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Fitbit in talks to buy smartwatch pioneer Pebble

Fitbit is in advanced talks to acquire Pebble, the smartwatch pioneer and darling of crowdfunding site Kickstarter, according to several people close to the negotiations.

The deal, which is in its closing stages but has not been completed, would bring intellectual property and new expertise in wearable devices to Fitbit at a time when the fitness-tracker maker is looking to expand its product range.

Pebble has raised a total of more than $40m through Kickstarter, including the crowdfunding site’s biggest campaign in 2015 that persuaded consumers to put more than $20m into its Pebble Time watch. It also raised $15m in venture capital funding in 2013.

However, people close to the deal said Fitbit was paying a low price for the Silicon Valley-based start-up, which has struggled financially despite another $12.8m Kickstarter campaign in June.

A pioneer in the wearable-technology market, Pebble launched its first smartwatch in 2012, two years before the Apple Watch was announced. Although it had a strong following among early adopters and software developers who loved its open app platform, Pebble has struggled to garner mainstream appeal.

Fitbit’s main interest is in Pebble’s software platform, PebbleOS, which has one of the largest app catalogues of any wearable device and can be paired with both iPhones and Android devices.

While many of Pebble’s employees are expected to join Fitbit to maintain its existing products, manufacturing of its smartwatches is unlikely to continue for long after the acquisition. This year Pebble revealed a new device, Core, that can stream music from Spotify, track workouts using GPS and connect to Alexa, Amazon’s virtual assistant. The Core had been due to ship early next year.

Fitbit declined to comment. Pebble did not respond to requests for comment.

Pebble is the latest company to run into trouble in the wearable technology market. Jawbone, once seen as Fitbit’s biggest rival in fitness trackers, has been struggling in recent months. Microsoft axed its digital health device, Band, two months ago. Even Apple saw sales of its Watch more than halve earlier this year, according to analysts at IDC, in the run-up to the launch of its second version in September.

Fitbit itself saw its stock plunge earlier this month after warning that sales in the crucial holiday quarter would come in below Wall Street’s expectations. It blamed production issues for delays to the release of its new Flex 2 tracker.

After cutting staff earlier this year, Pebble contacted several companies about a potential buyout in the past few months as it scrambled to secure its future.

Founder and chief executive Eric Migicovsky was hoping to sell for about $200m, according to a person who saw the pitch. Although the price Fitbit is paying is unclear, it is far less than that, according to four people familiar with the situation, and would not be a material amount for the fitness tracker maker.

James Park, Fitbit’s chief executive, has previous form in low-cost, tuck-in acquisitions. This year, Fitbit acquired certain assets from Coin, a Silicon Valley payments start-up. Coin’s wearable-tech patents and personnel will accelerate its plans to add pay-by-touch capabilities to its wristbands, Fitbit said in May.

Mr Park told analysts this month that Fitbit was planning to launch “new form factors”, devices in a different style to its traditional wristbands, to help broaden the appeal of its products. Fitbit launched its first smartwatch, the Blaze, in January.

Via FT