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Pebble: The First Victim of Apple Inc.’s (AAPL) Apple Watch

With AAPL preparing its next Apple Watch and cutting prices, Pebble is laying is at risk of being left in the dust

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Apple Inc.’s (AAPL) Apple Watch is a success or a failure depending on who you ask. But regardless of what analysts think about the its impact on AAPL’s bottom line, for competitors in the wearable business, it is a huge threat.

Smartwatch pioneer Pebble is one of several watchmakers feeling the pressure, and with past difficulties raising capital and the recent layoff of 25% of its staff, it is in real danger of being the device’s first high-profile victim.

Apple has a history of coming into new (for it) markets, crushing any existing players and then dominating.

With the iPod, AAPL effectively killed Sony Corp (ADR)‘s (SNE) Walkman, which was the de facto personal portable music player for several decades. It also steamrolled the MP3 players many electronics manufacturers had been introducing to take advantage of digital music files.

When it released the iPhone in 2007, AAPL disrupted a very established mobile phone industry and all but eradicated smartphone pioneer BlackBerry Ltd (BBRY).

With the Apple Watch, Pebble finds itself in a familiar and unenviable position.

To call the battle between Pebble and Apple a David and Goliath story is almost underplaying the severity of the mismatch.

Pebble did extremely well in helping to launch the current mass-market smartwatch industry. It was a startup trying to succeed in a product category that had existed on the periphery for many years, but had never taken off with consumers.

Using crowdfunding site Kickstarter, the Pebble smartwatch smashed records by collecting over $10 million in 2012. Several generations of Pebble smartwatches upped its profile and by the end of 2014, sales of Pebble smartwatches had surpassed 1 million.

That doesn’t sound like much, but considering only 6.8 million of the devices sold worldwide that year, Pebble had a pretty decent chunk of the pie.

But in 2015, things got real.

Will Apple Watch Put Pebble on Its Death Bed?

AAPL released the Apple Watch that spring and it quickly dominated the sales charts. Pebble was working on its next generation Pebble Time — an updated smartwatch with a color display and new UI — to take on the Apple threat, raising over $20 million on Kickstarter. However, Apple had been developing the Apple Watch for several years and had hundreds of engineers on the project. Before the Apple Watch had even hit store shelves, Apple had spent $38 million marketing its new smartwatch.

The results were predictable and even if Apple didn’t sell as many units as many analysts had predicted (and AAPL investors had hoped), 2015 was still a rout. The Apple Watch is estimated to have taken two thirds of smartwatch sales for the year.

For Pebble, which was not only facing the Apple Watch threat, but having to deal with a slew of other competitors running the Android Wear operating system from Alphabet Inc’s (GOOGGOOGL) Google, the impact was immediate. TechCrunch and other outlets began reporting about funding issues and rumors of loans being used to keep the company afloat.

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Article printed from InvestorPlace Media,

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