Fitbit's Acquisition of Pebble Leaves Many Questions Unanswered

December 06, 2016

After a week-long rumor mill about Fitbit acquiring the struggling smart watch maker Pebble, the suspense ended today when Fitbit announced that it is acquiring Pebble’s software assets and IPs, not the latter’s hardware business. Though it is a smart move to skip Pebble’s hardware business, the rationale for Fitbit to acquire Pebble’s software business remains unconvincing to me.

We don’t know the price tag of the deal so have no idea how much value Fitbit attaches to Pebble’s software assets. We assume that this move is about strengthening Fitbit’s software and OS development efforts so that Fitbit’s future products can offer richer and more useful features and functions to its customers. But is Pebble’s asset really what Fitbit needs? Here are the three reasons behind my doubt about this deal.

Pebble has been struggling to grow its developer community. It attracted a good size of developers in its early days, but with the entry of WatchOS and Android Wear OS, app developers shifted their focus and growth of its developer community thus stalled. It is not clear how Fitbit would make use of Pebble’s current OS platform or developer connections. By any means, Pebble’s software business doesn’t look appealing.
Pebble is touting its open platform approach which may not be consistent with Fitbit’s view of how it will conquer the wearable market. Though never confirmed, I suspect that Fitbit always wants to achieve a level of ecosystem success like Apple has done with its iOS empire. Apple has a tight control on its ecosystem, whereas Pebble had supplied tools to developers to work with both Android and iOS. This open development philosophy is unlikely to pan out with Fitbit as the new owner.
Pebble is now a failed brand and may lose developers’ trust. Fitbit will retire the brand, but developer’s trust can only be earned or regained with patience, a clear vision, and real progress. Fitbit is likely to face developer’s skepticism about how Pebble’s software assets would be integrated with Fitbit’s own efforts and what upside they can attain by working with Fitbit both near term and long term. It is imperative for Fitbit to restore confidence and trust among Pebble’s developers by articulating a well-laid software strategy.

Of course, Fitbit may simply use this deal to acquire software talents and ditch all existing platform tools and initiatives that Pebble offers. If so, none of my arguments is relevant. After all, the real value of the deal is Pebble’s people and perhaps its IP assets.

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