Tweetstorm Digest: June 17, 2015

Some @charlesfitz thoughts on Fitbit right before their IPO:

1/ Fitbit IPOs tomorrow and this profitable company has a surprising number of skeptics.

2/ They have dominant market share (85%) and their brand is almost synonymous a la Kleenex/Xerox with the fitness tracker category.

3/ 2014 revenue was $745M with $337M in the first quarter of this year. 2014 profits were $132M.

4/ 2014 performance was despite a recall of its high-end Fitbit Force product due to allergic reactions to nickel metal components.

5/ Even with 50+ competitors introduced at CES, they are holding their own. Nike has exited and Jawbone is in its death throes.

6/ The glib takedown is the company is the next Blackberry – http://www.businessinsider.com/fitbit-risks-to-business-before-ipo-2015-6

7/ Apple Watch is touted as a Fitbit killer but it is somewhere between “meh” and an outright flop (heresy I know).

8/ Apple Watch provides a huge price umbrella for Fitbit, whose most expensive product is only $249. Big battery life umbrella too.

9/ Apple Watch is overly complex, inconsistent, slow and, in my view, a Pavlovian notification nightmare.

10/ Apple execs in their chauffeur-driven Bentleys have lost sight of “the rest of us” with Apple Watch.

11/ Apple’s fashion fixation and need for material revenue contribution at Apple scale have perverted the design point.

12/ Fitbit looks good for foreseeable future. Hopefully will be long $FIT tomorrow.

3 thoughts on “Tweetstorm Digest: June 17, 2015”

  1. Meh. FitBit the Kleenex of the industry: yeah if only <5% of people had noses.

    I only know about FitBit because I watch tech podcasts. I work at a large development company, and though I haven't gone out of my way to look for someone with one, I know no one, none, with any fitness band.

    The problem is: it is such a niche market, for those that "should" care about it (fitness buffs, and not just any fitness buffs, I'd argue people that exercise in ways easily converted into heartrate and speed, ie cardio fans), and those that are tech nerds who don't already have a watch they like for style reasons, you need the union of the three to justify dropping $100+ for one of these.

    The fact that you mention Apple in half of your points means that, yeah Apple watch IS important. If nothing else it serves as a point of comparison for other devices. Also likely to be more widely known because it does more than just track activity, and at least tries to answer the "I'm going to give up my pretty jewelery for your ugly band because …?" though as with a typical Apple product is a good 2X the price of what it is "worth".

  2. Could interpret not knowing anyone with a fitness band as a good sign – lots of market yet to penetrate.

    I think Fitbit works beyond the hardcore fitness/tech nerds. $99 is a discretionary purchase for a lot of people. It is also an aspirational purchase, just like lots of people buy athletic stuff and aren’t necessarily hard core athletes.

    The crux of my trade (which has stil been a good trade even after the last week’s market implosion and the perverse reaction to Fitbit’s first killer quarterly results) is that Apple Watch was overhyped and Fitbit was underhyped. Still think that is true, though the “meh” reaction to Apple Watch is much more conventional wisdom at this point. Apple Watch sets a huge price umbrella and I believe in price elasticity.

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