After a year filled with tumbling sales, manufacturing problems, and a plunging stock price, Fitbit CEO James Park is ready to look ahead.
Although Fitbit’s sales of its eponymous fitness tracking gadgets hit a record of $2.2 billion in 2016, the fourth quarter was a world of hurt. Amid a glut of inventory and weakness in China, sales for the all-important holiday quarter dropped 19%, Fitbit finally confirmed on Wednesday, after two earlier warnings to Wall Street about problems in the quarter. (Back in November, the company shocked investors by projecting sales simply would be flat in the fourth quarter).
Now it’s time to focus on the turnaround. CEO Park has a multi-pronged strategy, including offering a smartwatch with a health and fitness emphasis in the second half of the year.
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“As we move into 2017, although it’s going to be a challenging year and there’s going to be a continued disconnect given our excess inventory, we have a good foundation to work from,” the CEO tells Fortune.
To get operations and manufacturing under control, Park recruited tech industry veteran Jeff Devine, who’s experience at Cisco, Nokia, and Hewlett Packard should help Fitbit get back on track. Devine joins after Fitbit had to lay off 6% of its workforce and take millions of dollars in write-offs to cover excess inventory, warranty costs, and unneeded tooling equipment.
If all works out as planned, the hire may be Park’s version of Steve Jobs hiring Tim Cook away from Compaq Computer to overhaul Apple’s operations in 1998.
“In this business, gross margins are everything,” Park says. “He’s going to help us a lot on that front and improving dramatically the quality and accuracy of our products, as well.”
Fitbit’s next step will be to get sales of its core fitness tracker line growing again. In 2016, Fitbit (fit) sold 22 million trackers, led by the best-selling Charge 2. But revenue was down sharply in the fourth quarter in both the U.S. and the Asia Pacific region.
In Fitbit’s view, the sales slump is a sign that the market for trackers among early adopters has been saturated, but more mainstream buyers, the so-called late adopters, haven’t gotten on board yet. With over 50 million devices sold in the past three years and over 23 million active users, the company must now reach more casual, less tech savvy buyers.
“We feel other parts of the market represent another 40 to 80 million users for trackers,” Park says. “The way we plan on capturing those users is more on the software side.”
An important building block is the company’s Fitstar app, which offers fitness advice and coaching for a subscription fee. Since adding more features and focusing more marketing on Fitstar at the CES show last month, the company attracted 1.2 million new downloads of the app.
Fitbit Introduces New Features for 2017
Finally, Park is planning his entry into the smartwatch category currently dominated by Apple. He has built a technology foundation over the past year, paying a total of $54 million for assets from failing pioneer smartwatch makers Pebble and Vector and mobile wallet startup Coin.
Taking on Apple (aapl), Samsung, and manufacturers using Google’s (googl) Android wear software won’t be easy, but Fitbit will play to its traditional strengths, with an emphasis on health and fitness, a connected community of users, its positive brand image, and long battery life, Park says.
“All those things are going to really help us enter the category,” Park says. The three acquisitions also add an ecosystem of developers, he adds, which will be critical if Fitbit’s smartwatch is to offer the kind of third party software needed to compete with Apple and Google.
For more on Fitbit’s Pebble acquisition, watch:
Asked about the timing of the new smartwatch, Park is coy. “We don’t typically disclose product news, but I’m sure we’ll have more to share in the second half of this year,” he says.
Fitbit’s share price lost 70% last year and recently touched an all-time low of $5.62. But on Wednesday, as Park explained the strategy for a turnaround, the shares gained 4% in after hours trading. That’s still a long way from the company’s $20 price at its 2015 initial public offering, but at least it’s a move in the right direction.
Fitbit Marketing Plan Essay
2524 WordsMay 12th, 201211 Pages
FitBit is dedicated to helping people live healthier and more active lives. The company aims to create innovative, inspiring products and online services that combine the power of new technologies to make people more aware of their diets, daily activities and motivate them to do more exercises.
FitBit is a wireless health and sleep tracker. The company’s goal is to provide a unique product, rich features at a highly competitive price. Target segmentation includes athletes, students, professionals and other groups in Australia. The product will be distributed to most of the electronic specialty stores and online. The tiny device will help people taking advantage of their…show more content…
Expected technological advancements in health products are likely to contribute to greater spending on health. The FitBit as a technological health device shall greatly meet local consumer’s needs.
The number of Australian households using computers and accessing the internet has significantly increased during past a few years. In 2008-09, nearly six million Australian households (72%) had internet access. There are nearly 10 million Facebook users in Australia which takes almost half of the population. Latest information about products and services can be spread quickly through the social network, which means the FitBit can use it to increase the brand awareness.
Australian’s international trade activities are regulated by TRIPS and WTO settlements. Intellectual property is an integral part of global trade which is paid enough attention by the Australian government. In 2009-10, value of intellectual property reached $170 billion. Therefore, FitBit as an innovative product and its crucial technology will be well protected by the local government.
Australian government issued carbon tax aiming to reduce the emission of carbon dioxide. The FitBit could indirectly contribute to the environment protection by encouraging people to walk instead of driving car