Wearables may be strengthening their grip in the tech marketplace, but will Fitbit have what it takes to go the distance?
As the eight year old company which makes wearable health devices is set to raise between $350million and $500million from an initial public offering (IPO), it is a good time to ponder whether this is part of a long term plan or a knee jerk reaction to some looming threats?
Fitbit has done well in the past 12 months, having been seen on the wrists of world leaders and celebrities. It provides a discrete way of measuring physical activity and can be linked directly to the users smartphone for instant results. In the first quarter of this year, it reported sales of almost $340million, three times that for the same quarter a year earlier.
But it has encountered some problems too. Only last week it was reported that Jawbone, it’s most closely related wearables rival, is suing Fitbit, accusing it of stealing commercially sensitive data and poaching staff.
Risks of how personal health data can be used and manipulated by third parties is also causing some concern.
Even users themselves are abandoning the product, with 15% said to stop using the Fitbit within 30 days (and 42% of similar devices stopping within 6 months).
Regardless of whether the allegations stand up to scrutiny, this is unwelcome news before an IPO and potentially very costly in financial as well as reputation terms.
I joined Michael Wilson for the Arise News World Business Report to discuss what potential Fitbit investors will be thinking about.
(hand model @yasemin86k)