What happened to Pebble?

Pebble was a smartwatch developed by Pebble Technology Corporation and was the brainchild of Eric Migicovsky. After initial success, the company ran out of funds and had to declare bankruptcy after almost four years in operation. The watch was funded by a $10.3 million Kickstarter campaign – the largest such campaign at the time – with the first watches shipped to backers by January 2013. Approximately 400,000 units were sold in the following year, increasing to nearly two million by 2016. Pebble suffered from cash flow issues with many purchase orders still outstanding after the Fitbit acquisition. It also failed to secure enough funding to develop a health-based smartwatch, allowing Apple to move in with its superior pedigree.

Background

Pebble was a smartwatch developed by Pebble Technology Corporation.

The watch was funded by a $10.3 million Kickstarter campaign – the largest such campaign at the time – with the first watches shipped to backers by January 2013. Approximately 400,000 units were sold in the following year, increasing to nearly two million by 2016.

However, Pebble was acquired by Fitbit for $40 million in December 2016 after the company announced it would no longer manufacture, support, or honor the warranties on its products. The company’s intellectual property and software engineering team was absorbed into Fitbit, with the remainder left out of work.

Pebble developed a reputation for going against the grain in the smartwatch industry. Designers favored simple watches with e-ink screens and long battery life over high-resolution displays with sophisticated features.

Unfortunately, this point of difference did not help the company remain viable long-term. To find out why do read on!

Usability

With prices starting at $99, the Pebble watch was attractive to consumers. It was waterproof and the relatively primitive screen worked well under a variety of light conditions.

However, there were some usability issues. The watch was cumbersome because it needed multiple apps to connect with a smartphone. Connectivity itself was also unreliable, reducing the long battery life marketed as a unique feature of Pebble watches. What’s more, the first versions did not have scratch-resistant glass.

Most crucially, the Pebble worked better on Android than it did iOS, which alienated Pebble’s mostly iPhone-based target audience.

Poor product positioning

Pebble misjudged the smartwatch market by focusing on productivity and third-party innovation and not health and fitness. As a company still reliant on crowdfunding, this error would prove costly.

In response, the company began Kickstarter campaigns for new products aimed at the fitness crowd including the Pebble Core and Pebble Time 2. Both products were due to launch in early 2017 with thousands of backers, but the company could not reach its funding goal. It also failed to secure any interest from private equity funds and other investment groups.

Former CEO Eric Migicovsky highlighted the misstep in an interview, noting that “We did not get this in 2014 – if we had come out then as the smartwatch fitness wearable, maybe it would have been different.

Supply chain difficulties

A lack of funding also made it difficult for Pebble to pay its Taiwanese suppliers during 2015. 

In some instances, suppliers would contact Pebble regarding outstanding purchase orders and receive no response. Some of these orders remained unpaid even as Fitbit took over the company in late 2016. 

Competition

Apple also entered the smartwatch market shortly after Pebble. Initially, it also failed to recognize the potential of a health and fitness wearable – instead of marketing its smartwatch as an iPhone that could be worn on the wrist.

In the end, the market was not as big as Apple and Pebble had envisioned. With its superior brand and product-building experience, Apple quickly secured what little market share existed.

Key takeaways:

  • Pebble was a smartwatch developed by Pebble Technology Corporation and was the brainchild of Eric Migicovsky. After initial success, the company ran out of funds and had to declare bankruptcy after almost four years in operation.
  • Pebble watches had usability issues with alienated its target audience of iOS users. The company was also overly optimistic about the size and potential of the smartwatch market.
  • Pebble suffered from cash flow issues with many purchase orders still outstanding after the Fitbit acquisition. It also failed to secure enough funding to develop a health-based smartwatch, allowing Apple to move in with its superior pedigree.

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Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"