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Fitbit In A Fight For Its Life

Jul. 10, 2017 10:41 AM ETFitbit, Inc. (FIT)AAPL31 Comments
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Intelligent Speculator


  • Fitbit is struggling to compete on both the high end and the low end of the activity tracker market.
  • A large portion of Fitbit's consumers did not buy the device but rather received it as a gift and do not tend to keep using the device, and are unlikely to upgrade.
  • Activity trackers and health data are increasingly becoming a feature for ecosystem players such as AAPL, GOOG and MSFT which will keep potential profit margins for FIT very low.

It's no secret that recent times have been challenging for Fitbit (NYSE:FIT). I took the time to do a deeper dive into the company's troubles to see if there was any hope for a turnaround as some have suggested. Fitbit is a company that manufactures activity trackers that make it easier for its customers to track and increase their level of activity. As you would imagine, Fitibit's customer are mainly based in the US with a few other countries (UK, Canada, Australia) coming next.

In those markets, Fitbit is fighting for mainly users of Apple's (AAPL) iOS as those users typically have more revenues and thus are more likely to be focused on and investing in activity trackers. That also translates into much higher rankings for its app on the Apple App Store than the competing Android store:

One of the many issues Fitbit faces, though, is its difficult relationship with Apple. In a world where users are looking for integrated, easy solutions, Fitbit's data does not sync with Apple Health, a big problem for many of Apple's users. The thinking behind that was to force its users to get data through Fitbit's own app rather than becoming a "commodity provider" of health data for Apple. That decision was one of the reasons why Apple stopped selling the Fitbit device and this is clearly an ongoing issue.

The fact that Apple now has its own health device, the Apple Watch, is obviously a big factor as well and has left Fitbit and other players in a tough spot. Already, smaller health players such as Pebble, Jawbone and Hello have or are in the process of shutting down. Why?

Health Data Has Become A Feature For Ecosystem Plays

I've written about the power of ecosystem plays (FAAMG) and the challenge in competing with

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