MisfitWearables.com appears on the internet for the first time around mid-2012, promising, “We are developing highly wearable sensor products and services for wellness and medical applications” (Source). An attempt to find the website today comes back with a different story, “www.misfitwearables.com’s server IP address could not be found.” What happened?
In a wearables market that some, like Anshel Sag writing for Forbes, say is “very broad and saturated at nearly every end of the spectrum,” what could the disappearance of Misfitwearables.com mean? We took some time to follow the company’s history to find out what happened to Misfitwearables.com and what we can learn from it about the smartwatch market in general.
We have selected Misfit Wearables because of the promise made by one of the founders of the company, Sonny Vu. He says, “The first objective was to make a wearable device – not a tracking device that people wear” (Source). What this statement does is to admit that companies have often struggled to create practical wearables that seamlessly fit into items that people wear every day, such as a watch.
Honoring Steve Jobs
Misfit Wearables describes its core business as “developing great wearable products: things that people would want to wear all the time for a long time.” It calls itself “a pioneer in the emerging world of wearable sensor technology” (Source).
Another exciting thing about Misfit is the origin of its name. According to Vu, when he joined Sridhar Iyengar and John Sculley to establish Misfit, they decided on the name because the day they incorporated the company was the same day that the former Apple CEO, Steve Jobs, died. In honor of Job’s statement, “Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently…” the founders agreed on the name Misfit (Source).
The History of Misfit Wearables
Misfit Wearables was established on October 5, 2011 (Source). Three years after the company was established, the research portal, CBInsights.com, listed it seventh among the “Most Well-Funded Companies” in a top ten list. Its competitor Fitbit was in the second position.
Introducing Misfit Shine
Writing about one of the most popular products made by Misfit in an article for the British newspaper, the Guardian, Samuel Gibbs calls the Misfit Shine a “small and perfectly formed” product (Source). It hit the market in December 2013.
Describing the product, Gibbs seems to run out of superlatives, calling it an “attractive all-metal fitness tracker that is easy to live with and effortlessly does what it needs to do” (Source). One of the features that made the Shine seem to run ahead of the competition was that it is waterproof. Its battery lasted between three and four months between charges (Source).
The Swarovski Shine Collection
In 2015, Misfit Wearables teamed up with the jewelry maker, Swarovski, to introduce the Swarovski Shine Collection. In an article published on the tech news website Techcrunch.com, Sarah Perez calls the Swarovski Shine Collection “a new product line focused on bringing a more fashion-forward sense to its wearables collection” (Source).
Through collaboration with Swarovski, Misfit introduced other accessories, like bands, pendants, and bracelets. An analysis of these products shows that Misfit was conscious of the challenge presented by making wearables that integrate with everyday fashion.
The Funding
If the reviewers like Gibbs were raving about the Misfit products, they don’t seem to have been the only ones impressed. Funders also lined up to invest in the company. Before raising $15.2 million in 2013, Misfit Wearables had raised $7.6 million in a round of funding in 2012. This round was co-led by Brian Singerman of the Founders Fund (Source).
Another major funder preferred to remain anonymous. However, TechCrunch reports that the grapevine was pointing at the American venture capital firm, Khosla Ventures (Source).
Crowdfunding seemed to be an integral part of the Misfit Wearables’ journey. In an interview at Seattle Pacific University in 2014, Vu revealed that the company spent $20,000 on their pitch video for Indiegogo (an American crowdfunding website) (Source). Misfit raised $846,000 from the initiative (Source). Vu calls the initial investment of $20,000 “some of the best money they ever spent” (Source).
The Fossil Group Acquires Misfit
In November 2015, reports indicated that the American watchmaker, the Fossil Group Inc., had agreed to purchase Misfit for $260 million. Writing about the deal in an article published by the technology news website, TheVerge.com, Micah Singleton calls this a deal where “watchmakers and wearables unite” (Source).
In a press release announcing the acquisition, the Fossil Group said that “the acquisition will enable the Fossil Group to expand its addressable market offering.” The company adds, “Misfit brings to the Fossil Group a scalable cloud and app platform, a world-class software and hardware engineering team, a native wearable technology brand, and a pipeline of innovative products” (Source).
It doesn’t look like Misfit would be a misfit at the Fossil Group if one considers its earlier statement that its objective was “to make a wearable device – not a tracking device that people wear.” Misfit was now bringing its technology to a company with experience in what people would want to wear.
The Lessons
It’s clear that MisfitWearables.com has had an exciting history, but what lessons can we learn from this history about the smartwatch market’s future? Mostly, the telling signs about the industry’s future are how traditional watch markers, like the Fossil Group, are lining up to enter the space. Also, when you look at the faith that funders seem to have in the area, it’s clear that they see a bright future.
Attracting Investment
One thing that Misfit seemed to attract with ease was funding. For instance, earlier in this article, we refer to an investment of $20,000, which brought in over $800,000. This funding came from “almost 8,000 people from 64 countries and all 50 states” (Source).
In three rounds of funding between 2012 and 2014, Misfit Wearables raised over $63 million (Source). The most significant funding came in the Series C round, where the company raised $40 million. This round was led by GGV Capital and included Xiaomi, JD.com, Shunwei, and some already existing investors (Source). It was the company’s final seed round before being acquired by the Fossil Group in 2015 (Source).
Investors seem to have faith in the wearable technology industry in general. Between 2009 and 2014, over $1.4 billion was invested in wearables technology, setting an annual record (Source). In 2013, deals in the wearables technology space went up by 135%. The Apple Watch’s introduction into the market in 2014 saw the industry cross the billion-dollar mark in investments for the first time (Source).
The potential for wearable tech companies to continue attracting investment seems to extend into the future. In a 2019 article, The Economic Times reported that the wearable tech industry was worth nearly $23 billion in 2018. The industry is predicted to grow at a compound annual growth rate of 19%, taking its worth up to $54 billion by 2023 (Source).
The Apprehension among Mechanical Watch Makers
The acquisition of Misfit by the Fossil Group could be read as an indication that the makers of mechanical watches realize the threat that smartwatches pose to their business models. This is a reality that Fossil seems to be aware of in the statement indicating the Misfit would help it “expand its addressable market with new distribution channels, new products, new brands, and new enterprise partnerships, including music, fitness, healthcare, and digital entities” (Source).
From the wearables industry in general, it does look like the entry of Apple raised the heat. In September 2014, Apple announced that it would be entering the smartwatch market with its Apple Watch release the following year (Source). Apple followed up this announcement with the Apple ‘Series 0’ Watch (as dubbed by some) in April 2015 (Source).
Seven months after the first Apple Watch release, the Fossil Group acquired Misfit Wearables (Source). In a market that now had Apple as a significant competitor, some saw this acquisition as an attempt by Fossil to “gain significant market share in the wearables space” by taking advantage of the experience and expertise accumulated by Misfit (Source).
Back to the Traditional
Could the success by companies like Misfit be an indication that the traditional watches are seeing their last days? It doesn’t look like that is the case. For instance, the market research solutions provider, Euromonitor International‘s 2018 report entitled The Interplay Between Smart and Traditional Watches has some interesting views. It reports that “the recovery of traditional watches, and the slowdown of wearable electronics, clearly indicates the two categories tap into different consumer groups and can easily co-exist.”
Despite enjoying some success, the wearables industry still faces many challenges. Some of these include “design limitations, short battery life, no killer apps, low to no interest in apps other than fitness and medical, competition from fitness trackers, and more.” (Source).
According to Vu, one of the problems is that “Wearable stuff is not very wearable.” (Source). He tagged the term a “misnomer,” adding that, “None of it seems very polished” (Source).
Vu addressed this problem with the Misfit Vapor. Under the Fossil Group, Misfit released its first touchscreen smartwatch called the Misfit Vapor in 2017 (Source). The Vapor was a more traditional-looking smartwatch. Fossil built on it in 2019 with the Misfit Vapor X. DigitalTrends.com, a tech website, described it as having “an unfussy, good-looking design [that] hides a high-performance smartwatch that’s incredibly easy to live with” (Source).
Fossil’s efforts to create a traditional watch that comes with technology seem to match their style of always looking for ways to make wearables wearable. It’s a realization that the traditional watch is not going anywhere. Thus, the best thing is to combine the traditional and the smart to attract both the lovers of traditional watches and those that prefer something smarter.
Think What People Actually Want
Analyzing the work done by Misfit shows the importance of not only concentrating on technology but ensuring that the technology is contained in something that people would actually want to wear. This can be seen in the introduction of the Swarovski Shine Collection.
In 1982, the Japanese watchmaker, Seiko, launched its TV watch. It was the first watch to have a built-in television (Source). Writing for Bloomberg, Joe Thompson says that when he first saw the Seiko TV Watch, he asked, “Does anybody really want this contraption?” (Source).
Seiko designed its TV watch to be “connected by a plug on top and a wire that ran to a TV/radio receiver the size of a Walkman that you carried in a pocket. Also wired to the receiver were headphones that you wore to hear the broadcasts” (Source). This device was not what people would want to wear, possibly why it’s not around today.
Other companies have also tried bold initiatives with the smartwatch. For instance, Samsung Electronics launched the world’s first watch phone in 1999 (Source). In 2003, Japan’s NTT DoCoMo Wristomo phone watch was introduced to the world. These ideas do not seem to have impressed many, showing that all that people really wanted was a watch (Source).
Misfit seems to have learned from the mistakes of its predecessors with the Misfit Shine. Teaming up with a jewelry maker, Misfit came up with a wearable device that people actually wanted to wear. It was a device that brought “a more fashion-forward sense to [Misfit’s] wearables collection” (Source).
The Going is Tough
Even though Misfit seems to have succeeded, what is clear is that the smartwatch market is not for the faint-hearted. This is made clear by some players who have come and gone.
The harsh terrain is something that people like Shakil Barkat, head of global product development at Lenovo Motorola, an American consumer electronics and telecommunications company, are conscious of. After playing around with a smartwatch idea, Barkat admitted that “Wearables do not have a broad enough appeal for us to continue to build on it year after year” (Source).
Possibly realizing that smartwatches are the future, Motorola attempted to bring back the idea in 2019 with the Moto 360 smartwatch. This device was released by a company called eBuyNow, which had acquired the license to use the Moto brand (Source).
The smartwatch industry has also seen heavy competition that pushed some players out of the market. Pebble, a start-up smartwatch company, exited the market in December 2016. It was sold to Fitbit for $23 million (Source). Founder, Eric Migicovsky, was forced to sell the company after its revenue took a hit due to Apple entering the market in 2015 (Source).
Another casualty of Apple’s entry in smartwatch-making was the buyer of Misfit, Fossil. When Apple entered the smartwatch market, Fossil’s share price saw a dramatic decline (Source).
Wearable Technology can be Affordable
In early August 2020, Misfit started a sale that saw the company slash up to 85% off its prices. Most notable was the Misfit Vapor X, which sold for $39.99 from its regular $280 price (Source). The OG Vapor and Vapor 2 were made available at $30 each (Source). However, this could have been a one-off thing used by the company to gain market share.
The sale was the second one kicked off by Misfit in just over two months (Source). This may be an indication that smartwatches can be affordable gadgets, after all. It looks like this sale had products flying off the shelves. A visit to Misfit.com at the end of August 2020 displays the message, “We’re almost completely sold out of watches. We’ll let you know when we get more in stock.”
What Then Happened to MisfitWearables.com?
Sometime in November 2014, MisfitWearables.com started redirecting to Misfit.com. The company doesn’t make any announcements regarding this change. However, it does look like Misfit.com is much easier to remember than MisfitWearables.com. So, we can only speculate that this could be why the company settled for a shorter name.