Late last month we reported that Fitbit was closing in on a deal to acquire smartwatch maker Pebble "for a small amount". Bloomberg has now revealed that the buyout will cost "less than $40 million" and exclusively concerns Pebble's software assets, which are being sought by Fitbit "in a bid to better compete with Apple", according to people familiar with the matter.
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Yesterday's update on the details of the acquisition comes at a time when the wearables market as a whole appears to be facing increased uncertainty and significant profit hurdles. Earlier this week, in response to IDC market research claiming that Apple Watch's share of the wearables market had fallen to 5 percent, Apple CEO Tim Cook said Apple Watch's sell-through rate had hit a new high. Cook was responding to data which suggested fitness trackers "reigned supreme" in the market, yet Fitbit has seen its own struggles, with the company's shares tumbling 30 percent after announcing mixed third-quarter results and weak guidance for its fourth quarter.
To improve its standing in the market, Fitbit reportedly wants to hire Pebble's software engineers and testers, and get hold of intellectual property including the Pebble OS, watch apps, and cloud services. The $40 million buyout sum does not include Pebble's debt and other obligations, product inventory or server equipment, all of which will be sold off separately, said the people, who asked to remain anonymous.
The news all but confirms the end of the road is in sight for Pebble's entire product line-up, including its most recent smartwatch announcements, the Pebble 2, Time 2, and the Pebble Core. The Pebble 2 has already started shipping to people who funded the startup through crowd-funding site Kickstarter, but the Time 2 and Pebble Core will be canceled and refunds will be issued to Kickstarter backers, said the sources.
Following the buyout, Pebble's offices will be closed and former engineers will relocate to Fitbit offices in San Francisco. There's no word yet as to whether Fitbit will decide to use the Pebble brand in future.
The deal will make Pebble stock held by employees "worthless", said sources, with the money earned on the acquisition going to debt holders, vendors, some equity investors, and Kickstarter refunds for the Time 2 and Pebble Core orders.
Top Rated Comments
Hehehe, this is hilarious. From day 1 the pebble software was the worst thing about it. It never got much better during the lifetime of the pebble (I had the first pebble and pebble time) - I can't stop laughing that this is what fitbit bought xD xD xD
Yeah, I often have a chuckle at loads of people losing their jobs before Xmas. :rolleyes:Not saying this as a disgruntled user btw but as a programmer.
Does this mean existing Pebble watches would stop working? There's plenty of functionalities that depends on their Internet service:
Another beautiful example of why I don't trust "the cloud" for anything permanent and opt to avoid it as much as I can.* Installing apps
* Configuring watchfaces
* Voice transcription
Not possible with every service or product, but I'm certainly trying not to let myself get screwed too much.
To think some folks in the gaming industry think that gamesaves, vast amounts of computing for a given game and other things should be (partially) relegated to the cloud scares me and that's just one of many examples.
Glassed Silver:ios
Hope the Pebble folks manage to land on their feet.
Bummer all round really. :(
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Good, all things terrible have to disappear eventually.
Like.. Maybe that attitude?Seriously. Did you mistake Pebble for Aids or something?
The deal will make Pebble stock held by employees "worthless"
This practice enrages me, and it's why I turn down stock and demand higher pay.Most companies never have IPOs. The stock never becomes worth anything. You'll almost certainly be better off just taking cash.