According to JMP Securities technology analyst Alex Guana, Apple’s slow launch into the wearables market has left a large opening for competitor Fitbit. Guana claims Fitbit is the “clear leader in the market with over 11 million units sold last year.” Guana continued by saying that Fitbit is currently ahead of Apple Watch as far as price points, battery life and GPS tracking. However, he did concede that long-term, Apple can bring a lot of “power” with iOS and versatility. These Apple advantages will give Fitbit some serious competition.
When asked whether the current wearables market is like the smartphone market in years past, like Blackberry being the leader in an emerging market until Apple and Google stepped in offering far more versatility and power to smartphones, Guana said that will be Fitbit’s challenge going forward, not to be “Blackberried”.
T-GAAP’s counter opinion
We believe this “challenge” to Fitbit starts now, not in a year or two as Guana thinks. Apple Watch is now in retail Apple Stores, thus people can walk in, try on and purchase an Apple Watch – instant sale. Largely erased is the wait of four to six weeks for a watch, which will accelerate Apple Watch adoption as most people will want to wear it out of the Apple Store and in the mall where it will be immediately visible to more would-be buyers. Think free advertising. It is almost akin to buying the newest Nike Jordan basketball shoes in the late 80’s, where wearing them out of the store was part of the reason for buying them — that euphoric experience — which also bolstered market awareness and sales.
Unless Fitbit does more than help with your health/exercise regiment, it will be quickly become a loss leading, niche product. Apple Watch stops any Fitbit growth in the high-end where profit is to be made, and where the company is likely trying to expand into. The only thing to stop Apple Watch from dominating the wearables market place is Apple itself.
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