Another Sign of Weakness in the Wearables Market? - eMarketer

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Another Sign of Weakness in the Wearables Market?

Fitbit posts a Q4 2016 loss as revenues decline sharply

February 24, 2017

Fitbit, one of the largest wearables makers in the world, is struggling to sell its devices.

The company reported revenues of $573.8 million in Q4 2016, down 19.3% from $711.6 million a year ago. Meanwhile, the quarter marked the first time that Fitbit posted a quarterly loss since going public in June 2015.

“While Fitbit is the worldwide leader in the wearables space, that space is just not as large as analysts had predicted it would be,” said eMarketer analyst Nicole Perrin.

Despite making two acquisitions last year that helped eliminate some of the competition, Fitbit has been struggling to drive sales for its devices, especially as consumer interest for them has waned. In addition to weak Q4 earnings, the company reported weaker-than-expected holiday sales and laid off 6% of its global workforce.

But Fitbit isn’t the only wearables player that’s trying to stay afloat. Pebble, one of the smart watch makers that Fitbit acquired—and a company that garnered a lot of buzz for its device in 2012 via a Kickstarter campaign—folded in December.

Meanwhile, Microsoft killed its fitness tracker late last year, and Jawbone, another wearables maker, halted production of its trackers last year as it looked for a potential buyer.

The wearables market has fallen short of expectations, especially since the launch of the Apple Watch. With data showing sales and shipments slowing, eMarketer slashed its growth outlook for wearables. Indeed, in October 2015, eMarketer expected usage among US adults to grow more than 60% in 2016. However, according to the latest forecast, it only grew 24.7%.

“For most consumers, there just isn’t yet a compelling use case for smart watches,” said Perrin.

Rimma Kats

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