Fitbit, Inc. Gives Hints on Post-Pebble Smartwatch Strategy

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Last week, Fitbit, Inc.(NYSE: FIT) officially acquired the remaining assets of now-defunct Pebble. Existing and future hardware products will be discontinued, as Fitbit was predominantly interested in software engineers and intellectual property that could be subsequently be used to build a new smartwatch product. Most of that is pretty obvious; you don't buy the remnants of a smartwatch company unless you want to build smartwatches or improve your existing smartwatch offerings.

The timing may seem poor, given recent reports and third-party estimates that suggest the smartwatch market is already broadly stallingjust a couple years after inception. While Fitbit didn't disclose an official price tag, it was reportedly $40 million or less. That's a pretty reasonable cost, and if anything, Fitbit should be grateful that the smartwatch market claimed Pebble as a victim, since it just got a great deal on some assets that it could use to its advantage.

It's not a question of what Fitbit will do, but rather how it will do it. Thanks to a recent interview, investors have a few more hints.

That's what he said

Fitbit co-founder and CEO James Park sat down with The Verge for an interview last week to discuss the company's direction following the acquisition. Park acknowledges the market's woes right now, but suggests that a "different approach" can still be successful. The executive points to its ability to transform the pedometer market (which is essentially what most basic fitness trackers are, give or take a few other features), blowing away all prior expectations.

"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, regarding the current market situation. He continued: "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."

Park believes that smartwatches will continue improving across the board, and that the Pebble acquisition will help Fitbit and its partners create a wide range of better apps.

With our powers combined

So we know that Fitbit is targeting an array of areas that it must balance in order to appeal to prospective smartwatch buyers. Interestingly enough, the key will likely be to expand beyond health and fitness and grow general use cases, since that will broaden the appeal beyond fitness enthusiasts. By definition, that will require Fitbit stepping out of its wheelhouse and comfort zone, given its history of focusing on health and fitness.

Mobile payments still have some potential to empower wearables, and Fitbit did also acquire the assets of another failed start-up earlier this year: mobile payments hopeful Coin. Much like with Pebble, Fitbit wasn't interested in Coin's existing products, but instead wanted some NFC technology that Coin was working on.

Whether or not the Pebble acquisition proves prescient depends on your view, though. If this is merely a speed bump on the path to a vibrant market, then Fitbit can take its time to reposition itself for the next wave. If the smartwatch continues to flounder and solidifies itself as a niche product category, Fitbit may just be wasting resources chasing a pipe dream. It's too early to call for sure, but I think the smartwatch market still has plenty of upside in the years ahead.

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Evan Niu, CFA has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Fitbit. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.