Smartwatch Company Raises $8 Million on Kickstarter, Challenges Apple

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Perhaps it is the anticipation for Apple Inc.’s (NASDAQ: AAPL) smartwatch and competing products from large consumer electronics companies, or a general fascination with wearable devices. A tiny smartwatch company has raised over $8 million, and the firm, Pebble Technology, will allow people to invest more money via Kickstarter for another 30 days. Can a tiny company really build a competitive product?

So far, Pebble Technology has raised $8,391,698. The number of investors who have put money in for its Pebble Time smartwatch has reached 39,419. These projects have a way of gaining momentum. Investors with interest in small companies and the press become infatuated with a project that has become popular, particularly in an industry that presumably has a bright future. Analysts believe Apple may be preparing to build 10,000 of its new wearable devices. Pebble Technology has fed off that frenzy.

What will $8 million buy Pebble? In the first place, the product will be available for investment for another month — “30 days to go” in Kickstarter’s language. The Pebble investment figure could balloon into the tens of millions of dollars at the current rate of participation.

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The risk of Pebble having a successful launch is considerable. Mostly that is because of competition from much larger companies. Another primary reason is that Pebble may have designed the Pebble Time product along lines that do not attract consumers. It currently promotes the timepiece as an “Awesome Smartwatch, No Compromises” and Pebble lists the major “highlights”:

  • We’re announcing a new watch called Pebble Time with a new timeline interface.
  • Pebble Time features a new color e-paper display and microphone for responding to notifications.
  • No compromises on what you love about Pebble: up to 7 days of battery life, water resistance and customizability.
  • Pebble Time is fully compatible with all 6,500+ existing Pebble apps and watchfaces.
  • Three colors available exclusively on Kickstarter. Pebble Time starts shipping in May.
  • Extra special engraving for our original Kickstarter backers who support us again.

However, Pebble has to compromise. Even if it raises several tens of millions of dollars, its management has no choice other than to pick some features over others, and it will not have the money to build a product based on years of expensive research and development. For companies like Samsung, that is not at the core of the challenge. Creating a product that will catch the eye and dollars of consumers is. And, Samsung has hundreds of millions of dollars to invest in product development and manufacturing, as well as hundreds of millions more for marketing.

“No compromises” may be Pebble’s aim, but even the biggest consumer electronics companies have to make decisions, which means some level of compromise is inevitable.

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