Earnings Call

[datalore]

Fitbit had a tough quarter in North America, but the rest of the world is actually up. Overall things aren't looking good, but there seems to be a new smart watch on the horizon. 

https://www.marketwatch.com/story/fitbit-ceo-expect-a-mass-appeal-smartwatch-this-year-after-ionic-d...

[bbarrera]

Official press release on financial results. No matter how you slice it, fundamentals are still deteriorating. 

[datalore]

If things don't turn around, and I mean soon they can hang it up. Maybe a change at the top is in order, or selling to a bigger company. Either way the next few quarters are going to be make or break for them. 

[bbarrera]

not that bad, Fitbit has enough cash and established relationships to keep on keeping on for a long time. On the other hand, stock is going nowhere until there is a growth story...

[datalore]

I'm interested to see what this "mass-appeal" smartwatch is going to look like. I thought if they could harness the smartwatch chops of pebble with their health tracking they'd have a winner, but like lots of things it all comes down to execution. 

[Crazy-Fritter]

Unfortunately Fitbit is failing miserably at getting their watches to sync reliably.... it doesn't matter what kind of watch they make, if it can't sync reliably and do smartwatch things with the majority of phones out there, they're not going to make it.

And it doesn't seem they're taking that part of the problem seriously. I think most everyone (including Parks and the rest of the board members) knows Fitbits going down eventually. I'm sure they're preparing for it. 

They went against internal and external advice to go with Android Wear and skin it with a Fitbit style UI, which would have given them a solid OS foundation to work with, with a huge ready made app store. They were in no financial position to start their own OS and app store from the ground up, and it shows in the Ionic's build, software, syncing, and app store quality. It's decisions like these that have put them in this financial position, and it doesn't seem like that's changing any. 

Plus it's a little late in the game to stop this slow train wreck 😟

I like Fitbit and want them to succeed, but I'm also a realist 😉

On a side note I read in multiple business articles that Fitbit is trying to bring out a new blaze the first part of this year that's going to be given an Ionic type facelift, and there's a new charge on the way late in the year.

Maybe the blaze will be the mass appeal smartwatch they're talking about. It's always been aimed more at the smartwatch type crowd, and the surge was the top-level fitness watch before the Ionic. 

[SunsetRunner]

I totally agree.. They should have gone down the android approach of things... Sadly the issue i think why they couldn't go down with that approach is how could one install Android apps if they are using the iPhone?

Case in point.. Polar M600 awesome watch for metrics.. Does the job well. But everyone who has an iPhone say the same thing. The watch is crippled and you can only do small amount of things with it on an iPhone. It's only if you have a full fledged Android phone can you really utilise the android wear applications.

[Colinm39]

I agree with @bbarrera and unfortunately not many post how good their Ionic is.. or for that,  any of my Fitbits.. Except the GPS Connect with the Blaze.

But from reading the statement earlier, Mr Park is doing what any strong management would do in declining sales like they did last year....  We need the new Growth product to give Support the revenue they need. Always the cat chasing the tail in technology companies..

BBarrera and I have been with Fitbit since the Classic and Ultra days and as at writing this post my Fitbit One is 5 years old and worn every day 16/7 with the Ionic 24/7...

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@bbarrerawrote:

not that bad, Fitbit has enough cash and established relationships to keep on keeping on for a long time. On the other hand, stock is going nowhere until there is a growth story...

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[NellyG]

@datalore thanks for the link! Interesting.....

[bbarrera]

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@datalorewrote:

I'm interested to see what this "mass-appeal" smartwatch is going to look like.  

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I'll bet it won't have GPS. Think Blaze with fitbitOS and Fitbit Pay. On the earnings call the CEO referred to Ionic as performance model, and Fitbit would launch something with more mass appeal.

@Colinm39 my opinion is that Ionic is a work in progress, and without a speaker features like Coach are pointless. Seriously, how do you know when to stop doing jumping jacks or push ups? Those are timed activities, audio cues are essential, better off using Coach on phone. I used Coach when it was Fitstar, before switching from bodyweight work to lifting free weights (Fitbit still doesn't track sets/reps/weight).

Diplomatically I'd say the Ionic is really good at pushing you back to phone. The Alta HR and Charge 2 are far better values. With current out-of-box features, its overpriced in my opinion. Want to splurge? Best screen in Fitbit's lineup of activity trackers, although it has a really large bezel. Some odd choices for activity tracking -- step count to estimate running/walking miles, no general purpose GPS tracking, no skiing support, no footpad or sensor support -- but these are only surprises if you are new to Fitbit. Industrial design is nice as it curves for a better fit on the wrist, and to block light from interfering with HRM. Battery life is ok, I have a handful of 12-16 hour events this year and GPS tracking would kill battery before finishing the event. 

[rcooked]

Well, I think they are completely dead meat.  Been a long time shareholder and customer - my wife still uses them.  One thing I really think they should consider opening up the darn application to work with Apple health and make that a revenue generator.

Apple has nothing like it, but probably will.  Why not open this up with an in app purchase for Apple Watch users and make the revenue, get them in the eco system, etc...  they won’t do it.  However, I think Apple will eventually crush them with their offering when get it refined.  Personally, I think fitbits app is better (Even as an Apple Watch user), but I can’t use it with my preferred hardware - yes, I would pay for it so I could do the challenges with Fitbit wearing friends.

seems like they are running out of options and the hardware just won’t cut it long term, but software revenue might if done correctly.

who knows.

[bbarrera]

@rcooked I'm also an Apple Watch user, agree with you about option to pay Fitbit. I love the dashboard summary in Fitbit app, but then it quickly lacks detail (can't answer simple questions like how many running miles this week or month). On the other hand I really like how Apple Health rolls up stuff from other apps, for example without wearing Watch I still get move/calorie/stand credit because it rolls up from Strava and other apps (e.g. weight lifting).

[datalore]

I honestly think the lack of support for apple health is more about apple than Fitbit, or at least as much about apple as Fitbit. I agree with @bbarrera that the new blaze will probably not have GPS, but that's just shortsighted. They shouldn't worry about taking away from ionic sales, they just need a hit. If they can make a blaze that's waterproof with GPS they could have a hit. The only thing they should leave out is music storage, but other than that they need to do everything they can to create a hit. There really is no excuse for releasing a non waterproof watch at this point, or one without GPS. I'd like to see Fitbit survive if for no other reason than to offer an alternative to the coming apple/google duopoly. I hope they have a sense of urgency about this, but we'll see. 

[bbarrera]

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@datalorewrote:

I honestly think the lack of support for apple health is more about apple than Fitbit 

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@datalore Don't agree. The Fitbit app's MobileTrack reads steps from iOS Health, but only steps from iPhone. Fitbit ignores steps from Apple Watch. 

[rcooked]

Yes,

This will be the demise.  When you are not a leader in hardware (they aren’t) and you have a 800 billion (market cap) Co. You are up against, it makes little sense to wall yourself off from their products.

Apple will continue to erode them on hardware, and eventually put the final nail in their coffin with software.

I would like to see Fitbit succeed, but it continues to look grim quarter after quarter and year after year.

[SunsetRunner]

I agree and what's makes this a poor grim outcome is its limitation. In Australia we have had Fitbit in our market for 10 years and still haven't even opened up the food database.. 

Scan a barcode.. impossible.. All " suggest a feature" mentality.. 

Sure we can use my fitness pal etc but that's besides the point..

It seems they love hearing suggestions but that's it. Fitbit can acquire as many companies they want.. however if they can't find their footing correctly then the issue becomes a bit more muddled as they progress.

They announce a potential mass appeal smart watch this year.. Great. But what happens if that doesn't sell? 

Seriously I think it be like the ionic and rushed to try and make some revenue.

If i was Park.. I would sit down and see what people are saying about the limitations . Why people are turning away.

I tell you.. It's because lot of people are frustrated with half baked software that has stupid synchronisation problems at hand.

Fix the internal issues first and concentrate on delivering the product before moving on to the next project.

This is why Garmin and other highly respected gps companies do. That and allow training plans on their GPS watches..

Not software just...... Recording a run..