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    Fitbit CEO says buying Pebble could help it crack the code on smartwatches

    Fitbit CEO says buying Pebble could help it crack the code on smartwatches


    All signs point to an upcoming smartwatch from Fitbit

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    Following Fitbit’s acquisition of smartwatch maker Pebble, it seems obvious that Fitbit is considering a deeper dive into the smartwatch market. The more important question is whether that’s a smart move or not, with a recent report suggesting smartwatches will likely continue to struggle in the near term.

    But just because the smartwatch category isn’t working now doesn’t mean it can’t in the future with a “different approach,” according to co-founder and CEO James Park in an interview with The Verge earlier today.

    “I draw an analogy with our own history at Fitbit,” Park said. “The closest device you could draw a comparison to [when we started] was a pedometer. And we came up with a radical new concept around activity trackers and really transformed that market, and grew it into something of a size that people couldn’t imagine.”

    To be clear, Fitbit hasn’t explicitly said it is making a “real” smartwatch, one with more advanced capabilities than the is-it-or-isn’t-it-a-smartwatch Blaze. But all signs point in that direction. First, the Pebble acquisition earlier this week: Fitbit has said more than once that it bought the company for its smartwatch software platform, not its hardware. Earlier this year Fitbit also acquired Coin, a payment-technology startup, as part of an effort to develop an “active NFC payment solution.” And on Fitbit’s most recent earnings call, Park himself said the company was planning to expand into “new form factors” next year.

    Fitbit says it plans to expand into “new form factors”

    It was also in that same third-quarter earnings report that Fitbit forecasted a less-than-stellar holiday season, citing both production issues and a weakening demand for wearables. The report, and Fitbit’s subsequent stock drop, was a giant reality check for the wearables industry: do people actually want these things?

    “I can’t really speak in detail about why others might not be finding success in the market, but we’ve always had our own view and conviction,” Park said when asked about the timing of the Pebble buy and where the smartwatch market currently stands. “But we don’t think there’s been any product out there in smartwatches that combine general purposes, functionality, health and fitness, industrial design, and long battery life into one package.”

    Smartwatch makers are being tested in particular, with basic wristbands accounting for 85 percent of the global wearables market. Huawei, LG, and Lenovo’s Moto decided to hold off on putting out new Android Wear smartwatches this fall. Apple just said that it had its best week ever of Apple Watch sales, and has called it a multi-billion dollar business for the company, but global research firm IDC estimates that Apple Watch sales, prior to the launch of the newest Watch, were down 71 percent year over year.

    Park says he doesn’t judge the usefulness of the whole category based on individual companies or products, and that part of Fitbit’s goal is to have its product line “get more sophisticated over time.” And importantly, he said that the Pebble buy will help accelerate the development of a “great variety of apps we’ll either develop on our own or with partners.”

    Basically, by buying Pebble, Fitbit has bought into an independent smartwatch operating system, which means that it doesn’t have to turn to Google’s Android Wear if it wants to make a smartwatch, or build a new OS from scratch. Pebble, in its nearly five years of existence, managed to build up a store of 14,000 third-party apps and watch faces. Fitbit has third-party “integrations,” which means it shares data with other apps, but it currently doesn’t support third-party apps on actual Fitbit devices.

    Smartwatches still aren’t must-have devices

    Some analysts are still hopeful for the smartwatch market, too, despite what looks to be a significant bump in the road right now. Julie Ask, vice president at Forrester Research, says that while smartwatches are clearly a much smaller market than the smartphone and still aren’t “must-have” devices, she predicts that the wearables category will be comprised of 40 percent basic trackers, 40 percent smartwatches, and 20 percent “other” wearable technology in the next four to five years.

    “[Smartwatches] are getting much better at health and fitness. Prices will come down. And as things like mobile payments come into play, the perception of the utility will change,” Ask says.

    She also notes, though, that having a bunch of third-party apps to run on your wrist isn’t going to be the winning solution, either. “What we’ll end up doing are app fragments, especially on complicated platforms,” Ask says. “Consumers just need something quick.”

    The best way to do that, in Fitbit’s view: buy an independent app platform like Pebble. The idea is not a bad one. The execution of it will be a different story.

    Editor’s note: A previous version of this article incorrectly said Pebble’s app store had apps numbered in the single-digit thousands. The story has been updated with the accurate number.