4 ms·

If this goes through, best of luck to everyone from Pebble and Fitbit. Hardware is tough, but we all need it.

by outericky 10y ago

WillPostForFood 10y ago
Can anyone think of an example where you take two failing tech companies, merge them, and it works out?
- nwenzel 10y ago
  XM and Sirius got together. Not sure if it's working out or not but they're still an operating business which is better than where they were headed pre-merger.
- mc32 10y ago
  Micron + Elpida? Memory is a tough business.
- dpandey 10y ago
  Fitbit had revenues of $14.5 million in 2011, $76.4 million in 2012, $271.1 million in 2013, $754 million in 2014, $1.8B in 2015 and is expected to do $2.4B in 2016. 'Failing' in what sense?
  - twblalock 10y ago
    > 'Failing' in what sense? Stock down more than 70% year-to-date, and competing in a market that is rapidly becoming commoditized. Perhaps "failing" is a a strong word, but I wouldn't describe them more positively than "struggling." Like GoPro, Fitbit sells commodity hardware and is not greatly differentiated from its competitors in terms of hardware, software, or platform lock-in (you may disagree, but the consumer market has clearly spoken).
    - dpandey 10y ago
      Their hardware and marketing are good, but software not so much - which is where magic happens. Completely agree that when it comes to software and user experience - Fitbit feels like a 'commodity'. The 30% fall was mainly triggered by Fitbit revising revenue estimates for Q4 from 985M to somewhere around 725M as well as Q3 performing poorer than expected. What's fascinating is that Fitbit is still going to do about 2.2B in revenue (up from 1.8B) last year. So annual revenue is going to be more than current market cap (1.7B). Apart from a less than delightful user experience (resulting in device abandonment and low engagement/retention), Fitbit is also losing market share to Xiaomi in Asia. So I wouldn't call it failing, but yeah it could do much better :)
      - twblalock 10y ago
        > Completely agree that when it comes to software and user experience - Fitbit feels like a 'commodity'. I don't just mean that. I mean that anybody with business contacts in China could make equivalent fitness-tracking hardware. The barrier to entry for new competitors is very low. Fitbit needs to be able to prevent a bunch of new competitors from coming out of the woodwork and stealing their marketshare.
      - dpandey 10y ago
        PS: I can't reply to the followup post to this post, so answering here. If you go to CES, you'll find a hundred companies that make a fitness band (I did, last year). None of them have Fitbit's branding and name recognition (which is very non-trivial to create).
- fragmede 10y ago
  Both NeXT and Apple weren't looking so hot in the face of utter dominance by Microsoft and Intel in 1997, but here we are.
  - mtgx 10y ago
    I would say it's a half-decent example, but I wouldn't put too much trust in that considering it was Steve Jobs the one that made it work, and he was no run-of-the-mill CEO. It's a little like saying that starting a new (successful) car company is easy because Elon Musk did it.
- staticautomatic 10y ago
  Someone I worked with once described this as "trying to start a farm with a dead horse and a dead cow"
dragonmum 10y ago
> Hardware is tough, but we all need it. As the 2016 market has shown, "need" is perhaps too strong a word for a smart watch.
- dpandey 10y ago
  Hard to back up that claim. Fitbit should be doing about $2.4B in revenue this year. That's only about 22% of the global market share.
  - flukus 10y ago
    Is it the same market? The ability to tell me the time isn't the reason I wear a fitbit, it's mostly for the passive tracking.
    - dpandey 10y ago
      Fitbit blaze is a smart watch. "New products, Fitbit BlazeTM and AltaTM, including related accessories, comprised 54% of Q216 revenue". I don't know how revenue is split between the two, but it sounds like they're selling a lot of blazes. Edit: "In the first quarter, Fitbit sold 4.8 million wearable devices, including one million of the Fitbit Blaze and another one million of the Fitbit Alta." Now this is first quarter data (when Blaze + Alta did 50% of overall revenue). Since Blaze costs 199$ and Alta 99$, one could split the revenue Blaze (33%) and Alta (17%) roughly. One third of Fitbit revenue from Blaze (smartwatch) - that's a LOT!

If this goes through, best of luck to everyone from Pebble and Fitbit. Hardware is tough, but we all need it.

WillPostForFood 10y ago

Can anyone think of an example where you take two failing tech companies, merge them, and it works out?

nwenzel 10y ago
XM and Sirius got together. Not sure if it's working out or not but they're still an operating business which is better than where they were headed pre-merger.
mc32 10y ago
Micron + Elpida? Memory is a tough business.
dpandey 10y ago
Fitbit had revenues of $14.5 million in 2011, $76.4 million in 2012, $271.1 million in 2013, $754 million in 2014, $1.8B in 2015 and is expected to do $2.4B in 2016. 'Failing' in what sense?
- twblalock 10y ago
  > 'Failing' in what sense? Stock down more than 70% year-to-date, and competing in a market that is rapidly becoming commoditized. Perhaps "failing" is a a strong word, but I wouldn't describe them more positively than "struggling." Like GoPro, Fitbit sells commodity hardware and is not greatly differentiated from its competitors in terms of hardware, software, or platform lock-in (you may disagree, but the consumer market has clearly spoken).
  - dpandey 10y ago
    Their hardware and marketing are good, but software not so much - which is where magic happens. Completely agree that when it comes to software and user experience - Fitbit feels like a 'commodity'. The 30% fall was mainly triggered by Fitbit revising revenue estimates for Q4 from 985M to somewhere around 725M as well as Q3 performing poorer than expected. What's fascinating is that Fitbit is still going to do about 2.2B in revenue (up from 1.8B) last year. So annual revenue is going to be more than current market cap (1.7B). Apart from a less than delightful user experience (resulting in device abandonment and low engagement/retention), Fitbit is also losing market share to Xiaomi in Asia. So I wouldn't call it failing, but yeah it could do much better :)
    - twblalock 10y ago
      > Completely agree that when it comes to software and user experience - Fitbit feels like a 'commodity'. I don't just mean that. I mean that anybody with business contacts in China could make equivalent fitness-tracking hardware. The barrier to entry for new competitors is very low. Fitbit needs to be able to prevent a bunch of new competitors from coming out of the woodwork and stealing their marketshare.
    - dpandey 10y ago
      PS: I can't reply to the followup post to this post, so answering here. If you go to CES, you'll find a hundred companies that make a fitness band (I did, last year). None of them have Fitbit's branding and name recognition (which is very non-trivial to create).
fragmede 10y ago
Both NeXT and Apple weren't looking so hot in the face of utter dominance by Microsoft and Intel in 1997, but here we are.
- mtgx 10y ago
  I would say it's a half-decent example, but I wouldn't put too much trust in that considering it was Steve Jobs the one that made it work, and he was no run-of-the-mill CEO. It's a little like saying that starting a new (successful) car company is easy because Elon Musk did it.
staticautomatic 10y ago
Someone I worked with once described this as "trying to start a farm with a dead horse and a dead cow"

dragonmum 10y ago

> Hardware is tough, but we all need it. As the 2016 market has shown, "need" is perhaps too strong a word for a smart watch.

dpandey 10y ago
Hard to back up that claim. Fitbit should be doing about $2.4B in revenue this year. That's only about 22% of the global market share.
- flukus 10y ago
  Is it the same market? The ability to tell me the time isn't the reason I wear a fitbit, it's mostly for the passive tracking.
  - dpandey 10y ago
    Fitbit blaze is a smart watch. "New products, Fitbit BlazeTM and AltaTM, including related accessories, comprised 54% of Q216 revenue". I don't know how revenue is split between the two, but it sounds like they're selling a lot of blazes. Edit: "In the first quarter, Fitbit sold 4.8 million wearable devices, including one million of the Fitbit Blaze and another one million of the Fitbit Alta." Now this is first quarter data (when Blaze + Alta did 50% of overall revenue). Since Blaze costs 199$ and Alta 99$, one could split the revenue Blaze (33%) and Alta (17%) roughly. One third of Fitbit revenue from Blaze (smartwatch) - that's a LOT!