Fossil Group buys wearable tech start up Misfit

Designer watch maker the Fossil Group is to buy wearable tech maker Misfit for $260 million to acquire its cloud platforms, application portfolio and engineering team.

The Fossil Group already owns and licenses a range of 16 fashion brands including Fossil, Skagen, Michael Kors, Diesel and DKNY. Fossil sells 50 million watches and accessories each year in 150 countries.

The acquisition of the wearable tech brand gives the Texas based Fossil Group a ‘fashion gateway’ to the fast growing connected device markets, according to CEO Kosta Kartsotis. In a statement, Kartsotis said Misfit’s technology platform has already solved many of the hardest problems in wearables, such as battery life.

Sonny Vu, chief executive and co-founder of Misfit will become president and chief technology officer of connected devices for Fossil Group.

California based wearable tech maker Misfit launched in 2011, raised $63 million in venture capital

and employs  220 staff in the US and China.

The crowded wearable devices category is poised for consolidation, according to Jenny Lee, a managing partner at GGV Capital, one of the original investors in the wearable tech start up. Intense competition has made it harder for stand-alone fitness tracking startups to survive. Lee predicted the market will evolve to create more wearable devices specialised for particular tasks. Meanwhile, the Apple Watch, at the high end of the market and manufacturers of cheap variants such as Xiaomi have made the sleep and fitness-monitoring business a tougher competition to enter for a less well known brand.

“It isn’t about function, it’s about function and design and branding,” said Fossil Group’s Greg McKelvey chief strategy officer. The attraction of Misfit’s product range is that they look like traditional watches, rather than fitness trackers, but their battery life innovations make them a technology leader.

Misfit’s range includes Shine, a fashionable fitness and sleep monitor. It was involved in partnerships with brands such as Speedo and Swarovski. “Those products did great and gave us the taste. Brands really do matter,” said Misfit’s founder Vu. The problem was that each of these deals involved ‘quite a bit of work’ he said.

Misfit was founded in 2011 by Sonny Vu with John Sculley, the former CEO of Apple and Pepsi, and Sridhar Iyengar, co-founder and former CTO of AgaMatrix.

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