Fitbit Is Close to Buying Software Assets from Pebble
bloomberg.com
bloomberg.com
They were the only smartwatch manufacturer that could claim anything close to 10 days of battery life. They were the only smartwatch manufacturer that made devices that were water resistant and really meant it. (That is, they're all rated to 3-5 ATM and tested the same way regular watches are, you can actually use them in chlorinated or salt water, and they didn't try to claim that your "water resistant" device's warranty was void if you got it wet.) They were the only smartwatch manufacturer that made devices that had an always-on display that's actually any good (with the possible exception of the just-released Gear S3; I've yet to see one in person but it sounds like Samsung are getting there). It's a small thing, but they were also the only smartwatch manufacturer that didn't take themselves too seriously, filling their UI with cute icons and animations that made the watch fun to use. All that, and their products were significantly more affordable than some of their competition.
My Suunto can go weeks between charges (with GPS not in use). Even with full feature usage, it's supposed to go 200+ hours.
My quick perusal of Suunto's site seems to indicate their watches are more like a fancy fitbit then a smart watch.
I'm still stunned how much better the battery life is given the features it has. And the built-in GPS is SO NICE - but then again you'd kind of expect that from Garmin.
It feels like I'm starting to like a market and it dies. Like watching Firefly after the show was long cancelled. Back to bare wrists for me, alternatives do not exist. :(
Yeah, this feels just like firefly :(
'Failing' in what sense?
Stock down more than 70% year-to-date, and competing in a market that is rapidly becoming commoditized.
Perhaps "failing" is a a strong word, but I wouldn't describe them more positively than "struggling." Like GoPro, Fitbit sells commodity hardware and is not greatly differentiated from its competitors in terms of hardware, software, or platform lock-in (you may disagree, but the consumer market has clearly spoken).
The 30% fall was mainly triggered by Fitbit revising revenue estimates for Q4 from 985M to somewhere around 725M as well as Q3 performing poorer than expected.
What's fascinating is that Fitbit is still going to do about 2.2B in revenue (up from 1.8B) last year. So annual revenue is going to be more than current market cap (1.7B).
Apart from a less than delightful user experience (resulting in device abandonment and low engagement/retention), Fitbit is also losing market share to Xiaomi in Asia.
So I wouldn't call it failing, but yeah it could do much better :)
I don't just mean that. I mean that anybody with business contacts in China could make equivalent fitness-tracking hardware. The barrier to entry for new competitors is very low.
Fitbit needs to be able to prevent a bunch of new competitors from coming out of the woodwork and stealing their marketshare.
As the 2016 market has shown, "need" is perhaps too strong a word for a smart watch.
"New products, Fitbit BlazeTM and AltaTM, including related accessories, comprised 54% of Q216 revenue".
I don't know how revenue is split between the two, but it sounds like they're selling a lot of blazes.
Edit: "In the first quarter, Fitbit sold 4.8 million wearable devices, including one million of the Fitbit Blaze and another one million of the Fitbit Alta."
Now this is first quarter data (when Blaze + Alta did 50% of overall revenue). Since Blaze costs 199$ and Alta 99$, one could split the revenue Blaze (33%) and Alta (17%) roughly.
One third of Fitbit revenue from Blaze (smartwatch) - that's a LOT!
1. Others can't acquire and sue them
2. They can sue others if needed
Other than IP, it's hard to justify their spend in acquiring the company (they already have hardware and software/app).
To be fair, I don't think Pebble was aspiring to be acquired by Fitbit for their IP. They turned down a huge acquisition offer, presumably on the notion of getting bigger. This was just a fire sale which barely returned money to debt holders (and maybe some to investors).
Same thing with Coin. In fact, Fitbit only acquired a portion of that company.
《Edit》honestly I read the whole article, please explain how this makes sense from a fitbit perspective.
~60 engineers and managers retained as part of acquisition. 1 left before acquisition was final. ~15 left before 1 year cliff. ~30 left within 6 months after the cliff. ~15 are still there after 2 years.
There was a company wide layoff a few months after the 1 year cliff. The acquired teams weren't hit as hard, because it was understood that people would leave on their own.
Very interesting how they're treating their $33mm kickstarter obligation. [Edit: sorry, I wasn't sure what had been fulfilled already, thanks skuhn]
Doing some quick math, it looks like they plan to refund $9,650,775 (plus any amount people pledged above the minimum threshold for a given pledge tier). Of course they're returning the full value on money they received after Kickstarter's 10% cut. They would have only received about $8,700,000.
Since they kept going back to the Kickstarter well, maybe their business never got to the point where the fundamentals made sense -- after all, they were selling a $99 Pebble Core for $69 (actually $62.10) via Kickstarter. That kind of thing really eats into your margin.
Maybe they thought the Kickstarter customer base was just the most enthusiastic 10-20% of customers, and if it turned out to be 90-100% of customers they were left with production costs that didn't work. If you don't hit scale on production, you still get to pay the giant upfront costs.
At any rate, why liquidate the company if they had enough money in the bank to pay the entirety of your debts. A company at that point will hope that there might still be a way out.