Wednesday, December 07, 2016

A revisit of the smartwatch market in light of Pebble's failure

As it has now officially been announced, Fitbit is buying Pebble for very little money, and plans to divest from the Pebble watches themselves, as it integrates the IP into its own line of devices.

Although Pebble was not one of the top 3 players in the industry, and it is quite obvious that they mismanaged their growth, this still marks a turning point for the following reasons:
  • Citizen was turned-down by Pebble last-year, on a buy-out deal in excess of $700 million USD. The Fitbit deal is less than 1/10 of that, showing that there wasn't anyone else willing to give any significant amount of money for Pebble
  • The Pebble watch was positioned as a mass-market product. This shows that there isn't such a market out there for the current form of a generic purpose smartphone on your wrist (as I covered before:

If we take a look at the stats from IDC:

My analysis:
  • Wearables, in their current form, have a few niche markets in the sporting-activity-tracking-related segment, and not much beyond that
  • Although largely declining, Apple still sell a good number of smartwatches, which I believe can be attributed to a fashion/lifestyle statement from its buyers. This, however, is a fringe market which makes it unlikely to be sustainable
  • Until there's a clear differentiator between a smartwatch and a smartphone which could make a compelling argument for a separate, mass-market, multi-purpose smartwatch, the best that can be hoped for vendors is to compete with digital watches
  • I think there is a niche market for timepieces "add-ons" to make them interactive (notifications) without tempering with their intrinsic long-term value. This could take the form of attachment to traditional watches, smart-rings, bands, etc. This seems to be the only current and distinctive purpose of a smartwatch