Fitbit Inc (NYSE:FIT) of San Francisco, California has decided to acquire the European luxury smartwatch maker Vector in an effort to beef up their presence in this sector, though, their investors are not quite happy with the purchase decision.
Vector issued a blog post saying, “Today, we are happy to announce that the Vector Watch team and our software platform are joining Fitbit, the leader in the connected health and fitness market. This is an important milestone as a moment when we will start building other new and amazing products, features and experiences.”
Fitbit hasn’t elaborated on their plans for this new acquisition, however, it seems like they are planning to come out with a new smartwatch of their own. Released last year, Fitbit Blaze was their first smartwatch that can track heart rate and other important data automatically. This was, however, no competition to the wide ecosystem of apps such as the one of Apple.
Fitbit Might Be Able to Compete Better With Other Smartwatch Makers
Fitbit may now use Vector’s proprietary operating system to come out with the next-gen smartwatch, which will help them compete better with the Apple Watch. They will be able to launch their own app store a lot more quickly. After the acquisition of Pebble in November 2016, and now Vector, it looks a lot more likely that Fitbit can take on Apple (NASDAQ:AAPL) and the other smartwatch makers.
The Investors Are Unsure of Fitbit’s Decision
The investors are peeved, though. They are concerned that the business is getting into a category where the demand so far has been lackluster. In fact, the demand was weak even in the holiday season. So the category is definitely struggling.
Only last month, growth forecast of the wearable device market was lowered to 24.7 percent from a high of 60 percent by the research firm eMarketer. They are now saying that 39.5 million adults in the United States are likely to use these wearable devices at least once in the month, against an earlier prediction of 63.7 million.
The penetration rate of these gadgets is likely to grow by 21.1 percent by 2020, and reach just 15.8 percent of the population.
Fitbit (NYSE:FIT) has also experienced slow sales growth. But the business is not taking any of the warning signals. They instead have their focus set on moving up-market, in the hope that better products will bring back the sales.