Peloton halts production of fitness bikes, cites 'significant' loss of demand

AppleInsider · January 20, 2022 6:10PM

Fitness firm Peloton is reported to be temporarily halting production of its bikes and treadmills, citing continued decline in sales since after demand from people working at home peaked.

Peloton Bike

Peloton benefited from the coronavirus with booming sales for its home fitness equipment, but recently blamed Apple for the subsequent downturn. Saying that Apple's App Tracking Transparency privacy hurt sales, Peloton tried dropping the price of its original bike.

Now internal documents seen by CNBC say that a "significant reduction" in worldwide demand means the company will temporarily halt production. The company plans to halt production of its main Bike product from February 2022 to March 2022, and has already halted making the more costly Bike+.

That model was reportedly halted in December 2021, and is not expected to resume production until June. Peloton is also pausing production of its Tread treadmill machine for six weeks, starting in February 2022.

Peloton's move comes ahead of its required financial earnings report on February 8. The company is expected to say that the halting of production is to control costs.

The company reportedly greatly over-estimated its sales predictions and consequently has some thousands of bikes and treadmills in stock. At the same time, it cites "a more challenging post-COVID demand environment," for how fewer people than expected are registering for its strength training product.

Peloton's internal document also says that its financial forecasts do not as yet take into account the impact on demand that it may see over new charges from the end of January 2022. The company intends to begin charging Bike buyers an extra $250 for delivery and setup, and $350 extra for the Tread treadmill.

In December 2021, Peloton unexpectedly had a double-edged sword of being featured in the highly-awaited "Sex and the City" sequel, "And Just Like That." While it was prominently featured in the show, it showed major character Mr Big (Chris Noth) dying while using it.

Peloton very quickly responded with a light-hearted TV ad spot starring Noth which promoted the health benefits of its products. The ad was created and aired within 48 hours -- but was then pulled when Noth was accused of sexual assault.

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Zirlin · January 20, 2022 6:17PM

Looks like their bike sales have become...stationary.

I'll see myself out.

pairof9 · January 20, 2022 6:19PM

Ouch! Probably good short term medicine for long term success.

Personally, I can't justify the cost of such a unit and am quite satisfied with my current stationary bike (at a fraction of Peloton price) while watching Apple Fitness+ on nearby TV.

netrox · January 20, 2022 6:26PM

I am glad to see it go down. It's the biggest rip off that offer nothing substantial for its price.

omasou · January 20, 2022 6:31PM

As the article said they overestimated demand and now have too much stock.

Additionally, health clubs have re-opened and based on the parking lots that I pass folks are flocking back. Let's face it people are more interested in finding a date than improve their health. Now if Peloton added a social/dating component to their app...just saying.

baka-dubbs · January 20, 2022 6:41PM

They need to either cut the subscription cost or cut the cost of the bike. You can use the app with any generic bike for $13 a month, or you can buy their bike at a premium to then pay $39 dollars a month. Yeah, you get some additional features and more interaction in class, but your paying 3 times as much per year just to use their expensive hardware. They should allow integration with third party bikes and then go strictly for subscription model. Or they could continue to sell premium bikes, but this would allow their app to reach more people.

jimh2 · January 20, 2022 6:52PM

It had to end. The people I know who have it are exercise zealots. Regular people have no interest and in many cases no space for a bike in their house that will eventually hold laundry.

Their main issue is they were the first to market this type of interactive exercise. There is lots of competition now and while some of them may not be better they are cheaper and that is unfortunately the main component of decision making for many people.

hexclock · January 20, 2022 7:42PM

Personally, I don’t need someone to yell at me to pedal my bike faster. I only compete with gravity and friction when I ride.

chadbag · January 20, 2022 9:26PM

Saying that Apple's App Tracking Transparency privacy hurt sales

Yes. This really makes sense. That being forbidden from tracking customers will reduce demand for their bikes and/or subscription service. If they are trying to claim that it diminishes the value of advertising they place, I think they give too much credence to so called targeted advertising. Numbers I've seen show it has only a minor affect on advertising efficiency.

wonkothesane · January 20, 2022 9:31PM

Refusing to recall when you have a serious safety issue even after a child died certainly does not help:

Peloton CEO John Foley was forced to admit the company was wrong to fight the recall request. "We feel like we have some work to do to get back on the right side of the line with trust and safety," he said Thursday, the day after agreeing to the "voluntary" recall.

CPSC: “ Peloton Recalls Tread+ Treadmills After One Child Died and More than 70 Incidents Reported”

ravnorodom · January 20, 2022 11:06PM

I tried their bike in a 5 star hotel before. I am not impressed. The bike is cheaply made comparing to other brand (without virtual trainers) in that same hotel. I think the large size built-in LCD screen with different trainers, gorgeous landscapes and other interactive features are what make this bike overly expensive. I would rather get a better quality bike and add my own Apple Fitness+ plan.

ravnorodom · January 20, 2022 11:14PM

wonkothesane said:

Refusing to recall when you have a serious safety issue even after a child died certainly does not help:

Peloton CEO John Foley was forced to admit the company was wrong to fight the recall request. "We feel like we have some work to do to get back on the right side of the line with trust and safety," he said Thursday, the day after agreeing to the "voluntary" recall.

CPSC: “ Peloton Recalls Tread+ Treadmills After One Child Died and More than 70 Incidents Reported”

I can see them trying to cut every corner including safety in order to bring down the price since their interactive system is probably costing more to make.

jpellino · January 21, 2022 1:18AM

If your business model is threatened by privacy measures, then you have the wrong business model.
I think the kid-and-pet-eating treadmills are a bigger issue than Cupertino.
You can buy a decent bike and a trainer stand for half of what they charge.
And you can use the bike outside too.

MplsP · January 21, 2022 4:31AM

netrox said:

I am glad to see it go down. It's the biggest rip off that offer nothing substantial for its price.

Actually it provides something quite substantial for the price - a bike! We have a peloton and love it- the bike itself is a good quality exercise bike, much better than most home grade equipment.

We dropped our YMCA membership a year and a half ago when we purchased our peloton. Even including the monthly membership fee we’ll break at the 2 year point. WE both enjoy the peloton classes and more importantly, we use it far more often than we did our Y membership.

Peloton isn’t for everyone and I suspect they’re probably getting close to their maximum market penetration. There are also probably more bikes available used from people who purchased and decided it wasn’t for them.

sconosciuto · January 21, 2022 4:56AM

Wish I’d had the balls to short Peleton. Their business model was ripe for disruption though I certainly wouldn’t have seen it coming so hard and so fast from the two SatC-related blunders.

MrBunside · January 21, 2022 4:57AM

Well, that's just GREAT! Where am I supposed to hang my clothes now?

george kaplan · January 21, 2022 8:06AM

If Peleton plans to charge an extra $350 to set up and deliver a treadmill, I’ll just cancel my order and maim my kids myself.

GeorgeBMac · January 21, 2022 11:23AM

So, "Apple's App Tracking Transparency privacy hurt sales"? Really? Seriously?

I suspect that Apple's Fitness+ is doing them in.

While you can subscribe to Peloton's classes without buying their equipment, you don't get the full benefit without Peloton's screen. So they push into spending thousands on their equipment.

On the other hand: Apple's Fitness plus works well with whatever equipment you have available:

-- For strength and core I use my TV tied to my Apple TV (along with a few dumbbells)

-- For aerobic I use my phone and a treadmill I bought years ago (although one that interacted directly with my Apple Watch would be nice -- but fitness+ takes care of most of that)

For me, I have zero reason to invest in Peloton:
-- I already have home equipment -- so no reason to buy Peloton's

-- Apple Fitness+ is essentially free with my AppleOne subscription

EsquireCats · January 21, 2022 6:25PM

I’m guessing it had less to do with being able to track people and more to do with one of their machines killing a toddler.

DAalseth · January 21, 2022 7:27PM

Out of curiosity I checked out the price of their treadmills. (I don’t have a bike, but I do have a treadmill). Are they out of their mind? Easily three times the cost of the high end NordicTrac model I have. Admittedly I got mine fifteen years ago but they haven’t gone up that much.

And no I don’t need some overly eager person encouraging me to work harder. I hated that sort of thing n in high school PE class and I sure as H don’t have any interest in that now. I’m on my treadmill for an hour six days a week and Its all going fine.

Beats · January 21, 2022 8:44PM

I still think Apple should buy a fitness equipment brand like NordicTrac or even Peloton when their sales and stock drop.
Gymkit needs to get serious and relying on 3rd parties has always been a drag.

GeorgeBMac said:

So, "Apple's App Tracking Transparency privacy hurt sales"? Really? Seriously?

I suspect that Apple's Fitness+ is doing them in.
While you can subscribe to Peloton's classes without buying their equipment, you don't get the full benefit without Peloton's screen. So they push into spending thousands on their equipment.

On the other hand: Apple's Fitness plus works well with whatever equipment you have available:
-- For strength and core I use my TV tied to my Apple TV (along with a few dumbbells)
-- For aerobic I use my phone and a treadmill I bought years ago (although one that interacted directly with my Apple Watch would be nice -- but fitness+ takes care of most of that)

For me, I have zero reason to invest in Peloton:
-- I already have home equipment -- so no reason to buy Peloton's
-- Apple Fitness+ is essentially free with my AppleOne subscription

I wouldn’t doubt it if some a-hole company tries to sue Apple for “antitrust” or some other buzzword because of app tracking transparency hurting their dollars.

Peloton halts production of fitness bikes, cites 'significant' loss of demand

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