Is Fitbit buying Pebble good for the consumer?

Fitbit today acquired fellow smartwatch-maker Pebble in a deal worth $40 million. The acquisition has resulted in phasing out of all existing and new Pebble smartwatches and other products. 

Pebble's market value has gone down from $750 million to just $40 million in less than two years.

Latest update: Fitbit confirms $40 million acquisition of Pebble

In an industry with a few players and falling sales, you've got to hate your competition and Fitbit's acquisition of Pebble points that way. Following the acquisition, Fitbit has announced that all Pebble products are now dead and upcoming Pebble wearables have been binned, which is basically another way of saying that Pebble is out of the way as far as the smartwatch industry is concerned. However, Fitbit still won't get a free run as it will now have to contend with the Apple Watch Series 2, the Samsung Gear S3, Garmin wearables and a hundreds of fitness trackers whose demand has been going up.

The smartwatch industry is going through a rough patch, a situation not many smartwatch makers perceived when they launched dozens of new wearables in the last couple of years. Despite their increasing capabilities and standalone functionalities, smartwatches are yet to be adopted on a large scale and if the current trend continues, it is possible that watchmakers may decide to junk development of future smartwatches in the near future. Lenovo has already taken this route with Moto smartwatches but has said that it will reconsider if the smartwatch market rebounds in the near future.

Smartwatch sales hit by Apple Watch release delays

Earlier this year, research firm IDC discovered that the total number of smartwatches sold in the third quarter of 2016 was less than half the numbers sold in the same period of last year. While total sales crossed 5.6 million units last year, watch makers could sell only 2.7 million smartwatches in the third quarter of this year. A major contributor to such lack of sales was the delayed launch of the Apple Watch Series 2 but then, this implies how dependant the rest of the industry is on the Apple Watch series to survive as a group.

While Garmin and Samsung sold 600,000 and 400,000 units in Q3 this year, the likes of Lenovo and Pebble could sell only 100,000 pieces apiece. How smartwatch makers are feeling the heat can be estimated by the fall in Pebble's market value in a relatively short period of time. In early 2015, Citizen offered $740 million to acquire Pebble which didn't occur but later in the same year, Intel made another offer of just $70 million. As it turns out, Fitbit has now acquired Pebble for just $40 million, a fraction of what the wearable maker was worth last year.

So far, Pebble has launched a few successful smartwatches via Kickstarter campaigns in the last two years but the company has had to lay off a quarter of its employees this year amid stuttering finances. Fitbit isn't in the pink of health either but since it has now completed the acquisition, the company will be able to gain access to Pebble's patents and technologies which it can use to develop new products.

Is Google working on its own smartwatches?

Three UK offered 1,000 Fitbit trackers for just £69 apiece during the recently-concluded Black Friday sales and while we aren't aware if the network was able to sell all of them, it is clear that Fitbit is looking to take advantage of the festive season to sell as many trackers and smartwatches as possible before the end of the quarter. With the smartwatch industry going through a steady decline of late, it will be interesting to see how Fitbit manages to use it's Pebble acquisition to curate it's product inventory and stay relevant in the long run amidst competition from the likes of Apple, Samsung and Garmin.

For the consumer, it is important that smaller watchmakers do not fade away for it may lead to a few companies dominating the space and increasing prices of their offerings thanks to lack of competition. Pebble's decline in the last one year could be bad from the consumer's point of view so the onus now lies on the remaining wearable makers to decide how they can, going forward, offer cutting edge products at low cost and remain viable at the same time.

Source: 9to5Google

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