If Fitbit's (FIT) disappointing third-quarter sales and very poor fourth-quarter guidance made it clear that wearables have failed to live up to their massive 2015 hype, Fitbit's acquisition of smartwatch pioneer Pebble, together with the backstory surrounding the deal, makes it official that the hype cycle is over.
Pebble, which launched its first smartwatch in 2012 (three years before the Apple Watch arrived), was sold to Fitbit for a price between $34 million and $40 million, according to a source talking with TechCrunch. That's less than the $40 million-plus Pebble has raised over its history via crowdfunding site Kickstarter, and -- in spite of Fitbit's big 2016 losses -- equal to about 2% of Fitbit's market cap.
What's worse, TechCrunch reports Pebble turned down a $740 million offer in 2015 from high-end watchmaker Citizen. The company also reportedly rejected a subsequent $70 million offer from Intel (INTC) The chip giant, which in recent years has bought fitness watchmaker Basis and heads-up display maker Recon, was recently reported to be laying off a chunk of its wearables team and to have shelved plans to launch a new Basis smartwatch aimed at women.
Given all of this, it might only be a matter of time before watchmaker Fossil (FOSL) takes a write-down on its $260 million 2015 purchase of wearables firm Misfit. And unless its non-smartwatch products prove very successful, Nokia (NOK) might struggle to make its $191 million spring acquisition of French wearables/fitness hardware maker Withings pay off.
Recent sales estimates suggest Pebble was in dire straits. Research firm IDC estimates the company shipped only 100,000 smartwatches in the third quarter, down from 200,000 a year earlier. Competition from Apple (AAPL) , Garmin (GRMN) , Fitbit, which launched its Blaze smartwatch in early 2016) and Samsung (SSNLF) didn't help.