Declining revenue for fitness tracker brand Fitbit is a perfect example of the fight the wearables segment faces in the battle to remain relevant in the super-connected era.

Jamie Davies

May 3, 2018

4 Min Read
Fitbit struggles epitomise uphill climb for wearables

Declining revenue for fitness tracker brand Fitbit is a perfect example of the fight the wearables segment faces in the battle to remain relevant in the super-connected era.

For years it seemed Fitbit was the only brand out there which could actually make money from the long-suffering wearables segment. The promise had been wonderful for the devices, but in reality, brands were constantly chasing the fictional pot of gold. Even Apple, with its legions of cult-like iFollowers, strained to make the technology lucrative, and it seems Fitbits run of good-fortune is lacking fitness.

For the last three months, Fitbit bagged $247.9 million in revenues, up slightly on analyst expectations, but quite a bit short of the $298.9 million generated during the same period of 2017. This compared to $505.4 million in Q1 2016 and $336.8 million in 2015. It seems the boomtime for fitness trackers has ended, but someone forget to tell the management team.

“The strong growth and defensibility of our business continues to be powered by product innovation, the network effects of our community, our expanding global distribution, and investment in our brand,” said James Park, Fitbit co-founder and CEO. “Based on the first quarter’s performance and momentum, we are confident about the remainder of the year, which is reflected in our increased guidance.”

Prospects for the rest of the year might well be good, but you can’t argue with the figures. The devices are simply not in high-demand as they were in yesteryear. Fitbit should be worried, as should the rest of the industry; if Fitbit can’t make the segment work, what hope is there for anyone else?

The smartwatch and overall wearables segment has struggled for years to make any meaningful impact on the technology world. In truth, there was little point to the devices; smartwatches did not do anything a smartphone couldn’t, and until recently, weren’t able to function without being tethered; consumers were not prepared to make the swap. There is little point in a smartwatch. However, Fitbit found a niche.

In creating an affordable device, with a specific purpose and targeted at specific audience, Fitbit discovered success. This was not a connectivity device, nor was it a fashion statement, it was simply a fitness tracker. It was a sensible strategy, as sportspeople are often open to spending on premium devices which serve a purpose. It was a niche and limited usecase for Fitbit, but it worked. Some might also have hoped the normalization of the technology in this niche might have created momentum for other, more profitable usecases focused on connectivity. But what does the latest dent in Fitbit spreadsheets mean for the segment on the whole?

We suspect the wearables euphoria was pumped too early. There are usecases for the technology out there, but it is by no-means going to be a revolution because the practicalities of the devices are lacking. Wearables could well make an impact on the communications world in the future, but we suspect this won’t be reality until the voice interface has taken hold.

Unless smartwatches offer something smartphones don’t, they will probably be viewed as a replacement. However, with the touch interface still commonplace, the screens on watches are not practical for everyday use. The voice interface is starting to gather some momentum, which could make the concept of a screen redundant when it comes to communicating (i.e. dictating messages, voice commands to answer calls, a virtual assistant reading out written content) and offer a place in the world for wearables.

Fitbit struggles should be viewed as a significant concern for the rest of the wearables segment. There might be a time for the devices, but now is not that time.

Following comments from the European Data Protection Supervisor, do you feel the internet giants are taking advantage of the digital economy?

  • Yes - transparency is a myth (53%, 95 Votes)

  • Yes - lack of regulation has been targeted (26%, 47 Votes)

  • No - the consumer should have known about the value exchange (12%, 22 Votes)

  • No - they are experimenting with new ideas (9%, 16 Votes)

Total Voters: 180

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