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December 9, 2016

FitBit takeover of Pebble without their hardware stumps analytics and investors alike

Top 5 Wearable Vendors Marketshare: FitBit,Xiaomi and Apple Lead the stakes(IDC data)

 
After days of speculations and rumors on Pebble and Fitbit takeover talks, Fitbit has finally announced that it is acquiring " wearable smartwatches manufacturer Pebble .On December 7, 2016, Fitbit officially announced that they acquired assets from Pebble, including key personnel, as the company decided to stop producing wearable technology.However this does not include the hardware from Pebble.

While this seemed like a good news for both as Pebble was struggling to gain market share in the wearable industry and might have suffered in the future and may have gone under without an exit plan. However a few analysts are pointing out that the takeover plan by Fitbit does not make much strategic alignment not a very good  fit as it does not include pebble's famed"Hardware". Considering Pebble's hardware is what helped the company build a following in the first place, not owning the hardware part  for Fitbit is like killing the product and stopping innovation

Post this takeover Fitbit risks not only disappointing the thousands of loyal fans that believed in Pebble despite the odds but also leaves them high and dry .According to endgadget, Fitbit now plans discontinue many of  Pebble wearable which was supposed to be launched in the next quarter.
They includes all the devices that were listed in the company's latest Kickstarter campaign including The Time 2 and the Core -a GPS-enabled accessory for runners, both promised for next year -- will never ship. If you ordered a Pebble 2 or a special Kickstarter Edition of the Time Round and haven't received it yet, you won't get one. Pebble has said all Kickstarter preorders will be refunded within the next week.

During Q3,2016 quarter, Fitbit shipped 11% more fitness bands than it did in the year-earlier quarter, upping its share of the market to 23% from 21.4% in the year-earlier period, according to IDC. However, shipments rose just 3% industry wide, marking a stark deceleration from 67% in the first quarter and 26% in the second quarter of 2016. Last month, Fitbit provided a revenue outlook for the holiday quarter between $725 million and $750 million, which was sharply below the $985 million analysts had forecast in a FactSet survey.Analysts have since tempered their expectations, as many VC's and Investors alike now believe that product category has failed to convince consumers that these are must-have products the way, say, smartphones have.