Things Just Got Way Harder for the Next Pebble

Pebble

Wearable electronics, long the subject of considerable hype from the tech press, now seem on the verge of entering the mainstream. Samsung, Apple, Google, Motorola, and other tech giants all want consumers to strap a “smart watch” to their wrist; Google continues to push Google Glass, its augmented-reality headset; and Facebook bet $2 billion that Oculus Rift, its latest acquisition, can guide the future of virtual reality.

Wearable electronics becoming the Next Big Thing could present loads of opportunities to startups and entrepreneurs—as well as significant dangers. The Pebble “smart watch” is a good example of how a small group of people armed with knowledge, verve, and a bit of luck can transform a wearable-electronics concept into a viable, popular product. After failing to secure funding via traditional investors, Pebble’s creators turned to Kickstarter and raised a remarkable $10.3 million from 68,928 contributors. The device, which can act as an activity tracker and displays notifications on its e-ink display, went into mass production in early 2013, and sold 400,000 units by mid-2014.

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But for every successful startup like Pebble, another hundred wearable-electronics firms will fail. Kickstarter campaigns fail; investors fail to come through with the cash to keep operations running; co-founders fail to stay together; the product fails to perform up to expectations; or—perhaps the biggest fail of all—a big competitor like Google introduces a device that crushes yours on the open marketplace. A few lucky firms (Oculus VR springs immediately to mind) might find themselves acquired by a much larger firm, but how often does Mark Zuckerberg or Larry Page actually show up at a startup’s door with a duffel bag filled with cash?

Hardware is, in a word, hard. The infrastructure it requires to produce is extensive, and that’s even before you consider the array of deals necessary to place a product on actual store shelves; if something’s wrong with the units, you’ll need to initiate an expensive recall, or face the wrath of the public on social media. Software, on the other hand, is easier: Once it’s written, you can send out an infinite number of copies of it at relatively little cost; and if something goes wrong with it, you can fix it and push out an update.

That’s why, as Google and Apple and Samsung and every other tech giant on the planet fight to establish their respective wearable electronics as the market leader, it could pay off for startups to focus, as they did with smartphones and tablets, on creating apps rather than devices.

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Image: Pebble