Reading the "Risk Factors" in the From S-1 always proves to be educational. Thanks to the SEC the disclosures tend to be very candid (if not partially shrouded by legalese) and a good indicator of the structural weaknesses of a company.
For FitBit the lack of subscription revenue (1% of total), the litigation following product recalls, and the uncertainty from complying with FDA regulations seem particularly noteworthy.
The problem is competition. FitBit's only hope, in my opinion, is to create an Android-based/compatible multifunction device that becomes the competitor to the Apple Watch.
On the other hand, they present a cross-platform alternative. I bought Fitbit's scale because it had a Windows Phone app, something that Apple or Samsung won't give me.
I just don't think a pedometer gets the job done. I think the winners in this space will be much broader, multifunction devices. Something like I expect to see out of Apple Watch 3.0.
> I just don't think a pedometer gets the job done.
Fitbit's current flagship activity tracker (the Surge) includes a pedometer, but it isn't just a pedometer. It has a fair array of functions, including non-pedometer fitness functions like the heart rate monitor -- it doesn't support third-party functionality like Apple Watch or Android Wear, and it doesn't have a color screen, OTOH, it can be used with Apple or Android devices (and Windows Phone, I think) -- or with neither, it can use a desktop or laptop to sync, as well -- and when used with a mobile device, it can support call and text notifications and control the synced device's music playback.
It also has its own GPS for doing exercise (run/bike) route tracking.
They're in a tough competitive spot, sure. But they've known for a while that the direction was toward broader functionality.
An interesting comparison is Misfit. They sell pedometers but also offer a free app for Pebble and Apple Watch. How do they intend to make money? Selling Shine to people who are interested in the jewelry aspect? Getting people into their ecosystem and selling them the bed sensor or other future specialized sensors?
I've been really curious about the Misfit business model. It's neat that they offer their software on two watches now but it's free. You only pay for devices and last I looked they didn't have any services.
Does anyone have any insights there since I'm curious?
For FitBit the lack of subscription revenue (1% of total), the litigation following product recalls, and the uncertainty from complying with FDA regulations seem particularly noteworthy.