Fitbit’s health in question as job cuts loom large on horizon

30 Jan 2017

Fitbit. Image: nukeaf/Shutterstock

Some 10pc of Fitbit’s global workforce is expected to be cut as Fitbit prepares to reveal a struggling financial quarter. Are wearables wearing thin?

The frustratingly erratic formative years of today’s wearables market has so far seen companies come and go, devices reach for the stars and fall flat, and growth fail to truly catch fire.

All the while, one company has remained a constant success: Fitbit. Despite the might of Google, the innovation of Apple and the wealth of other rivals, Fitbit has maintained its position atop the wearables tree.

Though it appears times are not as good as previously thought at the company.

Fresh reports ahead of the release of the company’s Q4 results today (30 January) claim Fitbit is to cut 5-10pc of its 1,600-strong workforce. The expected struggle in Q4, according to The Information, is “the latest sign of a slowdown in the wearables market”.

“Fitbit is also undertaking a reorganisation which, along with the job cuts, will reduce costs by about $200m. The company’s board voted on the job cuts on Wednesday,” reads the report.

This ‘latest sign’ of a slowdown may come as a surprise mere weeks after such wearables were deemed the answer.

In December, it emerged that overall wearables growth was up 3pc, largely driven by the type of fitness wearables pioneered by Fitbit. As smartwatches struggled to prove relevance, it appeared that Fitbit’s early foray into the market was the right approach.

“It’s still early days, but we’re already seeing a notable shift in the market,” said Jitesh Ubrani, senior research analyst for IDC, at the time. “Where smartwatches were once expected to take the lead, basic wearables now reign supreme.”

Fitbit was seemingly enjoying a good few months. Recently, it swooped in to buy the struggling smartwatch maker Pebble for as little as $40m. The Pebble smartwatch is regarded as one of the first great success stories of crowdfunding campaigns and, in particular, the beginnings of the Kickstarter website.

Despite millions of dollars of funding however, its value plummeted, with Fitbit’s purchase looking rather paltry in comparison to earlier interest.

Apple Watch, Fitbit’s main competitor, appears a flop and, unless Google’s Android Wear 2.0 plans, with two devices expected soon, can drive up interest in the industry, it seems even the best of the bunch will struggle.

Fitbit. Image: nukeaf/Shutterstock

Gordon Hunt was a journalist with Silicon Republic

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