Fitbit, which is the world leader in the fitness wearables segment, is set to acquire smartwatch maker Pebble, according to a latest report from The Information. The acquisition will see Fitbit taking over the intellectual property of Pebble – a project that received multi-million dollar funding in its Kickstarter campaign.
The report suggests that Fitbit is going to acquire Pebble for a ‘small amount’, and the product line of Pebble will be closed down with time as Fitbit absorbs its software and intellectual property.
Pebble has reportedly been searching for a buyer for some time now after facing financial difficulties. The company had laid off 25 per cent of its staff earlier this year, with the money being tight even after two rounds of funding in 2015 and 2016 raised $26 million. The company had come gained spotlight following a successful Kickstarter campaign for its Pebble smartwatch.
A close source to Pebble reportedly told TechCrunch that Citizen (another watch maker) had shown interest in purchasing the company back in 2015 for $740 million. The company then got an offer from US tech giant Intel offering $70 million – a fraction of what was offered by Citizen. Pebble CEO, Eric Migicovsky, had rejected both offers.
The deal between Fitbit and Pebble is reported to be between $34 and $40 million, which barely covers the huge debts the company has generated over time. Migicovsky had earlier this year confirmed the company had close to $28 million in debt.
Even as many small players working in the fitness wearables segment have withered away, Fitbit remains the reigning king. According to an IDC survey in September, Fitbit has continued its lead in the connected wearables market in Q2 of 2016. The global market overall grew by 26.1 per cent in the period over last year. But Fitbit has seen a drop in Q3 earnings, and generated ‘below expected revenue’ during the key-holiday season owing to production issues related to the company’s new Flex 2 wristband and due to soft demand.
The problem is that the smartwatch segment has not quite grown as it was expect. Apple Watch remains the leading smartwatch in the world, and even the Android Wear segment has failed to take off. And Pebble has been struggling for sometime. So an acquisition by Fitbit should not be come as a surprise.