Fitbit, the market leader in wearable electronics, was forced to suspend the production of fitness bracelets, as retailers and manufacturers are inundated with unclaimed products. The demand for smart watches, revived the holiday season, returned to competitive level. Providers may not receive money for already released gadgets.
Fitbit has suspended production of its smart watches in the middle of December 2016. Reason – the excess of unclaimed goods in warehouses of retailers and manufacturers, due to the decline in sales, according to Cnews.
Research firm Cleveland Research confirms that the demand for wearable gadgets Fitbit at the moment can be “characterized as weak,” and that the expected revenue for the fourth quarter of 2016 highly inflated.
According to the analyst firm Ben Ballina, 2017 for Fitbit began badly, to the point that some providers may not get paid for their products, because the demand for it fell. Partners completely stopped production for Fitbit, as literally “buried in production”.
The drop in profits is due not only to the extinction of demand for the bracelets, but with pressure from competitors. In the upper price segment Fitbit has to compete with Apple in the bottom with Xiaomi. Cleveland Research notes that along with the reduction of the share in the market Fitbit bracelet is an increase in the share of Xiaomi.
Despite the difficulties Fitbit remains the market leader in wearable devices. In the third quarter of 2016, its market share was 23%. During this quarter, the company shipped 5.3 million gadgets.
To better compete with Apple, Fitbit recently acquired a European manufacturer of smart watches Vector Watch. The company, with headquarters in London and development center in Romania, was established in 2013 by Andrew Pitesa and Dan Tudosa. The staff includes former employees of the famous watch maker Citizen.
Vector famous for their round smartwatch, which differ expensive design and a long battery life – up to 30 days.
In December 2016 it became known that the Fitbit becomes the pioneer of the smartwatch market, the American company Pebble, for about $34-40 million In this case, the Fitbit was also not interested in the brand or products, and intellectual property of Pebble and its software solutions.