Fitbit to cut $200M in jobs & expenses after encroaching Apple Watch sales cut into market...
Fitbit -- Apple's main competition in the wearables space -- announced a reorganization on Monday in the aftermath of a weak fourth quarter, that includes the layoff of 6 percent of its workforce.
The changes should reduce costs by about $200 million, but at the expense of 110 people who will lose their jobs, according to Engadget. The company sold 6.5 million units during the December quarter, generating $580 million in revenue -- it had however expected a figured between $725 million and $750 million, helping to bringing its annual growth down from a forecast 25 percent to just 17 percent.
CEO James Park blamed "softer-than-expected holiday demand for trackers in our most mature markets, especially during Black Friday," but did point to fast growth in some markets like the EMEA (Europe, Middle East, and Africa) region.
Fitbit has traditionally specialized in dedicated fitness trackers and dominated the wearables market, but previous reports indicated it lost some sales to the Apple Watch in the month running up to Cyber Monday. While more expensive and limited to iPhone owners, the Apple Watch is a multi-purpose device, and in its Series 2 incarnation is better suited for fitness applications than the original release thanks to waterproofing and built-in GPS.
To compete more directly, Fitbit recently bought out two smartwatch makers, Pebble and Vector, the latter headed by former Bulova, Citizen, and Timex executives. It has also picked up Coin, which could translate into an alternative to Apple Pay on future devices.
At CES, Park said that Fitbit is even working on its own app store, which while unlikely to challenge stores belonging to Apple or Google could possibly expand the usefulness of the company's products.
The changes should reduce costs by about $200 million, but at the expense of 110 people who will lose their jobs, according to Engadget. The company sold 6.5 million units during the December quarter, generating $580 million in revenue -- it had however expected a figured between $725 million and $750 million, helping to bringing its annual growth down from a forecast 25 percent to just 17 percent.
CEO James Park blamed "softer-than-expected holiday demand for trackers in our most mature markets, especially during Black Friday," but did point to fast growth in some markets like the EMEA (Europe, Middle East, and Africa) region.
Fitbit has traditionally specialized in dedicated fitness trackers and dominated the wearables market, but previous reports indicated it lost some sales to the Apple Watch in the month running up to Cyber Monday. While more expensive and limited to iPhone owners, the Apple Watch is a multi-purpose device, and in its Series 2 incarnation is better suited for fitness applications than the original release thanks to waterproofing and built-in GPS.
To compete more directly, Fitbit recently bought out two smartwatch makers, Pebble and Vector, the latter headed by former Bulova, Citizen, and Timex executives. It has also picked up Coin, which could translate into an alternative to Apple Pay on future devices.
At CES, Park said that Fitbit is even working on its own app store, which while unlikely to challenge stores belonging to Apple or Google could possibly expand the usefulness of the company's products.
Comments
One VERY nice thing about Fitbit's falter admission this close to Apple's earnings announcement is IDC and others will not be able to publish Pro-Fitbit reports hat disparage Apple Watch later today or tomorrow! 😘
However, to realize its potential Apple will need to simultaneously move several wearable product lines forward at once. It can't be just Watch. It needs to be Watch plus AirPods plus maybe a half dozen other things. Apple has to figure out how to do that.
I believe every company should have its own philosophy on serving consumers. Why Apple is being criticized for that, I have no idea. There's a lot I don't understand about Apple but their products do last a long time and to me that's worth paying extra for. What is so much fun about trashing any company trying to give consumers decent products? Don't these dumbasses have any common sense at all. There are consumers who want Fitbits and there are consumers who want AppleWatches. Why does there always have to be this crazy competition to wipe out one or the other?
Agree. Some other wearables category may come up, but I can't think of one right now. Apple Watch provides the screen for UI & likely most health/fitness functions. AirPods provide the audio input/output, which leaves a requirement (of some kind) for vision.
I am continuing to see more & more Apple Watches in the wild. Sometimes it is someone who said they wanted one and finally got it for Christmas or birthday, or some cases it is a spouse who received one and thought they would hate it, but now they never take it off. This is going to be a much slower growth than iPhone, but wearables will be the next largest consumer electronics market by value (ahead of home automation including digital assistants for home, dedicated VR,...).
No, the new narrative is that Apple is doomed by being behind in home voice assistants vs. Alexa and Google Home. Oh and Microsoft makes better computing hardware.
Did I read that right Apple is causing fitbit pains, but, but, but... IDC said fitbit is the king of the Hill, when you're on top of the pile looking down on all those who you conquered on the way up should not be cutting costs and putting people out of jobs. This make no sense, IDC and others said market share and selling the more widgets makes you the most successful company around.
I feel bad for the people at a company like this, you know they people running was hyping them all up and said how great they were in reality they knew what was coming and I bet the upper management got their money and built big homes and are moving on like did nothing wrong. You do not go out and by a competitor when your own future is at risk, Oh I forgot when grow is slowing go and buy the competitor to grow you market share, Yeah another great Wall Street Tactic. Chalk up and another company who Wall Street screwed over so they can make money hyping the stock going up and shorting it on the way back down.
I wish Siri would get better because it's the preferred method of interacting with the watch .
The watch will be big when stand alone apps that customers pay for in the apps store become popular. The watch will be an app platform like the phone,iPad, and tv.
Once a cell watch is released, I would like Apple to do a high end consumer camera running iOS.