Fitbit investors shrugged off rumors the company was about to buy smartwatch competitor Pebble and traded shares of the company up 0.7 to $8.42 Thursday.
Pebble set a Kickstarter record in 2012 and was very early to the smartwatch scene but looks like the brand might not go the distance. Fitbit, which started with a fitness tracker in 2007, was said to be close paying $40 million for Pebble, according to several published reports. Both companies declined to comment.
This would be a disappointing exit for Pebble, which has raised more than $45 million since 2012.
Two years ago, Pebble moved past its more techie aesthetic with a more fashion-forward face and customization options. But those efforts faced competition from the increasingly diverse offerings from major players such as Apple, Motorola and Fossil. The brand also made a stab at health tracking a year ago with Pebble Health.
But in March the company laid off 40 employees, or roughly 25 percent of its staff.
Pebble chief executive officer and cofounder Eric Migicovsky blamed it on difficulty raising money in Silicon Valley.
Despite hot anticipation, the wearable and smartwatch market hasn’t taken off as some projected.
International Data Corp. said in October that global smartwatch turnover fell to an estimated 2.7 million units shipped, down from 5.6 million units a year earlier, representing a 52 percent drop. IDC wearables research manager Ramon Llamas said that this was due to a “realignment” from both platforms and vendors.
According to the IDC, Apple, Garmin and Samsung the largest share of the smartwatch market, while Pebble, as well as Lenovo, had just more than 3 percent market share.
Fitbit has been largely considered a fitness tracker rather than a smartwatch maker, but in January, it introduced a the Fitbit Blaze, a fitness tracker and smartwatch. This was followed by a number of updates and products in August.
“Over the past nine years, it has been our ability to innovate on both design and utility, and our deep understanding of what consumers want, that has made us the leading global wearables company,” said Fitbit cofounder and ceo James Park at the time.
Consolidation in the wearables realm seems to be a bit of a trend; Misft was acquired by Fossil Group last year.
The San Francisco-based wearable technology company, which was acquired by Fossil Group last year and has a handful of wearable sensors and trackers, recently added the Misfit Phase Hybrid Smartwatch.
Since buying Misfit, for $260 million, Fossil has introduced smartwatches and other wearable tech devices from brands such as Chaps, Diesel, Emporio Armani, Fossil, Kate Spade New York, Michael Kors and Skagen.
According to research from The Smartwatch Group, Misfit has been somewhat in the shadow of Fitbit and Jawbone, but its products have quickly found its customer base.
Lauren Guenveur, who is consumer insight director for Kantar Worldpanel ComTech, which just released its own smartwatch report, said while Apple “continues to dominate” the smartwatch segment with a 33.5 percent share, growth in the sector is slow. In the next 12 months, 9.3 percent of U.S.-based nonowners said they intend to purchase a wearable, Kantar found. This is slightly below 11.3 percent for Great Britain.
“September 7th’s unveiling of the Apple Watch Series 2 showed Apple addressing the key considerations cited by those planning to buy, including GPS, one of the most-desired functionalities, and waterproofing, the most-desired feature,” Guenveur said.
During the summer, the International Data Corp. reported that Apple Watch sales had fallen, likely in anticipation of the updated models.
New products and updates throughout the market could contribute to a rise in sales. Last week, IDC projected that total smartwatch shipments would rise 3.9 percent this year to 20.1 million units, with unit volume growing to 50 million by 2020. IDC research manager Ramon Llamas said this growth would be driven by lower prices, untethering from a cell phone and designs that resemble traditional watches.