Fossil spends $260M on wearables startup Misfit to bolster smartwatch lineup

Posted:
in General Discussion edited November 2015
In a bid to address the growing smartwatch market, established consumer wristwatch maker Fossil on Thursday announced an agreement to acquire wearables firm Misfit for $260 million.




The purchase will let Fossil leapfrog costly R&D cycles and accelerate development of products meant to compete with the likes of Apple Watch. The watchmaker just recently dipped its toe into the wearables pool with Q, a line of traditional watches with embedded activity trackers and smartphone connectivity. Fossil also markets dedicated bracelet style fitness monitors under the Q flag.

Misfit, co-founded by Apple CEO John Sculley, grants Fossil access to a scalable cloud and app platform, as well as the firm's team of seasoned hardware and software engineers. Fossil is essentially buying a made-to-order wearable technology platform. As of today, Misfit has more than two years of wearables market experience under its belt, competing with sector leaders Fitbit and Jawbone.

"We are thrilled to join forces with Fossil Group to usher in the next era of wearables where elegance, beauty and long-lasting wearability are paramount," said Misfit founder and CEO Sonny Vu. "Together, we will introduce products that blend Misfit's seamless, intuitive technology and user experience with the design, style and branding that is the hallmark of Fossil Group."

Fossil says it plans to introduce Misfit's tech into 16 of its brands, including Fossil and Skagen watches, over the course of 2016. The company is not only looking to field new products, but is also considering new brands and enterprise partnerships in the music, fitness, healthcare and technology industries.

It appears that Fossil intends to completely assimilate Misfit, as Vu will become president and CTO of connected devices for Fossil Group, Inc. as part of the deal. The $260 million acquisition is set to close before the end of 2015, subject to closing conditions and regulatory approval.
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Comments

  • Reply 1 of 21
    I see fear in their eyes.
  • Reply 2 of 21
    mac_128mac_128 Posts: 3,133member
    Quote:
    Originally Posted by john12345 View Post



    I see fear in their eyes.



    Better than burying their heads in the sand like Blackberry.

     

    Besides, this isn't Fossil's first time at bat with the smartwatch. 

     



    And why does it have to be fear? Couldn't they also see that some of their customers might prefer to wear a smart watch and they simply want to offer one?

     

    I think people on this forum are too quick to underestimate the Swiss watchmakers. If they hire the right software developers, they already equal or surpass Apple's build and design quality. I personally don't see any of them surpassing Apple on the software side especially, since any third party will have limited interface with Apple products, but that aside, I don't see why it can't be an equitable product.

  • Reply 3 of 21
    Quote:

    Originally Posted by Mac_128 View Post

     



    Better than burying their heads in the sand like Blackberry.

     

    Besides, this isn't Fossil's first time at bat with the smartwatch. 

     



    And why does it have to be fear? Couldn't they also see that some of their customers might prefer to wear a smart watch and they simply want to offer one?

     

    I think people on this forum are too quick to underestimate the Swiss watchmakers. If they hire the right software developers, they already equal or surpass Apple's build and design quality. I personally don't see any of them surpassing Apple on the software side especially, since any third party will have limited interface with Apple products, but that aside, I don't see why it can't be an equitable product.




    If you think they didn't do this purely due to threat from the Apple watch, then I have nothing more to say to you.

  • Reply 4 of 21
    mac_128mac_128 Posts: 3,133member
    Quote:

    Originally Posted by john12345 View Post

     



    If you think they didn't do this purely due to threat from the Apple watch, then I have nothing more to say to you.




    I don't agree this is purely a reaction to Apple. I do agree that Apple is definitely a motivating factor. My point is, that Fossil was exploring smartwatches a decade before Apple even dreamed about getting into the wearable category. So to assume they are purely motivated to copy Apple out of fear that Apple is going to put them out of business with one unproven smartwatch isn't entirely realistic either, and a bit of hyperbole.

  • Reply 5 of 21
    I more interested in learning why Sculley chose to sell the company instead of using his CEO skills to make a truly competitive product against Apple and the others (Isn't funny that competing with Samsung or any other Android Wear manufacturer is mentioned in press releases?). I am guessing with the failure of that opportunistic "Steve Jobs" movie, in which many, many people realized Sculley attempted to rewrite history, the man chose to get out of the embarrassing spotlight.
  • Reply 6 of 21
    Quote:

    Originally Posted by john12345 View Post

     



    If you think they didn't do this purely due to threat from the Apple watch, then I have nothing more to say to you.


     

    Would it not more be a reaction to the downward trend in wristwatch sales since the mid-90's, and the fact wristwatch makers have needed to do something about their profit lines since before the smartphone, let alone smartwatch, existed?

  • Reply 7 of 21
    chadbagchadbag Posts: 1,059member
    Quote:

    Originally Posted by leavingthebigG View Post



    I more interested in learning why Sculley chose to sell the company instead of using his CEO skills to make a truly competitive product against Apple and the others (Isn't funny that competing with Samsung or any other Android Wear manufacturer is mentioned in press releases?). I am guessing with the failure of that opportunistic "Steve Jobs" movie, in which many, many people realized Sculley attempted to rewrite history, the man chose to get out of the embarrassing spotlight.



    Someone comes waving a ton of money at you, you might make different decisions.

  • Reply 8 of 21
    Quote:

    Originally Posted by john12345 View Post



    I see fear in their eyes.

     

    Out of curiosity: When Apple buys a company to integrate its tech (it does this ALL the time) do you see fear in their eyes?

  • Reply 9 of 21
    Good luck trying to compete with Apple by grafting non-native technologies onto what has been a fashion accessory with off-the-shelf innards. I can see the flop-sweat on their brow
  • Reply 10 of 21
    radarthekatradarthekat Posts: 2,528moderator
    FOSL's earnings report tonight, and the stock's reaction, tells the tale perfectly. The company management is heavy in reaction mode to a landscape that is shifting under their very feet.

    FOSL, down 2% on the lousy market day, but down another 14.5% in the aftermarket on earnings, even when offset by this acquisition news. Any questions?
  • Reply 11 of 21
    Typo alert: "...[B]former[/B] Apple CEO John Sculley."

    Just in case there's a reader who has been in a coma since the early 90's...
  • Reply 12 of 21
    Yes, the retailers are in big trouble. Considering Macy's was also down big time Wednesday. Not just because of Apple, but any watch in the range of $300 to $1500 are in life support mode. For the past two weeks every time I visited Apple Store several times and a strange phenomenon I noticed is there were people buying Apple Watch and trying Apple Watch. I don't remember I have seen that say 3 month ago. Speaking for myself, I now use the routine suggested by _ Dave Smith to try wear my Apple Watch almost 24x7 and a very satisfied user. Looking forward for the next version.
  • Reply 13 of 21
    dasanman69dasanman69 Posts: 12,957member
    mubaili wrote: »
    Yes, the retailers are in big trouble. Considering Macy's was also down big time Wednesday. Not just because of Apple, but any watch in the range of $300 to $1500 are in life support mode. For the past two weeks every time I visited Apple Store several times and a strange phenomenon I noticed is there were people buying Apple Watch and trying Apple Watch. I don't remember I have seen that say 3 month ago. Speaking for myself, I now use the routine suggested by _ Dave Smith to try wear my Apple Watch almost 24x7 and a very satisfied user. Looking forward for the next version.

    So now the Apple Watch is going to be the demise of major retailers? Anything else?
  • Reply 14 of 21
    Quote:

    Originally Posted by RadarTheKat View Post



    FOSL's earnings report tonight, and the stock's reaction, tells the tale perfectly. The company management is heavy in reaction mode to a landscape that is shifting under their very feet.



    FOSL, down 2% on the lousy market day, but down another 14.5% in the aftermarket on earnings, even when offset by this acquisition news. Any questions?



    Make that 30% down today.  Ouch.  These mid range watches are going to suffer the most from the Apple watch.

  • Reply 15 of 21
    radarthekatradarthekat Posts: 2,528moderator
    john12345 wrote: »

    Make that 30% down today.  Ouch.  These mid range watches are going to suffer the most from the Apple watch.

    Yup, but not necessarily from direct competition from the Apple Watch. I believe this fallout has come about due to something I wrote about months ago here; the expectation of what a wrist wearable should be, and the functionality it offers, is shifting. Apple, as usual, didn't kick off the paridigm shift, but was the agent that solidified it in consumer's minds with its entry into the Smartwatch segment. Apple as kingmaker, and now smart wearable is the new king.
  • Reply 16 of 21
    foggyhillfoggyhill Posts: 4,735member
    Quote:

    Originally Posted by designr View Post

     

     

    Out of curiosity: When Apple buys a company to integrate its tech (it does this ALL the time) do you see fear in their eyes?


     

    If Apple had to buy Microsoft or Intel just to survive in their core market I'd say yes...

    Which is about the size of purchases they'd have to do to be comparable....

     

    Your whole comment is absurd. All but the Beat purchases are ridiculously small compared to the size of Apple

    Even for beat, it was for a adjunct business, not a core one..

  • Reply 17 of 21
    Quote:

    Originally Posted by foggyhill View Post

     

    If Apple had to buy Microsoft or Intel just to survive in their core market I'd say yes...

    Which is about the size of purchases they'd have to do to be comparable....

     

    Your whole comment is absurd. All but the Beat purchases are ridiculously small compared to the size of Apple

    Even for beat, it was for a adjunct business, not a core one..


     

    Given the principle and purpose of the transaction I submit that the relative size is not particularly relevant. Either way I hardly think it makes my comment absurd.

  • Reply 18 of 21
    john12345 wrote: »

    Make that 30% down today.  Ouch.  These mid range watches are going to suffer the most from the Apple watch.

    Actually, down 36.5%...that's severe.

    Also, AAPL is back to $110 territory, which blows.
  • Reply 19 of 21
    jessijessi Posts: 302member
    Someone should inform Apple Inside that John Scully is no longer CEO of Apple.
  • Reply 20 of 21
    Quote:

    Originally Posted by designr View Post

     

     

    Given the principle and purpose of the transaction I submit that the relative size is not particularly relevant. Either way I hardly think it makes my comment absurd.


     

    You can submit all you want, it makes a huge difference. I was also talking about the importance of what they bought in what they're doing.

    It's like the difference between buying an engine maker versus someone who makes you car stereo sounds nicer...

     

    The last time Apple bought something important to its future was 6 years ago when they bought the chip design team that eventually led to the A7 design and all their current designs. And even that is not entirely comparable, since buying that just made them even more competitive instead of keeping them in business (but, it's still the closest I can find).

     

    99% of what they buy is in no way important both in size and in tech to their survival.

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