A Blip In The World Of Wearables

There may be trouble in wearables land.

Based on a number of recent reports, the appetite for smart or connected things that are worn may be softening a bit, at least at the moment.

The latest is the widely reported rumor of a $40 million sale of smartwatch startup Pebble to Fitbit.

For context, Pebble, the once high-flyer on Kickstarter, in 2012 sought $100,000 to create its first watch and raised $10 million. Last year, it raised another $20 million and this year, another $13 million.

The $40 million that TechCrunch suggests Fitbit will pay for Pebble is quite a dive from earlier days. Pebble was offered $740 million to sell itself to Citizen last year and $70 million from Intel later, according to The Motley Fool.

I asked Fitbit about the reports of a pending sale and got the PR textbook reply “Fitbit does not comment on rumors or speculation.”

Fitbit has its own issues. The fitness tracker company lost about 80% of its value since around its IPO last year and the company’s growth story is probably over, says The Motley Fool.

In projecting sales for the final quarter of this year recently, CEO James Park said: “We continue to grow and are profitable, however, not at the pace previously expected.”

And then there’s Under Armour, which has a stated focus on connected fitness and has built a community of 190 million registered users.

However, during the company’s most recent reporting to analysts, CEO Kevin Plank stated: “We want to be clear, like our demand is still there, like this doesn't mean that the demand for the Under Armour brand has disappeared, but it certainly hasn't reappeared dollar-for-dollar in our immediate distribution.”

The company’s stock price is the lowest it’s been all year.

On the other side, The Motley Fool this week picked the three top stocks to buy in wearables and, sure enough, Under Armour is one of them, along with Apple and Qualcomm.

Another wearables indicator is Intel.

Back in August, Intel issued a full recall of its Basis Peak fitness watch, since they posed a burn hazard.

The product was recalled with full customer refunds rather than creating and sending a replacement product. And then Intel announced it would end software support for the device.

Since then, it has been widely reported that Intel was backing away from wearables, although the company last month issued a statement saying that it was not stepping back from the wearables business.

There’s clearly reason for Intel to be in on the Internet of Things, even if not in wearables. On the overall business side, Intel revenue for its Internet of Things business grew almost 20% to $689 million in the last quarter, with more than $190 million profit.

These all may be but blips on the wearables road.

The next two major indicators will be how many consumers receive smartwatches, fitness trackers and other wearables for Christmas, followed by whether those consumers stick with their new wearable and for how long.


9 comments about "A Blip In The World Of Wearables".
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  1. Douglas Ferguson from College of Charleston, December 2, 2016 at 10:05 a.m.

    It takes a certain confidence to wear technology on your wrist. Thanks to ever-present cell phones, I'm wondering why I even wear a watch, except out of habit. My students rarely wear watches, old or new-tech. It's another high-tech temptation to cheat during exams, so some professors ban them. Neither of my college-age sons asked for smartwatches as gifts.

  2. Chuck Martin from Chuck Martin replied, December 2, 2016 at 10:10 a.m.

    Right, Douglas, and some people wear both a traditional watch and a fitness tracker, which also has a time feature.

  3. Mark Westlake from GearBrain, December 2, 2016 at 10:34 a.m.

    I think this is showing wearables are not for everyone.  As Doug mentioned, he doesn't need a watch to tell him what his phone can do.  There are a lot of people who feel this way which I think is impacting wearable sales.

  4. Chuck Martin from Chuck Martin replied, December 2, 2016 at 10:54 a.m.

    Good point, Mark, and many likely will be given as gifts, even if not necessarily requested by the recipient.

  5. Paula Lynn from Who Else Unlimited, December 2, 2016 at 11:47 a.m.

    Now that a law is nearing to allow the FBI (aka government's new administration) to hack anything and everything whether individually or certain groups for whatever reasons while the president elect want to be able to incessently contact you via unblockable means, you want this on your person at all times ?

  6. Brian Nakamoto from Tightrope Interactive, Inc. replied, December 2, 2016 at 3:19 p.m.

    Hi Paula,

    Please see if you're alluding to Rule 41. Assuming you carry a feature or smartphone on your person at all times, the FBI can already ask a federal judge for a warrant to track you down.


  7. Brian Nakamoto from Tightrope Interactive, Inc., December 2, 2016 at 3:39 p.m.

    Lenovo/Motorla abandoning Android Wear is a bigger symbolic blip.

    In hindsight, Pebble should've taken Citizen's rumored offer of $740 million last year.

    P.S. Apple Watch got me to wear a watch all day again.

  8. Chuck Martin from Chuck Martin replied, December 2, 2016 at 6:47 p.m.

    Yes, Brian, there were several other indicators as well, including that one announced today.

  9. Paula Lynn from Who Else Unlimited replied, December 2, 2016 at 10:32 p.m.

    The operative word you used is "warrant". That exercise won't be needed and therein lies the rub.

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