Fitbit Cuts $200 Million in Jobs and Expenses, Apple Watch Remains Wearable Market Leader
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Fitbit, Inc. announced a 6 percent cut of its workforce Monday due to weak fourth-quarter revenue reports.
The company cited “softer-than-expected” holiday demand last year as a primary reason for the “direct action” according to a Jan. 30 press release. Along with realigning spending and investing, the company said it will also reduce its workforce. While the business reorganization is slated to save the company about $200 million, it will affect roughly 110 employees, the Wall Street Journal reported.
In the wake of the announcement, shares of Fitbit dropped nearly 13 percent during Monday’s morning trading, USA Today reported.
While the Fitbit lowered growth has been prevalent in its most “mature markets” — namely the United States and North America — CEO James Park did note that the company saw fast growth in several markets, including Europe, the Middle East and Africa. Despite 4th quarter reports, Parks said that the company is still in a key position to provide products for the healthcare ecosystem.
“We believe the evolving wearables market continues to present growth opportunities for us that we will capitalize on by investing in our core product offerings,” Parks said.
Additionally, while primarily a fitness tracker manufacturer, Fitbit announced that it will continue to expand into the $10 billion global smartwatch market — a move that will bring the San Francisco-based company into direction competition with Cupertino’s Apple Watch. The company is already positioning itself to do so, if its recent acquisitions of Pebble, Vector Watch and Coin are any indication.
Still, Fitbit will likely face stiff competition from Apple and other smartwatch makers. While Fitbit currently dominates the wearables market, it’s largely failed to take any ground away from Apple’s smartwatch dominance. In 2016’s 4th quarter in the U.S., the Apple Watch occupied as much as 50 percent of the smartwatch market share, according to research firm Kantar Worldpanel. That’s a sharp increase from the 24 percent the company controlled during the 3rd quarter — a jump that’s likely attributable to the release of the Apple Watch Series 2.
