Smart watch maker Pebble Technology Corporation, more popularly known as just Pebble, could be in talks with FitBit – market leader in fitness bands – about a sale of software and other intellectual property. Though no specific price has been mentioned, a report from The Information reveals that FitBit may make the acquisition for “a small amount.”
Update: We’ve just heard that the deal amount is between $34 million and $40 million
The smart watch maker had a rough start prior to 2012. Its founder, Eric Migicovsky, was unable to raise more than $375,000 from angel investors for his concept design. However, Migicovsky decided to go the crowdfunding way in April, 2012. In the first six days of the campaign’s launch on Kickstarter, Pebble raised $4.7 million. The campaign closed at a whopping $10,266,845 pledged by nearly 70,000 people, and made history as the world’s most highly funded project on Kickstarter.
But over the past year Pebble has been going through a financial crunch, and this could be why they’re mulling over being acquired by FitBit, technically a rival smart watch maker.
According to the report, the Pebble brand will slowly be phased out and incorporated into the FitBit brand. FitBit itself has been having sales problems, with last quarter’s results sending the stock down by an unbelievable 30%.
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The possible takeover could signal a shift in FitBit’s strategy, because Pebble is far more focused on app support than most other brands. There’s already a long list of apps that work with Pebble, such as Runkeeper, Uber, Yelp, MisFit, GoPro, iHeartRadio, Dominoes Pizza and others. Their focus is on extending the capability of smartphones to wearable devices. Users also have the option to download from a vast choice of watch faces, so you can have one for every occasion.
Of course, Pebble won’t be able to charge a premium because of its liabilities, so FitBit could quickly arrive at a price that fits its own budget and makes Pebble happy as well. If that happens, it’s an immediate inorganic boost to FitBit’s line up of products. The brand transition will, of course, take time, but FitBit should see some accretive benefits in the next couple of quarters – something they sorely need to regain investor trust after the debacle of the last quarter.
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