Strategy Analytics Says Apple Top Wearables Vendor in Q1 (May 8, 2017)
Fitbit Reports Worst Revenue in Nearly 3 Years, Second Straight Quarter of Heavy Losses (May 3, 2017)
Apple’s AirPods Have a 98% Customer Satisfaction Rating (May 1, 2017)
This isn’t good news for Fitbit, at a time when it was supposed to be recovering from a tough year and getting back to profitability and eventually growth. As I’ve said before, I suspect its push into the smartwatch market will be more of a distraction than a help to the company’s overall performance – it puts it head to head against Apple in a category Apple currently dominates and takes it out of the sweet spot it’s historically done well in. If it’s also unable to produce a decent product in accordance with its own internal timeframes, then that bodes even worse for the further push into this category following the Blaze launch last year. Another big question not addressed by this article is to what extent Fitbit will be able to integrate some of what it acquired from Pebble and Vector over recent months in this new product – so far, it looks like it’s more of an iteration on the Blaze than something completely new.
via Yahoo Finance
Tag Heuer Connected Modular 45 hands-on review – Wired (Mar 17, 2017)
Earlier in the week, I wrote about Swatch’s smartwatch operating system and components, and in passing referred to Tag Heuer’s Android strategy. It’s now in the second phase of that strategy, with a highly modular and customizable approach this time around, and a modest goal of selling 150,000 of these watches, compared to just over 50,000 of its first attempt. That’s obviously a tiny fraction of the overall smartwatch market, and it’s hard to see how it’ll make money at this scale with this much customization. Apple has offered the most customization of any tech-centric smartwatch to date by far, but this Tag watch seems to take the concept much further, which may be appealing to potential customers, though the watch itself looks incredibly thick and bulky, even for a Tag.
It’s fascinating to think about this move in the context of the history of Swatch. Though the company incorporates much older brands, the Swatch name and brand arose in the early 1980s out of the Swiss watch industry’s previous crisis: quartz watches from Asia. Those watches caused a massive decline in the Swiss watch industry as cheap, highly accurate watches from Asia flooded the market. The Swatch brand was created to compete with these quartz watches, offering a simpler mechanical watch with cheaper materials that could compete with the new entrants, and it worked. Now, it appears Swatch wants to defend against the new crisis – smartwatches eating market share – with its own entrant, based on technology co-developed with a Swiss university that specializes in miniaturization. I may be biased, but suspect it’s easier for the tech industry to learn about watches than it is for watchmakers to get really good at technology, even with some help. I’m skeptical that this move will work out, but given how poorly Android Wear has fared, it certainly can’t hurt, and may well do better than competitor Tag Heuer’s Android strategy.
This is a good follow-up to this morning’s item about the new Android Wear watch from Huawei, and argues much as I did that other smartwatch makers are largely failing to learn the lessons of or compete effectively with the Apple Watch. It frames the discussion in terms of the compromises and tradeoffs watchmakers choose to make, which seems a smart way to think about it, and has arguably always been one of Apple’s strengths.
via The Verge
I linked to reviews of Android Wear 2.0 and the LG watches that launched at the same time a few weeks ago, and those were pretty negative. Now, here we have another entry from a major Android vendor and it seems to be at least as bad as LG’s. At this point, it feels like some Android vendors have given up on the platform entirely, while others seem to have given up trying to make a smartwatch competitive with the Apple Watch but are still putting what they do have out into the market. None of this is going to help Android Wear or smartwatches in general. I’ve said before that I think it will take a Pixel-style first party entry from Google to give this platform the boost it needs, because for now Android Wear continues to be more or less irrelevant in the smartwatch and broader wearable market. Even if Google does get into this market directly, however, it continues to be far smaller and narrower than many people originally thought, and it’s currently dominated by Apple.
via Android Central
Given all the focus Fitbit has been putting into smartwatches lately, it’s good to see the company get back to focusing on its core value proposition: really good dedicated fitness trackers. The acquisitions it’s made and products it’s launched have made me worried that, rather than sticking to its core market, it’s trying to expand into territory dominated by Apple and to a lesser extent Samsung, which seems unwise. The Alta will now get a version that costs $20 more for an embedded heart rate monitor, and which also promises to track sleep better. This is good incremental innovation from Fitbit, which seems to have managed to squeeze the new functions into the same size, and it should also give average selling prices a bit of a boost. ASPs have risen over the last several years, but remain under $100 most quarters, and have been boosted most in those quarters when new high end devices launched. Given Fitbit’s bad Q4, it needs lots more of this kind of thing to spur repeat purchases and broaden its addressable market, though the overall ceiling on this market continues to be one of its biggest long term challenges.
via Ars Technica
Wearables grew 16.9% in Q4 2016, Fitbit still first but Xiaomi is gaining – VentureBeat (Mar 2, 2017)
The numbers here look about right, but what a far cry from the forecasts of the wearables market we saw a few years back. I recently wrote a piece on the state of the wearables market, in which I argued there are really three important sub-markets within wearables: the Apple Watch in its own category, dedicated fitness trackers (in which Fitbit dominates in western markets and Xiaomi in China), and Samsung’s various devices, many of which are bundled with smartphone purchases and therefore thrive on a rather different business models from the others. These IDC numbers largely back that up with market share numbers, but also reinforce the point I made in that article about how the market has fallen short of its theoretical potential and largely stopped growing. It can still grow, but the offerings need to get much better and broader in their appeal, and to some extent we also need the technology – especially in components – to catch up with the vision here.
Huawei Watch 2 and Watch 2 Classic officially unveiled at MWC 2017 – AndroidAuthority (Feb 27, 2017)
These two watches are somewhat reminiscent of the LG smartwatches that debuted with Android Wear 2.0 a few weeks back – there are again two, with somewhat different form factors, but this time the feature set is more consistent across them, as is the price. That price, though, is fairly steep – in line with the low end of Apple’s Watch price range, which continues to be a tough place to be when your watches look very much like the smartwatches they are rather than nice pieces of smart jewelry. Huawei definitely has the scale to do some interesting things in watches if it chooses to, but I can’t see these new models selling in very large numbers at these prices.
Nokia Making Big Move Into Digital Health, Relaunching Withings As Nokia This Summer – Forbes (Feb 27, 2017)
This is where things are going to get interesting – on the one hand, you now have HMD Global launching Nokia phones, and on the other you have the entirely separate company called Nokia launching its own consumer gadgets under its own brand. So there will be both smartphones and fitness devices in the market carrying the same brand, which have nothing to do with each other. It looks like Nokia is going to kill off the Withings brand it acquired and make a big push into health and fitness. As a non-consumer brand since its sale of the phone business to Microsoft, this is going to be an uphill battle for Nokia, and especially in a crowded and somewhat stagnant wearables market. Withings produced some interesting devices over the last several years, but it’s never had significant market share, and I’m not convinced Nokia will change that. Health (as opposed to pure fitness) is certainly one of the more promising aspects of this broader space, and it looks like Nokia is investing there, with a HIPAA-compliant Patient Care Platform among other elements. That may be its one opportunity to succeed where others have failed.
Fitbit Reports Final Q4 2016 Earnings (Feb 22, 2017)
I covered Fitbit’s preliminary earnings release a little while back, and we already knew these results weren’t going to be pretty. This was the first quarter of year on year declines, and also featured the company’s first meaningful losses since 2013, when it recalled its Force device. Its costs, especially its sales and marketing costs, rose considerably as a percentage of revenue, and its cost of revenue in particular was well up on last year’s despite the much lower revenue. As I said a few weeks ago, though Fitbit is downplaying these results as a temporary setback and promising a recovery, I see little evidence to support that assertion. Interestingly, some of the metrics Fitbit only provides once a year around user numbers suggest that it’s sold relatively few second devices to the same users – its registered user number is over 80% of its total number of cumulative devices sold, suggesting under 20% were sold as second devices to the same users; in addition, its active user number is now under half its total registered user number, suggesting an over 50% abandonment rate. Those two combined, together with the relatively small addressable market for dedicated fitness devices, are why Fitbit is having such trouble.
via Fitbit (PDF)
Android Wear and LG Watch Reviews Are Mixed at Best (Feb 8, 2017)
It looks like Google and LG lifted an embargo this morning on Android 2.0 and LG’s two new smartwatches. My first reaction to the reviews here is that the new watches sound pretty terrible, and that we’re back to grading these smartwatches on a curve, something I first noted back in 2014 before the Apple Watch was announced. The Verge review is illustrative – it notes that the Sport version is uncomfortable and enormous (it doesn’t fit under shirt cuffs), doesn’t have interchangeable bands, the Android Pay app takes too long to load, and can’t be used while swimming; the Style version lacks most of the more interesting features on the Sport, looks cheap, and the batteries on both versions struggle to make it through the day, while Android Wear 2.0 is pretty buggy. The Verge’s rating? 7.1 for both. Their rating for the Apple Watch Series 2? 7.5. Android Wear has struggled to take off ever since it launched – it’s just never felt like Google or its OEMs understand that watches are fashion accessories, and need to be designed for that job. Packing a billion features into these watches isn’t going to cut it, especially if they don’t work well, or they end up looking ridiculous on your wrist. I’ve seen nothing here that makes me think Android Wear 2.0 is going to do any better than the previous versions.
Fitbit Announces Preliminary Fourth Quarter 2016 Results (Jan 30, 2017)
These are preliminary results from Fitbit, designed to flag to investors that revenues in Q4 were well down on previous forecasts, and to announce layoffs and other cuts to the business designed to realign costs with lower revenues. The company will lay off 6% of its workforce as part of an attempt to cut $200m (or almost a fifth) out of its operating cost run rate for the year. Bizarrely, it’s still characterizing its current troubles as temporary, even though it’s given very little evidence to back up this claim. Importantly, revenue in the first half of 2017 is likely to be down compared to H1 2016, because it had big new product launches a year ago. So even if we’re to believe the claims of a rebound, Fitbit concedes there won’t be any evidence of it until later this year. Fitbit continues to be by far the most successful standalone wearables company out there, but if even it is struggling in this way at this point, that’s indicative of broader challenges for the wearables industry.