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Fitbit Idea Proposal (FIT)

Fitbit Idea Proposal (FIT)
 

Is demand for wearable tech and smartwatches growing? Will the new Ionic help Fitbit regain lost share?

 

Report Available: December 7, 2017

 

Blueshift’s initial research found FIT losing ground as its device shipments are declining. It is estimated that by years end, FIT will have fallen to third place in the wearables market with only 13% market share, down from 24% a year ago. In addition, the wearable market growth rate is slowing and consumer preference is shifting. FIT’s recent launch of the Ionic smartwatch is an attempt to reclaim lost market share, but in a highly competitive market it remains to be seen if its new device will drive sales and get FIT back on solid ground.

 

Observations

  1. FIT reported Q3 earnings and revenue that were ahead of expectations, despite comparing poorly to a year ago. Revenue fell 22% year to year (including a 32% drop in the U.S.), while the company reported a loss of $113 million after reporting a profit in the same quarter last year. FIT fared better sequentially with U.S. revenue 23% higher than the previous quarter. The company sold 3.6 million devices in the quarter (7% higher than Q2) with an average selling price up 12% from a year ago. The app was the No.1 downloaded health and fitness application in the quarter and 42% of device activations in those three months came from repeat customers.
  2. FIT introduced its new Ionic smartwatch, marketed as the ultimate health and fitness smartwatch, along with Bluetooth headsets. FIT has partnered with Adidas to offer a Fitbit Ionic special edition and training programs. The device has a new relative SpO2 sensor capable of tracking  deeper health insights, GPS tracking, on-device dynamic workouts, improved heart rate tracking, and water resistance up to 50 meters. There is also access to a library of popular apps including Pandora, Starbucks, Strava, and Weather powered by AccuWeather. New products from FIT introduced in the last 12 months, including the Ionic and Alta HR, accounted for 32% of revenue in Q3. The Ionic accounted for 50% of all smartwatches purchased on AMZN and it is the highest rated FIT product on AMZN.
  3. Wearable device shipments continue to increase, but the rate of growth has declined. A key reason for the decline, according to FIT, is market saturation in developed markets like the U.S. and Australia. FIT is counting on its feature rich Ionic to reinvigorate the market, though it faces stiff competition from AAPL, GRMN, and others. IDC expects the smartwatch segment, currently 57% of the overall wearables market, to grow 26.5% year-to-year through 2021.
  4. IDC’s recent study found consumer preferences shifting to smartwatches and away from basic wearables that do not run third-party apps. Smartwatches experienced double-digit year-over-year growth in Q2. Gartner expects a total of 41.5 million smartwatches to be sold this year, forecasting that smartwatches will become the No.2 wearable device category behind Bluetooth headsets.
  5. The competitive landscape in the smartwatch category is cluttered with tech heavyweights, start-ups and white label manufacturers that will all challenge FIT as it tries to regain its position in the wearables industry. Smartwatch sales leader AAPL announced a new Apple Watch Series 3 in September and it claims that the Apple Watch is the top selling watch in the world. GRMN’s new Vivosport is getting positive reviews for being lightweight, more affordable than its competitors, and the quality of its features as an activity tracker.

 

How is demand for wearable technology? How is demand for smartwatches? What are expected results for the upcoming holiday season? How were Black Friday sales? How is the Ionic performing in its first two months on the market? How is it competing with AAPL’s and GRMN’s new smartwatches? What separates the Ionic from its competitors? What will the smartwatch market look like in 2018? To answer these and other questions, Blueshift will gather data and issue a market research report from independent sources in the following areas: Smartwatch and wearable retailers, Smartwatch competitors, App developers, Supply chain, and Industry specialists.

  

Companies: Apple (AAPL), AsusTek Computer Inc. (AKCPF), Fitbit (FIT), Fossil (FOSL), Garmin (GRMN), LG Corporation (KRX: 003550), Samsung Electronics Co Ltd. (KRX:005930), Sony Corp. (SNE)

 

Research Begins: November 13, 2017