Fitbit announced its second quarter earnings after the bell Wednesday, and it hinted at a future product that might save the smartwatch category.
On the earnings call, the company said its new, unnamed smartwatch will be available for the 2017 holiday season. The Blaze, Fitbit’s existing smartwatch, is outselling every other Android-based smartwatch, according to the company.
“Our upcoming smartwatch device will deliver a combination of features that consumers have not yet seen in a smartwatch, including a health and fitness first focus, cross-platform compatibility, water resistance to 50 meters, industry-leading GPS tracking, and an easy-to-use software developer kit that will enable innovation and deeper connections to the healthcare system. All of this will come with multiday battery life at an attractive price,” James Park, CEO of Fitbit, said on the company’s earnings call.
Yuuji Anderson, an analyst at Morgan Stanley, thinks Fitbit will sell 1 million units of the new watch in the fourth quarter. Anderson said the success of the new smartwatch will largely depend on its features and how new they seem. If Fitbit is able to squeeze top-of-the-line heart rate and GPS sensors in the watch it might be an attractive entry point for new customers to buy into the platform, according to Anderson.
The company would also have to convince developers to build apps for the new platform. The company said it has a robust universe of developers that it can rely on to build content for the watch, but until the watch is released, it’s hard to tell that developers will deem it worthwhile to develop apps for Fitbit’s platform.
Anderson is neutral on the company currently but said a failure to convince developers to come to the platform would be a reason to be bearish on the company.
“Until the watch functionally differentiates itself we are staying on the sidelines, particularly as the activity tracker category also needs to undergo its own evolution to reverse declining demand,” Anderson wrote in a note to clients.
The Blaze was successful, outselling other smartwatch platforms, but the category is lagging and would need a real hit to revive it.
Fitbit is down 27.73% this year, and is trading at $US5.74 after earnings. The company saw a 13.21% increase after beating earnings expectations on Wednesday.
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