06 Jul / Device or Vice?
by Mike Tinney
Wearables, devices, measuring robots… are they good, are they bad, or are they a fad? I don’t know. But we’ve been watching them closely for years. Certainly, there have been some very interesting signals in the last half decade.
For example, when FIX started providing services to clients in 2013, Fitbit was number one, Nike Fuel Band was number 2, and Jawbone was number 3. Then, shockingly, Nike announced they were abandoning their wearable. Misfit and Withings entered the arena with new smart wearables. Misfit was very fashionable, whereas Withings was very clinical, an early pioneer of heart rate monitoring in wrist worn devices. Garmin was just entering the market.
Everyone thought Jawbone would grow as Nike left the field, but shortly thereafter, Jawbone seemed to collapse in upon itself. In the meantime, Fitbit was prepping for an IPO.
Watching Fitbit’s IPO was fascinating. Studies showed that one third of people who buy fitness trackers abandon them within six months, and more than half eventually stop using them altogether. Nevertheless, analysts believed that there were soooo many people likely to buy a Fitbit in the future that they still backed Fitbit’s $3.7 billion IPO valuation in spite of the short “wrist life” of the wearable.
Fitbit IPO’ed like a champ, and quickly began to double down on both community and corporate. In the meantime Garmin slowly started gaining market share, Xiaomi started to make a splash, and the Apple Watch was released with lots of promising health features on the way, cementing the trend away from “step trackers” to “app-based smartwatches.”
As Garmin and Apple continued to ascend, Withings and Misfit exited. Withings with a sale to Nokia, and Misfit with a sale to Fossil. In my opinion, that was a smart move on Fossil’s part. As the largest worldwide manufacturer of watches, Fossil had the most to lose with the smart band revolution. Any smart wearable is a mini computer in its own right these days. Heck, my $129 middle of the road Fitbit still displays my texts and sends me alerts and prompts. High end wearables in all major lines do so much more than that. Why should anyone put something on their wrist that only tells them the time? Smart move Fossil.
Nokia… maybe not so much. I just read that Nokia is selling Withings back to Withings’ founder. Good move for Withings’ founder… it looks (from the outside) like a sell high, re-buy low scenario. That’s a good deal by most counts.
Meanwhile, remember Nike? They exited the hardware part of the business and doubled down on their Nike+ fitness app ecosystem, eventually partnering with Apple for Nike+ edition Apple Watches. Maybe they decided to get out of the hardware business a few years ago, and make the Apple Watch their home? Oh hey, is that Apple CEO Tim Cook on Nike’s Board of Directors? He is smiling in his picture…
In 2013, Fitbit shipped 67% of all activity tracking devices. Fast forward to the end of 2017 and the market has distributed and shifted to smartwatches, with Apple (15.3% marketshare) having taken the crown on the strength of the Apple Watch. Xiaomi (13.6%) follows in second place on the strength of their overseas sales. And Fitbit? They’re still a player in third (13.3%) but their market dominance has eroded in just 4 short years.
So what does all this mean? I dunno. I think hardware is hard to keep up with. I think there are strengths with a community-first approach. Big companies, big brands have muscle they can throw around. There’s obvious external synergy to what Nike is doing with Apple, and probably 100x that happening behind the scenes. I think Fossil made the right covering bet by nabbing Misfit. Don’t know if they are too late to the party though… but better late than never at all, I think.
What does this mean to us at FIX? Well, we’ve engineered our platform to be device agnostic, so aside from the overall market continuing to grow… very little, actually. As wearables battle for community, they generally recognize that ease of use and access are key. The more apps they work with (both first party and third party), the larger their community overlap.
FIX is both a community source and a content source. We can bring people to the wearable platform, and give the existing wearable customers something new to do with their existing wearable investment. We probably aren’t Switzerland in this story. We’re probably more like Iceland. Welcome everywhere. Not particularly threatening. Exotic and different.
Until next time,
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