Vector Watch, a Romanian startup building smart watches, has recently been acquihired by FitBit. The news is quite old by now, and all that could have been said about it has been said already. But that’s not a valid reason to not write this blog post.

Needless to say, the exit wasn’t that great. But it’s still an impressive feat. Building hardware is, in general, a hard thing to do. Building consumer hardware is harder still. Building it in Romania is asking for trouble[1]. For reference, there’s a single other company in Romania building consumer phones, though they seem to be doing alright.

What’s interesting though, is that no other company is doing that great. In fact, the market is said to have declined by 51.6% in the third quarter of 2016. That’s not good news. But it’s not dire news either. At least not for the companies which can tough it out for a while. That means the likes of Apple, Samsung, Sony etc. but not independent producers, such as Pebble (acquired by Fibit), Garmin, or even smart offerings from traditional watch manufacturers[2].

The reason that it’s not dire news is that we’re still early in the game. The iPhone of smart watches hasn’t been invented yet. And there’s no rule that says the current players will be the ones who deliver it. But there’s a lot of potential in the market, especially in healthcare and payments.

I also feel like the product category itself has been unfairly set up against smartphones/phones. That’s just an incredible computational sweet spot to beat. And it’s going to take other large advances in technology to beat it. And whatever beats it will probably do the same to smartwatches, VR and a host of other “ancilliary” tech.

It’ll be interesting to see how the “killer version” looks like. Will it be brought upon by advances in technology? Or by building it in a way in which the current players haven’t thought of?

[1] Granted, this last part isn’t 100% true. The design is done in Romania. The building is done, as with all these things, in China.

[2] There’s a huge step between manufacture of mechanical and elctronical devices. It’s not a reasonable asumption to expect this transition to go smoothly. One can argue that the markets are actually quite different, esecially at the high end. Somebody interested in a Patek Philippe isn’t a potential client for a smartwatch. But they still can wear a single watch at a time. If the industry manages to produce something truly compelling, then that’s bad news for watch manufacturers, regardless of price tag.