
Fitbit Is Close to Buying Software Assets from Pebble - iSoron
https://www.bloomberg.com/news/articles/2016-12-07/pebble-said-to-discuss-selling-software-assets-to-fitbit
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adambrenecki
This is really sad; Pebble had probably the best products on the smartwatch
market, and I'll be disappointed to see them go.

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.

~~~
DrScump
"They were the only smartwatch manufacturer that could claim anything close to
10 days of battery life."

My Suunto can go _weeks_ between charges (with GPS not in use). Even with full
feature usage, it's supposed to go 200+ hours.

~~~
ajford
Which one? Also, is that with a connection to your phone or data service so
you get push notifications? Can you run custom apps on it?

My quick perusal of Suunto's site seems to indicate their watches are more
like a fancy fitbit then a smart watch.

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Skunkleton
Shame. I really liked my Pebble Time, and I was looking forward to buying a
Time 2. The pebble is the only smart watch that is still a good watch.

~~~
darklajid
Agreed. I still like my Time (did yours die?), but I am one of the affected
PT2/Core backers (and Pebble advertising other KS projects like hell means
that I also backed a GPS strap/addon for the now DOA PT2. Yay).

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. :(

~~~
Skunkleton
No, mine didn't die, I just liked the bezel on the T2.

Yeah, this feels just like firefly :(

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outericky
If this goes through, best of luck to everyone from Pebble and Fitbit.
Hardware is tough, but we all need it.

~~~
WillPostForFood
Can anyone think of an example where you take two failing tech companies,
merge them, and it works out?

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dpandey
Fitbit had revenues of $14.5 million in 2011, $76.4 million in 2012, $271.1
million in 2013, $754 million in 2014, $1.8B in 2015 and is expected to do
$2.4B in 2016.

'Failing' in what sense?

~~~
twblalock
> '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).

~~~
dpandey
Their hardware and marketing are good, but software not so much - which is
where magic happens. Completely agree that when it comes to software and user
experience - Fitbit feels like a 'commodity'.

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 :)

~~~
twblalock
> Completely agree that when it comes to software and user experience - Fitbit
> feels like a 'commodity'.

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.

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robbiet480
Anyone have a good alternative to the Pebble Core that runs some kind of open
OS (Linux/Android) with 3G built in a very similar form factor? Will take
suggestions from AliExpress even... Wish I would have just gotten my Pebble
Core instead :/

~~~
Vexs
You could strap a ESP236 to a bluetooth or NRF module- those things have a lot
of processing power, wifi, etc, and add a little battery. They've got good
power consumption, are cheap as hell, and should work.

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mathgeek
A lot of the signals here are pointing to a result of Pebble getting as much
as they can at this point without anyone having to actually fulfill
undelivered promises. Sad, but such is the way of backing things on
kickstarter and equivalent sites.

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dpandey
The key focus of this acquisition seems to be the acquisition of assets (read
'IP'). Fitbit has had a rough time battling Jawbone in court (though
ironically Jawbone has been the sufferer in the market while Fitbit revenue
keeps going up). I feel that has made them cautious about IP and this is the
second acquisition (after Coin) that's been purely focussed on acquiring IP so
that:

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).

~~~
woah
What have pebble and coin done to get this IP? Just had enough patent lawyers
around to patent stuff they happen to be working on ("Method of having an
e-ink watchface")?

~~~
dpandey
You usually acquire IP by inventing something, and then filing for patents
based on the invention, if that's what you're asking.

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.

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rotoole
Lord why? 40M for engineers who will quit as soon as possible? What is the
point?

《Edit》honestly I read the whole article, please explain how this makes sense
from a fitbit perspective.

~~~
hayksaakian
is there data or statistics about this topic? i'm sure someone with access to
this data could determine if market impact and recruitment costs would make it
worthwhile

~~~
phamilton
Anecdote from a recent acquisition experience:

~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.

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blackoil
Microsoft should buy pebble. This will give a nice kick to wearables program

~~~
dpandey
It doesn't look like Wearables are a priority for Microsoft at all. Given the
recent slump in that market, I don't think they're getting FOMO either.

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banjoriver
"The deal will mean the Pebble stock held by employees is worthless, two of
the people said. The money will instead go to debt holders, vendors, some of
its main equity investors, and Kickstarter refunds for the Time 2 and Pebble
Core orders, the people said."

~~~
greglindahl
This is a classic "no money falls on common" situation. Debt holders are early
in line; investors have preferred shares with liquidation preferences.

Very interesting how they're treating their $33mm kickstarter obligation.
[Edit: sorry, I wasn't sure what had been fulfilled already, thanks skuhn]

~~~
skuhn
They don't have a $33mm Kickstarter obligation to take care of. Their most
recent project raised $12.8mm for the Pebble 2, Time 2 and Core. According to
this rumor, they intend to refund people who pledged money for the Time 2 and
Core.

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.

~~~
greglindahl
Thanks, I was making a (bad) guess about what had been successfully delivered.
Hm, that makes the reported $40mm price closer to having money falling on
common, but probably not close enough. Did the $15mm series A have a 2X
liquidation preference?

~~~
skuhn
Without knowing any details about their business, my guess is that they also
have substantial debts with their manufacturing partners.

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.

