Fitbit’s much-rumored acquisition of independent smartwatch maker Pebble now seems to be less about its products and more about its software, newly surfaced details of the deal suggest.
The deal sees Fitbit acquiring specific assets of Pebble, which includes important staff members, and the smaller company’s software and firmware developments. The acquisition is being valued at $40 million, which is well below Pebble’s debts and obligations. As part of the deal, Fitbit won’t take on that debt, according to Bloomberg.
James Park, Fitbit’s cofounder and CEO, told Bloomberg that the acquisition was “an opportunity to build on our strengths and extend our leadership in the wearables category.”
The majority of Pebble’s assets and infrastructure will be sold off separately — with the money going toward debt holders and investors. As a consequence, Pebble will cease manufacturing and selling its products. Currently owned Pebble devices will continue working as normal — at least for the time being — according to a blog post by company founder Eric Migicovsky.
“Our heartfelt gratitude goes out to each and every Pebbler for making awesome happen with us over the years,” Migicovsky wrote. “You are what made Pebble special and worth fighting for, every second of every day. We will always remember the love you showed Pebble, through thick and thin.”
Since its inception, Pebble has been an example of crowdfunding success. But despite its niche popularity in the wearable market, the company has struggled to keep up with the technological development of larger companies like Apple and Samsung — and, as a result, has struggled to survive in the midst of slumping smartwatch sales across the entire industry. Earlier this year, Pebble was forced to cut a quarter of its staff, Engadget reported in March.
Only around 40 percent of Pebble’s current workforce will move on to Fitbit. The rest will be let go, with or without a severance package, according to Bloomberg. Additionally, the company’s planned devices — the Pebble 2, Pebble Time 2 and Pebble Core — will no longer be produced. While the Pebble 2 is still in the midst of shipping out to customers, backers of those crowdfunded campaigns on Kickstarter who haven’t received their devices will be refunded by March 2017.
But despite the help from Pebble’s key staff and technology, Fitbit might still be on the losing end of a battle in the wearables market. Recent holiday season revenue reports estimate that Apple Watch sales account for at least half of the market’s total revenue.
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