Fitbit Falls Behind Apple & Xiaomi In Wearables Shipments
Zacks Investment Research | Jun 06, 2017 11:15PM ET
After years of maintaining its leading position in the wearables market, Fitbit, Inc. (NYSE:FIT) finally lost its ground to Apple (NASDAQ:AAPL) and Xiaomi.
According to the latest International Data Corporation (IDC) report released on Monday, Apple and Xiaomi are tied at the top in terms of first-quarter 2017 shipment volumes, with each having shipped 3.6 million units. Fitbit has been pushed back to the third position with 3 million units shipped. Samsung (KS:005930) having shipped 1.4 million units and Garmin (NASDAQ:GRMN) 1.1 million units hold the fourth and fifth positions, respectively.
Fitbit’s shipment decreased a massive 37.7% on a year-over-year basis while that of Apple surged 64.1%. In terms of market share. Xiaomi is leading with 14.7% market share followed by Apple with 14.6% share. Fitbit holds 12.3% share of the market while Samsung and Garmin hold 5.5% and 4.6% share, respectively.
What’s Wrong with Fitbit?
Fitbit’s growth has been slowing down with smartwatches outshining the fitness wearable category, influx of new wearables, lack of upgrades among existing users and lackluster growth in the Asia Pacific region.
The company’s shares have lost a mammoth 81.8% since Jun 18, 2015, the day on which the company began trading on the New York stock exchange.
Despite the broad range of devices Fitbit provides at different price points, it has been facing tough competition at both the high- and low-end products. At the high end, there is Apple’s multi-functional Apple Watch, which renders Fitbit devices useless. There are other big manufacturers who are developing connected devices on Alphabet (NASDAQ:GOOGL) owned Google's Android operating system. At the lower end, the company’s biggest competitors are Xiaomi and Garmin.
With Fitbit bringing in counter strategies through the roll out of new products, buying smaller companies (Coin, Pebble, and Vector) and increasing marketing spend; its operating expenses as a percentage of revenues have increased to 70.2% in the first quarter of 2017 from 42.5% in the year-ago quarter. Increasing expenses coupled with slower revenue growth resulted in the company posting a net adjusted loss of 25 cents per share in the first quarter of 2017.
Fitbit, Inc. Net Income (TTM)
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