Consolidation is a fact of life within the tech industry: companies are bought and sold all the time, often so that a larger or more powerful firm can get its hands on the top talent behind a particularly interesting app or platform.
The wearable-electronics industry might soon find itself in the midst of serious M&A action, at least if you believe the latest scuttlebutt that FitBit is set to acquire Pebble. The Information, which broke the story, had no official word about the value of a potential sale, but an anonymous source told the publication that FitBit could pay as much as $40 million.
The Verge also confirmed that a deal is in the works, via (presumably another) anonymous source.
Pebble first came to prominence as a Kickstarter darling, raising $10.3 million from nearly 70,000 contributors to create its first-generation smartwatch. That product, which displayed notifications and the time on an e-ink display, sold hundreds of thousands of units following its release in 2013.
But things have not been smooth for Pebble in recent months. The company announced in March that it would lay off 25 percent of its staff, reportedly because of lack of funds. An October analysis by research firm IDC, meanwhile, placed Pebble’s share of the smartwatch market at 3.2 percent, well behind Apple, Garmin, and Samsung.
FitBit has also endured a bit of a bumpy road, with its stock tumbling on reports of slackening consumer demand in the fourth quarter. Although the company regularly releases new products, it must face strong competition not only from the Apple Watch, but a variety of competitors that are leveraging Android Wear and proprietary software.
As competition heats up, companies will inevitably falter and end up absorbed by others. Pebble’s engineers have successfully released wearable devices for years, often in the face of resource constraints; by giving them a new workplace, FitBit denies the competition access to their wealth of knowledge. In addition, Pebble may have patents and other assets that FitBit could find useful as it designs more sophisticated and power-efficient devices.
For engineers, developers, and others interested in the wearable-electronics space, any FitBit-Pebble deal is well worth watching; it may kick off a broader trend of acquisitions—changing the number of wearables-based companies you could potentially work for.