Fitbit has gobbled up another smartwatch startup, although not the entire thing. This time it’s Vector, which was founded less than a year ago. It seems investors aren’t very impressed with the move, as shares of Fitbit tumbled after the acquisition was revealed.
The news comes about a day after it was revealed that the company is planning to release its own app store.
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Fitbit acquires luxury smartwatch maker
Although the fitness wearable maker announced the acquisition, it did not disclose the financial terms of the deal. Vector Watch just started operating in Europe in March 2015, but it ramped up fast with 12 smartwatch models early on. Vector made a name for itself with the 30-day battery life of its watches.
The announcement said the deal covers “specific assets” of the European smartwatch maker but doesn’t include its hardware products. A key part of the acquisition is Vector’s software assets, according to the company’s announcement. After the deal closes, Fitbit will open a development center in Bucharest, Romania.
Vector said it will make the integration with Fitbit as “seamless as possible with no impact” on customers. The products will continue to work as usual, and the warranties will still be valid. The company won’t add any new software or hardware features to its watches after the deal closes, however.
It’s been less than 3 months since Fitbit made its last acquisition, which was Pebble. Like the deal with Vector Watch, the Pebble agreement also didn’t include the watch maker’s hardware products. Last year the company also acquired the mobile payments startup Coin, although it said at the time that it wouldn’t be integrating Coin’s wearable mobile payment technology into its products until this year or possibly later.
Fitbit also planning its own app store
Fitbit Chief Executive James Park said at the Consumer Electronics Show that they plan to watch a dedicated app store for the company’s wearables this year. Although he didn’t reveal many details, he did say that the app store would offer apps focused on health and wellness. The apps will target healthcare firms and businesses.
While Fitbit has focused on the fitness wearable space, it seems likely that the company will launch a full-fledged smartwatch at some point. The Pebble, Coin and now Vector Watch acquisitions all seem to support this, although the company hasn’t stated that it will indeed do so. An app store will be a necessity if it does expand beyond basic fitness wearables into the smartwatch market.
So far fitness wearables have been selling better than smartwatches because consumers don’t yet seem convinced that they need a smartwatch. The tides could be turning, however, as smartwatch sales soared during the holiday shopping quarter, and Fitbit will need to plan for the future if it’s going to stay afloat. Demand for wearables in general slowed down last year, causing Deutsche Bank analysts to slice their price target for the company’s stock in half.
Shares of Fitbit slumped by as much as 5.71% to $7.34 during regular trading hours on Tuesday. They seem destined for a new low as they approach their all-time low of $7.20 per share, which was set within the last 30 days.