Fitbit's new financial worries are just its latest in a long line

Posted:
in General Discussion
For a company that's a household name and is producing a hugely successful product, Fitbit has a remarkable history of lurching from crisis to crisis.

Fitbit produces many, ever more sleek fitness devices
Fitbit produces many, ever more sleek fitness devices


It's a device you wear on your wrist and which gathers data to help you have a fitter, more active life. There have been different models, constantly revised and updated, and there have been security issues about what data the devices are overhearing.

But enough about Apple Watch, let's just examine what's happening with Fitbit.

The parallels with the market for Apple Watch, and the parallels with how the two companies are treated and traded, are remarkable.

Apple Watch is a smartwatch that, increasingly, includes health features. Fitbit is a range of devices, including smartwatches like the newest Versa Lite, that have traditionally concentrated on health and fitness.

Right now, Fitbit's shares have dropped considerably, following its financial earnings call for the quarter. Alongside many positive points, the company admitted to weaker than expected sales for its main Apple Watch competitor, the Fitbit Versa Lite.

And looking ahead to the next quarter, it issued a warning that revenues are expected to be up to 15% lower than originally predicted.

"With weaker Versa Lite sales, we are lowering the midpoint of our 2019 revenue guidance by $95 million to $1.455 billion from $1.550 billion," said the company in a press release, "and now expect full year 2019 revenue to be $1.43 billion to $1.48 billion."

We've been here before

Fitbit has been around since 2007, and this is not the first time its shares have fallen. It also isn't the first time that the company has potentially faced serious problems.

"We probably have a list of seven times that the company was close to death," co-founder James Park told Forbes back in 2015. While he didn't read out the list, it's likely that at least one of the times was in 2011 when privacy became a hot issue.

When you get a Fitbit, you sign up to a service and all of the data that your device records is saved there. Fitbit shares data, much as Apple Watch does, to promote competition. When it reveals some information online, though, it sometimes goes further than it should and the result is embarrassing data being posted and readable.

Specifically, one category of activities that Fitbit tracks was being revealed. "Sexual activity, active, vigorous effort," was being listed with the duration of the, ah, workout shown next to it.

It used to be in Apple Stores

Also likely to be on Park's list of times the company almost died, was the moment when Apple ceased selling its products in retail and the online Apple Stores. It did that when the Apple Watch came out, and naturally Fitbit's Park had an opinion.

Certain Fitbit devices have companion iOS apps
Certain Fitbit devices have companion iOS apps


When the Apple Watch launched in 2015, he said that Apple simply got it wrong.

"We look at it from a consumer point of view," Park said. "[Apple Watch] is a computing platform, but that's really the wrong way to approach this category from the very beginning."

Usually it's Apple who claims to have thought about products from the user's point of view, but this time, it was Fitbit trying to claim that position.

Fitbit did claim a position as a household name, and it did so both through investing greatly in advertising after it lost the Apple Store outlet, and through making devices that work well.

Just over a year after the Apple Watch launch, Fitbit bought smartwatch maker Pebble. Perhaps it was spending too much on acquisitions, maybe the company's running costs were too high, or maybe investors were noticing how well Apple Watch was doing.

Whatever the reason, Fitbit's stock dropped radically. While it recovered well, the company has had more financial lurches than it or investors would want.

It's not as fancy as an Apple Watch, but it works.
It's not as fancy as an Apple Watch, but it works.


It got called on this rollercoaster, though, in 2016 when CNBC's Jim Cramer talked interviewed James Park and asked about Fitbit's guidance. Cramer said that it had become routine for Fitbit to announce incredible profits, but then warn of "tepid" future expectations in its guidance.

"We are a fitness social network that is coupled to hardware," responded James Park on Cramer's Mad Money show, "and we are on the cusp of transitioning the mission and purpose of our company from a consumer electronics company to a digital healthcare company."

Three years on, Fitbit is again reporting profits, yet issuing warnings in its guidance for the next quarter.

Amongst the AppleInsider staff, it's split about 50/50 as to whether we see more Fitbit devices in the wild, or Apple Watches. Regardless, as good as Apple Watch is, it's better when there is strong competition. So here's hoping there isn't an eighth time that Fitbit faces near death.



Keep up with AppleInsider by downloading the AppleInsider app for iOS, and follow us on YouTube, Twitter @appleinsider and Facebook for live, late-breaking coverage. You can also check out our official Instagram account for exclusive photos.

Comments

  • Reply 1 of 12
    AppleExposedAppleExposed Posts: 1,376unconfirmed, member
    Just read up on this yesterday. While tech sites are busy typing up the next "Apple is doomed" bait they're ignoring a massive turd in the punchbowl.

    Apple Watch sales and user base is WAY up. 75% of Q3 Watch buyers are new.
    VS.
    Fitbit. Reported record losses and their latest attempt to knock off Apple Watch has sold less than expected. Fitbit stock plunged to record lows and a drop of 15% while Apple reported GREAT news.
    "In its effort to stay competitive, Fitbit has been slashing prices, which resulted in a shrinking of its gross margin, or the profit left after subtracting costs of goods sold, to 34.5% from 39.8%."
    https://www.cnbc.com/2019/07/31/apple-fitbit-results-show-smartwatch-market-becoming-winner-take-all.html



    This has caused Fitbit to lose 82% of it's IPO since 2015. Fitbit is now valued under 1B dollars.

    Now, I don't give a F about stock prices but what this shows us is that Fitbit, the company that was supposed to be the knockoff Apple Watch for Android is now a slowly dying company. Yet they are still outselling the next closest competitor. This means android Wear (or whatever flavor of the week name they have) is doing a LOT WORSE.

    Fitbits strategy going forward is services. The problem here is that they're competing with a company that has been planting their seeds into services for over a decade and are about to storm the industry with more refined, secure, quality services which have been in the works for years.

    CHECKMATE.

    fotoformatcornchippscooter63StrangeDayslostkiwiwatto_cobra
  • Reply 2 of 12
    seanismorrisseanismorris Posts: 1,015member
    Now. Now. No gloating.

    The reality is when Apple entered the market everyone else was regulated to mid to low end.  It’s tough to make money without a premium product.  No platform = no premium product.

    This feels like Blackberry, which switched to Android to run Google Apps.  I don’t know the status of the watch project with Google...

    But, maybe they can reinvent themselves with Google’s help... 
  • Reply 3 of 12
    AppleExposedAppleExposed Posts: 1,376unconfirmed, member
    Now. Now. No gloating.

    The reality is when Apple entered the market everyone else was regulated to mid to low end.  It’s tough to make money without a premium product.  No platform = no premium product.

    This feels like Blackberry, which switched to Android to run Google Apps.  I don’t know the status of the watch project with Google...

    But, maybe they can reinvent themselves with Google’s help... 
    Forgot to add:

    Fitbit making knockoff Apple Watches is their downfall. They had a perfectly original, functional, innovative band that people called "Fitbits". Maybe Fitbit thought their bands would go the way of iPod but now they're chasing the Apple knockoff market which suffers from high volume, low profit. Ask Samsung or anyone else who chases Apples market. You just cannot be better at being Apple than Apple.

    I believe the choice between a "Fitbit"(band) and an Apple Watch is harder than Fitbit Versa Vs. Apple Watch where it's a no-brainer. At least their bands are different and serve a different market. This causes knockoffs to only be able to compete on price, which history has shown us and Fitbit is now adjusting which of course lands you in the high volume/low profit conundrum.
    llamawatto_cobra
  • Reply 4 of 12
    Fitbit, the cat of Wallstreet, has used seven of its nine lives...
    jcs2305watto_cobra
  • Reply 5 of 12
    StrangeDaysStrangeDays Posts: 8,244member
    I never invested in Fitbit due to their refusal to share my own data back to me via Apple HealthKit. Was a dealbreaker.
    createriomacpluspluslostkiwiwatto_cobra
  • Reply 6 of 12
    Apple owns the wrist, but they are not a monopoly.

    Only Fitbit comes close to Apple's market share, and their balance sheet is declining. Android and Samsung's Gear pick up the remaining crumbs. No other watch maker, except perhaps Huawei, will spend enough to catch up with Apple's A-series chips. All other Smart Watch makers will have to sell excess inventory at firesafe prices whenever a competitor releases a new model.



    AppleExposedwatto_cobra
  • Reply 7 of 12
    sflagelsflagel Posts: 593member
    Now. Now. No gloating.

    The reality is when Apple entered the market everyone else was regulated to mid to low end.  It’s tough to make money without a premium product.  No platform = no premium product.

    This feels like Blackberry, which switched to Android to run Google Apps.  I don’t know the status of the watch project with Google...

    But, maybe they can reinvent themselves with Google’s help... 
    Forgot to add:

    Fitbit making knockoff Apple Watches is their downfall. They had a perfectly original, functional, innovative band that people called "Fitbits". Maybe Fitbit thought their bands would go the way of iPod but now they're chasing the Apple knockoff market which suffers from high volume, low profit. Ask Samsung or anyone else who chases Apples market. You just cannot be better at being Apple than Apple.

    I believe the choice between a "Fitbit"(band) and an Apple Watch is harder than Fitbit Versa Vs. Apple Watch where it's a no-brainer. At least their bands are different and serve a different market. This causes knockoffs to only be able to compete on price, which history has shown us and Fitbit is now adjusting which of course lands you in the high volume/low profit conundrum.
    Agree; Fitbits are companions to traditional watches, worn on the opposite wrist. They should stay in that market which will always exist and which neither Apple not Samsung will want to compete in. 
    AppleExposedctt_zhllamawatto_cobra
  • Reply 8 of 12
    sflagel said:
    Now. Now. No gloating.

    The reality is when Apple entered the market everyone else was regulated to mid to low end.  It’s tough to make money without a premium product.  No platform = no premium product.

    This feels like Blackberry, which switched to Android to run Google Apps.  I don’t know the status of the watch project with Google...

    But, maybe they can reinvent themselves with Google’s help... 
    Forgot to add:

    Fitbit making knockoff Apple Watches is their downfall. They had a perfectly original, functional, innovative band that people called "Fitbits". Maybe Fitbit thought their bands would go the way of iPod but now they're chasing the Apple knockoff market which suffers from high volume, low profit. Ask Samsung or anyone else who chases Apples market. You just cannot be better at being Apple than Apple.

    I believe the choice between a "Fitbit"(band) and an Apple Watch is harder than Fitbit Versa Vs. Apple Watch where it's a no-brainer. At least their bands are different and serve a different market. This causes knockoffs to only be able to compete on price, which history has shown us and Fitbit is now adjusting which of course lands you in the high volume/low profit conundrum.
    Agree; Fitbits are companions to traditional watches, worn on the opposite wrist. They should stay in that market which will always exist and which neither Apple not Samsung will want to compete in. 
    The problem is, once you’re a public company investors expect growth...

    You either succeed spectacularly or fail spectacularly....

    They’re trying to spend to succeed, but failing to grow out of their niche.

    Fitbits were trendy for a while, but now they feel similar to GoPro’s.  What’s the loyalty of Fitbit owners? Are they “upgrading” to Apple Watch?

    It sounds like investors are losing patience.  Next, the founders get pushed out, and a new CEO is brought in to pursue “strategic opportunities” AKA “sell out”.
    FileMakerFellerllamawatto_cobra
  • Reply 9 of 12
    I've been using Fitbits for years and on the whole I'm fine with their offerings, the lack of a tru Apple Health sync is somewhat annoying. However, the glaring issue which has been with their gear now for 18 months or more is the fact that you can only have one FitbitWatchOS device on an account at a time.

    Previously, I had a Fitbit One, Charge 2 and an Ionic on my account for different use-cases. Ionic as a watch during the day. Charge 2 for sleep monitoring, and the One for gardening.

    The Charge 2's sensors failed and so I replaced it with the Charge 3, only to discover that what seems to be an upgrade of a Fitbit Health Monitor was actually now running FitbitWatchOS and you cannot have it and the Ionic on the account. No literature mentioned this... TO THIS VERY DAY THEY DON'T MENTION IT!

    If you cannot support your existing customer base who are happy to own multiples of your devices! Or be opening honest with the marketplace! What hope have you got attaching and keeping new customers?

    I've gone from recommending their offerings when people asked to suggesting the look at the Apple Watch or other players because I don't believe their motivation is aligned with their market anymore.
    watto_cobra
  • Reply 10 of 12
    sirlance99sirlance99 Posts: 1,145member
    Just read up on this yesterday. While tech sites are busy typing up the next "Apple is doomed" bait they're ignoring a massive turd in the punchbowl.

    Apple Watch sales and user base is WAY up. 75% of Q3 Watch buyers are new.
    VS.
    Fitbit. Reported record losses and their latest attempt to knock off Apple Watch has sold less than expected. Fitbit stock plunged to record lows and a drop of 15% while Apple reported GREAT news.
    "In its effort to stay competitive, Fitbit has been slashing prices, which resulted in a shrinking of its gross margin, or the profit left after subtracting costs of goods sold, to 34.5% from 39.8%."
    https://www.cnbc.com/2019/07/31/apple-fitbit-results-show-smartwatch-market-becoming-winner-take-all.html



    This has caused Fitbit to lose 82% of it's IPO since 2015. Fitbit is now valued under 1B dollars.

    Now, I don't give a F about stock prices but what this shows us is that Fitbit, the company that was supposed to be the knockoff Apple Watch for Android is now a slowly dying company. Yet they are still outselling the next closest competitor. This means android Wear (or whatever flavor of the week name they have) is doing a LOT WORSE.

    Fitbits strategy going forward is services. The problem here is that they're competing with a company that has been planting their seeds into services for over a decade and are about to storm the industry with more refined, secure, quality services which have been in the works for years.

    CHECKMATE.

    Why does it always have to be checkmate with you. The world would be boring in your vision of only Apple and everything Apple. 
    ctt_zh
  • Reply 11 of 12
    AppleExposedAppleExposed Posts: 1,376unconfirmed, member
    Just read up on this yesterday. While tech sites are busy typing up the next "Apple is doomed" bait they're ignoring a massive turd in the punchbowl.

    Apple Watch sales and user base is WAY up. 75% of Q3 Watch buyers are new.
    VS.
    Fitbit. Reported record losses and their latest attempt to knock off Apple Watch has sold less than expected. Fitbit stock plunged to record lows and a drop of 15% while Apple reported GREAT news.
    "In its effort to stay competitive, Fitbit has been slashing prices, which resulted in a shrinking of its gross margin, or the profit left after subtracting costs of goods sold, to 34.5% from 39.8%."
    https://www.cnbc.com/2019/07/31/apple-fitbit-results-show-smartwatch-market-becoming-winner-take-all.html



    This has caused Fitbit to lose 82% of it's IPO since 2015. Fitbit is now valued under 1B dollars.

    Now, I don't give a F about stock prices but what this shows us is that Fitbit, the company that was supposed to be the knockoff Apple Watch for Android is now a slowly dying company. Yet they are still outselling the next closest competitor. This means android Wear (or whatever flavor of the week name they have) is doing a LOT WORSE.

    Fitbits strategy going forward is services. The problem here is that they're competing with a company that has been planting their seeds into services for over a decade and are about to storm the industry with more refined, secure, quality services which have been in the works for years.

    CHECKMATE.

    Why does it always have to be checkmate with you. The world would be boring in your vision of only Apple and everything Apple. 

    Because the world would be boring without Apple. You may not even commenting on this forum without them.

    Because the world is boring when everything looks like an Apple product.
  • Reply 12 of 12
    aknabiaknabi Posts: 173member
    Just read up on this yesterday. While tech sites are busy typing up the next "Apple is doomed" bait they're ignoring a massive turd in the punchbowl.

    Apple Watch sales and user base is WAY up. 75% of Q3 Watch buyers are new.
    VS.
    Fitbit. Reported record losses and their latest attempt to knock off Apple Watch has sold less than expected. Fitbit stock plunged to record lows and a drop of 15% while Apple reported GREAT news.
    "In its effort to stay competitive, Fitbit has been slashing prices, which resulted in a shrinking of its gross margin, or the profit left after subtracting costs of goods sold, to 34.5% from 39.8%."
    https://www.cnbc.com/2019/07/31/apple-fitbit-results-show-smartwatch-market-becoming-winner-take-all.html



    This has caused Fitbit to lose 82% of it's IPO since 2015. Fitbit is now valued under 1B dollars.

    Now, I don't give a F about stock prices but what this shows us is that Fitbit, the company that was supposed to be the knockoff Apple Watch for Android is now a slowly dying company. Yet they are still outselling the next closest competitor. This means android Wear (or whatever flavor of the week name they have) is doing a LOT WORSE.

    Fitbits strategy going forward is services. The problem here is that they're competing with a company that has been planting their seeds into services for over a decade and are about to storm the industry with more refined, secure, quality services which have been in the works for years.

    CHECKMATE.

    Why does it always have to be checkmate with you. The world would be boring in your vision of only Apple and everything Apple. 
    In that world it's cheeckmattee (at least on my 2016 MBP keyboard... e, t, b wonky)
    ctt_zh
Sign In or Register to comment.