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Fitbit has doubled down on a losing strategy

Published Aug 29th, 2017 1:49PM EDT
Fitbit Ionic vs Apple Watch

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Through years of hard work and good hardware, Fitbit has achieved the “Kleenex status” of having an entire genre of devices associated with its brand. But it’s now facing existential competition from Apple, which is slowly but surely taking over the entire high-end wearables market with its Watch.

Sure, Fitbit is still the brand of choice for people who want to throw down $70 on cheap validation that they’re doing something healthy every day. But if there’s any money to be made in wearables, it’s certainly not selling semi-disposable bracelets to insurance companies.

In the face of all this, Fitbit has been left with a difficult choice: adopt Android Wear and try to build a viable smartwatch to compete with the Apple Watch, or stick to making simple fitness monitors with only basic smartwatch functionality. I mean, surely no-one would try to build a completely new watch operating system to compete with watchOS and Android Wear, right?

Oh. Um. Enter Fitbit’s new smartwatch, the Ionic, running “Fitbit OS, which the company says will become the core of its current and future smartwatch endeavors.”

Developers will need to code their own separate apps for Fitbit OS, and will even be able to code in third-party watchfaces for you to download and install. Basically, if developers don’t freely pour hundreds of hours into developing Fitbit OS apps — and keeping them updated! — Fitbit OS will wither and die.

Unfortunately, we’ve seen this move before, because it’s exactly the same strategy now-defunct smartwatch maker Pebble used. Fitbit bought Pebble for just $23 million last year, an epic fall from grace for a company that was reportedly once valued at around $750 million.

It’s difficult to pin Pebble’s exact demise on any one thing — smartwatches have never really proved profitable for anyone, even Apple — but the reliance on a proprietary operating system definitely doesn’t help. Relying on a proprietary OS will always make integration with a smartphone a difficult and moving target. Using a Pebble with an iPhone, something I did for years, always felt like a bit of a bodged-together hack, rather than the complete experience that an Apple Watch-iPhone pairing provides. You had to jump through hoops to get SMSes to show up on your watch, it didn’t pair consistently, and every new iOS update always broke something.

I can only imagine Fitbit OS is going to be more of the same.

Now, none of this is to say that the Ionic is a bad smartwatch. Initial reviews are good: The Verge says that “purely as a fitness tracker, it’s certainly the best Fitbit I’ve ever used;” Gizmodo said “it might be the smartwatch that unseats Apple;” and Mashable waxed lyrical about the watch’s sensors.

Purely from a fitness hardware perspective, it looks like an awesome device. But none of that matters so long as Fitbit is determined to try to build out all the infrastructure to compete with Apple and Google on the software level.

The best example is the new contactless payment system Fitbit is introducing with the watch, called Fitbit Pay. It’s an NFC payment system that will let you make contactless payments with your watch, and at launch, you can sign up with some big-name cards like Visa and AMEX.

But I can virtually guarantee that no-one is going to.

NFC mobile payments have been around for years in theory, but it’s taken a massive push from Apple to get people interested in Apple Pay. Even with the ease of use of setting up Apple Pay or Android Pay on your smartphone these days, a staggeringly tiny number of transactions — around 1% — were made with mobile payment apps last year. Fitbit will be a rounding error compared to Apple when it launches, and things are only going to get worse. The future of mobile payments, according to most experts, is integrating loyalty cards and money management apps in the system — even more work that probably isn’t going to happen for Fitbit. Even if it did manage to pull that off, you’d be talking about an army of people just dedicated to keeping its mobile payment system working and competitive.

The bottom line is that Fitbit is good at making hardware. It’s not good at mobile payment processing or loyalty program relationships with retailers. The only way it has a hope of making money is to focus on the hardware and fitness side of things, and use the existing wealth of smartwatch apps  — and Android Pay — that it can access for free by using Android Wear.

Chris Mills
Chris Mills News Editor

Chris Mills has been a news editor and writer for over 15 years, starting at Future Publishing, Gawker Media, and then BGR. He studied at McGill University in Quebec, Canada.