Fitbit: Turnaround Challenges
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Case Code: BSTR580 Case Length: 16 Pages Period: 2007-2019 Pub Date: 2019 Teaching Note: Available |
Price: Rs.400 Organization: Fitbit, Inc. Industry: Technology & Communications Countries: United States Themes: Turnaround Strategy, Competitive Strategy, Strategy Formulation |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
The Rise of Fitbit
Since its inception, Fitbit had managed to stay in the competition by steadily delivering new products with extra features. It seldom dropped its models and frequently released updates of its software. Thus, it created the impression among the customers that its products would never become obsolete and this encouraged them to purchase Fitbit products rather than those of its competitors. Fitbit won the runner-up award at TechCrunch50 in 2008. This award signified the innovation by Fitbit in making the fitness trackers. It also won the Innovation award at the Consumer Electronics Show (CES) 2009 as the innovator in consumer electronics in the health & wellness category...
Problems
Apple and budget Chinese companies like Xiaomi were posing a stiff competition to Fitbit. An Apple smartwatch was compatible with its entire range of devices. Though Fitbit could also work on both Android and iOS, its app could not deliver the level of integration and functionality that Apple’s built-in app could. For instance, the Apple Watch Series 3 offered users’ access to a range of third-party services including games like Pokémon Go and apps like iTranslate that Fitbit lacked. Moreover, Apple Watch users could get mobile notifications on their watch even when they were away from their phones if connected through the same Wi-Fi. Fitbit, on the other hand, could not get notifications beyond 30-50 feet. The price difference between the Apple Watch and the Fitbit smartwatch was also not much – Apple’s pricing started at US$ 329, while Fitbit’s state-of-the-art Ionic was priced at US$300...
The Road Ahead
Analysts opined that consumer interest in exclusive wearable devices was declining. This was apparent from the growing sales of smartwatches and the drop in demand for Fitbit devices. They also felt that Apple would outdo Fitbit in the wearables market as sales of the Apple Watch were growing. Meanwhile, Xiaomi had replaced Fitbit at the top of the wearables sales. Experts opined that there might be a situation where consumers would prefer their wearable devices from either a premium player like Apple or budget Chinese companies like Xiaomi...
Exhibits
Exhibit I: Global Smartwatch Shipments Market Share by Brand in Q1 2018 vs Q1 2019
Exhibit II: Fitbit Inc.'s Key Financials for the Third Quarter 2018
Exhibit III: Global Wearable Technology Segmentation
Exhibit IV: Top Wearable Companies by Shipment Volume, Market Share and Year-over-Year Growth Q4-2018
Exhibit V: Worldwide Top Five Wearable Companies 2018 Q4 Unit Market Share
Exhibit VI: List of Fitbit Products up to 2018
Exhibit VII: Number of Fitbit Users
Exhibit VIII: List of Companies Acquired by Fitbit
Exhibit IX: Condensed Consolidated Statements of Operations of Fitbit, Inc.
Exhibit X: Stock Chart of Fitbit Inc.
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