191 million to break into wearables

Nokia appears ready to accept the future of health-centered wearables. The company announced recently that it is acquiring digital health company Withings for $191 million. The France-based group has sold wearables in the past such as the Activité smart watch and the Withings Go, a lightweight fitness tracker with an E Ink screen. Withings has also made a smart thermometer, indicating that the company is not confining its digital health efforts to wearables.

“We have said consistently that digital health was an area of strategic interest to Nokia, and we are now taking concrete action to tap the opportunity in this large and important market,” noted Nokia CEO Rajeev Suri.

Digital health should be considered a “strategic interest” to any company involved in mobile electronics. Health tracking is one of main reasons people use smart watches and wristbands. Fitness and health tracking were also themes seen in wearables displayed at the Consumer Electronics Show and the Global Sources Mobile Electronics show this year.

Nokia’s acquisition is the latest sign that the health-oriented wearables market is expected to see exceptional growth over the next several years. Nokia sold off its mobile phone business to Microsoft in 2014, offloading the company’s handset business that had to compete in a market with increasingly smaller margins. The wearables space could be a gamble for Nokia, but many expect the market to see significant growth in the future. IDC projected recently that wearables will jump from 110 million units shipped in 2016 to 237.1 million units by 2020.

As in other markets, China continues to compete on the low-end side, preferring to gain market share by competing on price. This strategy enabled Xiaomi to become the third-largest wearables maker in 2015. The company’s Mi Band has basic activity tracking functions and costs a mere $15. BBK Electronics, another China company, broke into the top five by selling an affordable wearable device for children. Many other domestic suppliers are producing similar smart watches and wristbands.