Fitbit announced on Monday that the revenue in all-important holiday quarter shrunk almost 20 percent, that is a big reversal from a nearly doubling of sales during the same period in 2015. Despite the problems, CEO James Park is looking ahead to better times. The first half of 2017 will be brutal there will be "a temporary slowdown and transition period" before a planned product expansion into the higher-end smartwatch category is expected to bring stabilization in the second half of the year.
The Rough Times Of Fitbit
James Park, CEO of Fitbit, is hunkering down for rough times ahead, according to Fortune. But eventually, the fitness tracker maker, weakened by slowing its sales. It may not see a good and healthy pulse rate again without some acquisition interest, maybe from a technology or sports apparel giant.
On Monday, Fitbit informed people that revenue of Fitbit shrunk almost 20 percent. In response to the problem, the company said it would lay off 6 percent of its workforce to provide a small piece of $200 million in cost cuts that Park requires to turn from the company's $1.1 billion in annual spending. The troubles of the company are evident in its shares, which fell 17 percent in mid-day trading on Monday to under $6.
Since the initial public offering of Fitbit is at $20 in 2015, the company's stock has shed more than 70 percent. The released statement on Monday was headlined by an announcement of "cost reductions to improve efficiencies and strengthen performance," which means layoffs for Fitbit. These "reorganization efforts" amount to the elimination of the six percent of Fitbit's workforce, or about 110 employees.
Fitbit Can Recover From Cratering Sales And Stock Drop By Making Smartwatches
According to Mashable, Park announced the plans of Fitbit for expansion into making smartwatches. "We believe we are uniquely positioned to succeed in delivering what consumers are looking for in a smartwatch: stylish, well-designed devices that combine the right general-purpose functionality with a focus on health and fitness," he said. This move is unsurprising for Fitbit.
Fitbit bought the assets of several struggling wearable makers in the recent months, starting with Coin in May 2016, Pebble in December and Vector this January. Most of the achievements had to do with tech not typically found in Fitbit's activity trackers, like Coin's wearable payment platform. Park also said something a little bit about the plans for a standalone Fitbit App Store using the Pebble's assets at CES 2017.
All of these appropriations as well as Park's comments seemed to point to the development of a Fitbit own smartwatch. Park confirmed that news in a statement, saying the three acquisitions by name. "With the recent acquisition of assets from Pebble, Vector Watch and Coin, we are taking action to position the company for long-term success," he said.
While Fitbit's 2016 Blaze release is a watch, it was explicitly marketed as a fitness-first product. From Park's statements, the Fitbit's next attempt at entering the smartwatch world will likely to break their product pattern and will attend to appeal to a deeper and more casual user base. When Mashable reached out for information on the possible timetable for the company's upcoming smartwatch series, Fitbit representative had no comment.
Fitbit's market is entering with a true-blue smartwatch. However, it is far from being stable. At the end of 2016, there's an inconstancy market for all smartwatches. Established tech makers abandoned their wearable lines and the number of sales slumped down because as consumer research data reported, most customers weren't interested in the devices anymore. Many customers find wearable devices useless.