Pebble, which agreed to sell to Fitbit Inc (NYSE:FIT) for an undisclosed sum, is laying off several employees who apparently failed to find space in Fitbit’s team. The smartwatch pioneer is sending home 82 workers as it shuts down operations and sells key assets, including intellectual property, to Fitbit.
Pebble described its move to shut down operation as a “tough decision”, saying the move was a result of various factors that weren’t specified. However, the company has recently faced stiff competition in the smartwatch market, fighting for space against major brands like Apple Inc. (NASDAQ:AAPL), Samsung (Garmin Ltd. (NASDAQ:GRMN).
By the time Pebble decided to close shop, research firm IDC had said the company only controlled a sliver of the smartwatch market: 3.2%.
Apple’s entry in smartwatch business frustrated Pebble
Though a latecomer, Apple has quickly gained market share in the smartwatch space with its Apple Watch device, which is currently in its second generation. Apple enables customers to tether their Apple Watch devices to their iPhone, giving them the opportunity to receive text messages and calls on their wearable device.
Apple, which has recently struggled with shrinking iPhone sales, sees Apple Watch and new other products like Apple Music and Apple Pay, as a way to break its overreliance on iPhone sales. The iPhone contributes the bulk of Apple’s revenue and profits.
Successful crowdfunding campaign
Pebble’s shutdown closes the chapter on one of the successful crowdfunding campaigns. Armed with a great proposal, Pebble approached potential investors on crowdfunding website Kickstarter and pitched its business of manufacturing smartwatches. While Pebble set out to raise $100,000 through Kickstarter, it raised $1 million in a matter of hours through customer preorders for the product it was developing. The campaign raised $10 million for Pebble and subsequent campaigns raised an additional $33 million.
Can Fitbit get better?
Fitbit has not declared publicly what it intends to do with the technology and talents it has acquired from Pebble. But given that the company has recently struggled with stagnating sales growth, it could use Pebble’s technology to differentiate its fitness devices and widen its lead in the fitness wearable space. Apple and Microsoft Corporation (NASDAQ:MSFT) are increasingly aiming to claw away Fitbit’s share of the fitness device market.
