Fitbit Takes A Hit
Wearable maker Fitbit has announced it is cutting jobs and trimming its fourth-quarter forecast. With its stock down nearly 20%, the company is cutting 110 jobs or 6% of the company’s workforce, which is confusing news because it continues to be one of the most downloaded apps. While it was a product that took the world by storm, Fitbit is a commodity category.
Like most commodity companies, you cannot make money once everybody has one of whatever you are selling. After its big run up in 2015, the stock has continued to steadily decline. Fitbit was founded in 2007 by James Park and Eric Friedman, raising money by demonstrating their idea of a circuit in a wooden box. It launched its tracker in 2009 and in 2015 Fitbit was the leading company in the sales of wearables after an IPO of $4.1 billion.
It shipped around 18 million fitness trackers that year without having created a new product. In 2016 it launched 4 new devices – Blaze, Alta, Charge 2 and Flex 2. Fitbit also encountered huge competition with the Apple Watch. Both devices track your overall steps taken, distance traveled, and calories burned. While many versions of the Fitbit are more economically priced, the Apple Watch has more options, such as being able to connect to the iPhone and to encourage you to stand up and move around at regular intervals.
Apple was fortunate to have piggy-backed on the sometimes difficult experiences of the pioneer Fitbit company, including dealing with privacy issues, as well as what materials to use to avoid causing irritation to people’s skin.