How Is Fitbit Doing? Is The Company Fit For The Long Run?
By introducing mass-available, fashionable tech gadgets cum accessories that can help track a person’s daily activity levels and vital organs’ data, fitness bands, like the ones made by Fitbit, can motivate more people across the globe to eat better, exercise more and lead healthier lifestyles. However, despite the current exponential growth seen in the young health technology industry, some critics still insist that the prevailing fitness band “thing” is a trend that may very well be on its way towards archaic coffers. On that note, we ask: how is fitbit doing or, in other words: is Fitbit fit for the long run?
What is Fitbit and Who Cares?
According to CEO James Park, Fitbit is a “digital wellness company”. In reality, Fitbit is a health devices maker—and develops the accompanying wellness software. The wearable devices’ software and sensors help keep track of users’ activity level by counting: steps/distance moved, stairs climbed, calories burned, heart rate stats and sleep patterns—different devices measure different stats. That is on top of being materially designed to please as fashionable, accessorizing bits.
Fitbit was founded in 2007 by co-founders, James Park and Eric Friedman. After releasing the first activity tracking device in 2009, Fitbit has shot through the gate to become the largest, best-selling activity trackers maker in the world. It even offered up an IPO in June 2015 (after breaking away from Apple Inc.’s somewhat dry partnership) and became the hottest thing on Wall Street with an insane market valuation in excess of $4.1B.
According to market research firm, Ladenburg Thalmann, Fitbit commanded a lion’s share (88%) of the fitness tracker business in the U.S at the time of the offering.
In Q1 2016, Fitbit shipped some 4.6 million devices leading to a sales total of about 36.9 million devices since 2009, according to Survey Monkey Intelligence.
The Fitbit activity tracking platform (mobile app + website forum) leads with 57% (over 8 million) active monthly unique users (MUU), well ahead of second-ranking, Nike Run Club with 11% (1.5 million MUU).
The consolidated, aggressive competition of Jawbone, Garmin, RunKeeper and Apple Watch is sulking underneath.
Here Comes Trouble!
All is not well in San Francisco, though
Survey Monkey Intelligence estimates that Fitbit’s market share has dropped to 60% in the US, and even worse globally (no real figures were given). Still, Fitbit’s share price has plunged more than an incredible 70% from a high of $98 past the IPO time through to October 6, 2016 ($14.77).
Despite the share price remaining relatively stable (compared to the hot mess witnessed in the case of GoPro), and in spite of the estimated 40% growth forecast for the industry in the next 3 years, analysts foretell of a stormy sailing for the market-leading Fitbit.
Going Forward – 4 Risks for Fitbit
The thing is: the activity tracking market is a notoriously fickle one—not to mention increasingly very competitive.
- Earlier studies have shown that fitness tracker users shelf their device after roughly 6 months of use—they get tired and bored, the novelty dies off. Worse for Fitbit, Survey Monkey Intelligence reports that Jawbones’ UP mobile app is much better at engaging and retaining users than Fitbit’s platform by a mile.
- Second, most of Fitbit’s competition is direct; devices made by competitors such as Jawbone or GoTrak105 have almost 100% similarities in design, build and, most importantly, how their function. Besides, more activity trackers have hit the market in the past year at way cheaper prices. And those feature almost the same hardware and features that Fitbit’s devices tag along—putting Fitbit’s value proposition under question tags.
- Thirdly, even devices that weren’t eating into Fitbit’s line of work are trending dangerously in now. Think of the Apple Watch series and Mondaine watch that now feature fitness tracking and significantly more than the Fitbit Charge HR for example.
- Fourth, there’s the danger that Fitbit, being a one product-only producer, may be outgunned by big-time innovators such as Apple and Google—after all, Fitbit’s devices operate under the Android and IOS platforms and can be “figured out” by the former two. However, as CEO James Park stated in an interview with TIME, the company is looking to penetrate into the medical diagnoses and clinical records niche to add some pack to its value proposition and hardware-oriented model. That could help keep it alive, and hopefully on a healthy growth trajectory. In the long run
Customer Retention and Marketing Strategy
As of September 2016, Fitbit’s app downloads topped the 24,000 downloads mark, which is four times the 6,000 downloads Nike’s Run Club got. Furthermore, Fitbit’s fitness trackers cost a healthy bit less than the competition from say, Apple Inc. Better for Fitbit, the market is still excited to have a Fitbit stylishly wrapped to its wrist, and the company’s move to manufacture niche products (such as the Fitbit Surge for serious Runners) may give it stickier appeal.
Also, as opposed to the competition, Fitbit has taken a B2B approach to selling their wares. It sells in bulk to a large corporation, which then distributes to its employees, who are required to sport their Fitbit to challenge them to work out to boost productivity and earn bonuses.
The fact that these employees can network through their Fitbit’s and challenge each other as a network of colleagues, as opposed to the individual user experience, means the Fitbit habit can stick with such a group and build a loyal user base for the long run—the genius of the B2B model.
How Is Fitbit Doing?
The fit bit of modern living has received some stellar boost in awareness in the last couple of years, mostly thanks to the proliferation of diseases and conditions that science has linked to the rigors of sedentary living. Silicon Valley has been at the forefront to help keep you moving. And if the above stats and facts are anything to go by, Fitbit may well be fit for the long run in terms of active users, devices sold, and profits made.
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Fitbit Charge 2
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Misfit Shine 2
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