Does the Pebble Cause a Ripple In Apple’s Waters?

Ever since the Pebble watch became an cause célèbre in tech circles for its kickass Kickstarter moves (it’s raised almost $7mm dollars and counting), something’s been nagging me about the company and its product.

It’s now Valley legend that the company had to turn to Kickstarter to get its working capital – more than 46,000 folks have backed Pebble, and will soon be proudly sporting their spiffy new iPhone-powered watches as a result. Clearly Pebble has won – both financially, as well as in the court of public opinion. I spoke to one early investor (through Y-Combinator) who had nothing but good things to say about the company and its founders.

But why, I wondered, were mainstream VCs not backing Pebble once it became clear the company was on a path to success?

The reasons I read in press coverage – that VCs tend to not like untested hardware/platform plays, that retail products have low margins, etc., all sounded reasonable, but not enough. In this environment, there had to be more going on.

Now, I don’t know enough to claim this as anything more than a theory, but it’s a Friday, so allow me to speculate: Perhaps one reason VCs don’t want to invest in Pebble is because they fear Apple.

Here’s why. If you watch the video explaining Pebble, it become pretty clear that the watch is, in essence, a new form factor for the iPhone. It’s smaller, it’s more use-case defined, but that’s what it is: A smaller mirror of your iPhone, strapped to you wrist. Pebble uses bluetooth connectivity to access the iPhone’s native capabilities, and then displays data, apps, and services on its high-resolution e-paper screen. It even has its own “app store” and (upcoming) SDK/API  so people can write native apps to the device.

In short, Pebble is an iPhone for your wrist. And Apple doesn’t own it.

If we’ve learned anything about Apple over the years, it’s that Apple is driven by its hardware business. It makes its profits by selling hardware – and it’s built a beautiful closed software ecosystem to insure those hardware sales. Pebble forces an interesting question: Does Apple care about new form factors for hardware? Or is it content to build out just the “core” hardware platform, and allow anyone to innovate in new hardware instances? Would Apple be cool with someone building, say, a larger form factor of the iPhone, perhaps tablet-sized, driven by your iPhone?

I don’t know the answer to that question (and doubt Apple would answer my call asking such a question), so I’ll toss it out to you. What do you all think? Is Pebble playing with fire here? Would Apple ever change its developer terms of services to cut the new company off?