Why Fitbit buying Pebble makes sense — at least, in the short term

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Late yesterday it was reported by The Information that Fitbit is close to buying wearable startup Pebble, news that has since been independently confirmed by The Verge. Fitbit and Pebble have been in the final stages of the deal since before the Thanksgiving holiday; the buying price has not yet been confirmed. While it ultimately might not be as good of a deal as Pebble would have hoped for, there are a lot of reasons why a Pebble-Fitbit deal makes sense.

First, the deal comes at a time when the wearables market is facing a day of reckoning. Google delayed its next version of Android Wear software until next year, and three key makers of Android Wear watches — LG, Huawei, and Motorola — held off on launching new hardware this fall. Jawbone is reportedly looking to sell itself. And Fitbit, despite being the clear leader in the wearables industry, just saw its stock fall off a cliff after it forecasted a dismal holiday quarter. Consolidation comes as no big surprise then — see also Nokia and Withings, or the number of digital health apps that have been snatched up by larger companies. Ever since the notion of the quantified self first became a thing with these digital trackers, their perceived value has been largely dependent on how much data they could gather, and how companies could use that data. If a company is struggling to sell hardware, it could always sell off its platform or its data. Second, for Fitbit, acquiring Pebble would mean just that: it’s not about the hardware, but about acquiring talent, software, and a homegrown smartwatch platform. While “basic” activity trackers like Fitbits are in a better position than “smartwatches” right now, according to data from research firm IDC, Fitbit mentioned more than once a softening in demand for basic activity trackers on its recent third-quarter earnings call. Owning a smartwatch platform would help diversify Fitbit’s product lineup if it chooses to go further down the smartwatch path. A buy also lets Fitbit essentially kill off the only competitor it can. Aside from Fitbit and Pebble, the top wearable makers come in at the very high end (Apple), very low end (Xiaomi), or specialized (Garmin). Buying those multi-billion dollar competitors is not an option for Fitbit. Buying Pebble is.. 

Last modified on Friday, 02 December 2016 14:01