The headlines that started the month of August were less than thrilling for Fitbit — as some were beginning to wonder if Apple had already won the wearable war. Sales on the Versa Lite, Fitbit’s “affordable” answer to the Apple Watch (starting at $160) came in lower than expected and overall Fitbit’s smartwatch revenue decreased 27 percent year over year in Q2. Smartwatches make up 36 percent of the company’s total revenue. As a result of those weaker than expected sales, Fitbit cut its revenue forecast for the year.
Apple Watch, the experts opined, costs quite a bit more than the Fitbit — but those extra funds buy a whole lot more function. The Apple Watch can track health, play music, order an Uber, pay at a store that takes Apple Pay and (depending on what model one has) make a phone call without being in proximity to a phone. Fitbit is a single purpose-built product — a fitness tracker — and its smartwatch offerings are hardly the multitool that Apple offers. Even the Versa Lite is relatively uncomplicated.
“The Versa Lite was aimed at first-time smartwatch owners, but struggled against fitness trackers with smartwatch-like capabilities and with higher-end smartwatches capable of much more, like GPS, NFC and other [features],” IDC analyst Ramon Llamas recently told TomsGuide.com.
Apple’s wearable division, by comparison, grew by 50 percent during the quarter that ended in June, and CEO Tim Cook noted in his post-earnings call with analysts that over 75 percent of customers buying Apple Watches in the June quarter were buying their first Apple Watch.
However, August’s headlines for Fitbit are ending quite a bit different than they started. The Versa 2 is getting a makeover, and subscription services are coming to the products and Amazon’s Alexa is on board to reportedly up that functionalities count. It seems Versa is getting a second bite at that wearable market, while Amazon gets to burnish its everyday app boasts and possibly take a bite out of Apple’s directly, all without even having to build a smartwatch of its own.
The Versa Alexa Pair-Up
Fitbit seems to have taken the market’s message — and this week started rolling out the next version of the Versa 2 which will arrive in stores in a little over two weeks. Now priced at $200, the Versa 2 comes with a few next-generation upgrades, most notably the Alexa addition which seemed aimed at vaulting it into the more premium smartwatch category where the Apple Watch is currently perched.
However, even putting the Alexa addition aside, the new Versa 2 is designed to do quite a bit more than its predecessor. The display is upgraded, the processor is faster and it boasts a five-day battery life.
Contiguous with Versa 2 upgrade, Fitbit is also launching a new coaching and fitness guidance subscription service called Fitbit Premium. For $10 a month or $80 a year, subscribers will gain access to guided plans and workouts as well as what Fitbit describes as “a customized mix of suggestions based on user’s collected fitness data.”
The fitness subscription, notably, is not exclusive to new Versa 2 customers.
Alexa access, on the other hand, is — though Alexa on the Versa is not quite as full an experience as Alexa on a smart speaker just yet. For example — though users can talk to Alexa — she can’t quite talk back yet because the Versa 2 still doesn’t have speakers. Answers are instead delivered via text responses.
On the Versa, Alexa can do a range of her normal activities — search for general information, control smart home devices, find local businesses, start or stop timers and, on Android Phones, transcribe voice responses to messages.
Alexa will eventually be able to access fitness tracker controls — though that won’t be available at rollout. It also won’t have the ability to control music on the Versa 2 — but given the complex process for sideloading music on the Versa 2 it seems unlikely anyone is using it for music.
FitPay — FitBit’s NFC-based mobile wallet, will be on the Versa 2 on all editions. The first version of the Versa 2 had FitPay, but only on premium editions of it.
As of the redesign, however, Fitbit has not added GPS to the device as of yet, nor has it added any FDA-cleared health features, either. Both the Apple Watch Series 4 and Samsung’s Galaxy Watch active offer ECG and EKG technology — though Samsung’s has not been approved by the FDA as of yet.
Amazon’s Toe Into Wearables
Amazon does not have a wearable in the market — though speculation that it may release one any day now has recurred in waves on and off for the last few years. When asked directly in 2016 about Amazon’s plans, CEO Jeff Bezos did what he is famous for doing when asked a question he doesn’t want to answer. He didn’t.
“I think it’s a super interesting market, and I obviously can’t talk about our future roadmap,” Bezos said. “But I think that’s also in its infancy. I think you’re going to see a bunch of different products be successful there, different functions … but I don’t think you’ve seen the tip of the iceberg yet.”
Two years later, wearables can certainly do quite a bit more than they could when the first edition of the Apple Watch launched in 2015 though it’s hard to say how much further down the tip of that iceberg the market has traveled.
As of 2018, the global wearable market is growing — but other than Apple, which accounts for 51 percent of the worldwide market as of the start of the year — there aren’t many breakout success stories. However, that picture is starting to change. Samsung Galaxy Watch sales surged by 121 percent during the second quarter year, according to data from Canalys. Apple still leads the market — and also grew its wearable sales by a notable 32 percent according to the data — but the Galaxy Watch is attracting interest.
“Smartwatch vendors are increasingly getting nearer the bullseye — hitting the right price point in a way that spurs massive demand,” said Canalys research analyst Vincent Thielke in a press release. “With Samsung’s new Galaxy Watch branding in place, and showing robust performance, the company has moved to cultivate a fitness-focused line-up with the Galaxy Watch Active series.”
Moreover, Steven Waltzer, industry analyst at Strategy Analytics points out — the proof is increasingly in the global sales futures — global smartwatch shipments hit an all-time high of 45.0 million units in 2018 and is on pace to handily pass that milestone in 2019.
“Smartwatch growth is soaring, as consumers seek to accessorize their smartphones and bring digital connectivity to their wrists,” said Steven Waltzer, an industry analyst at Strategy Analytics.
This means for a firm like Amazon — with Everyday App ambitions and a highly sticky and channel spanning weapon like Alexa in its arsenal, the wearables market is potentially a very appealing target.
However, as its CEO noted two years ago, it’s still early, and consumer adoption has more ebbed and flowed than shown any explosive, exponential adoption. Some analysts think that may be right around the corner, but some analysts once thought Google Glass would surpass the smartphone in consumer’s lives. There is much potential in the wearable market, but also a lot of uncertainty, and players emerging.
This means it might be a very good time for Amazon to start testing the wearable waters — and getting an idea of how many consumers are interested in talking to Alexa in their watch. Probably a useful tool to figure out if and how wearable will fit into Amazon’s overall strategy for being the central app consumers turn to get everything done.
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