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Fitbit Launches Versa 2 Following Versa Lite Flop

Following the Versa Lite's flop, which caused Fitbit (NYSE: FIT) to cut its full-year guidance, the company has a lot riding on the Versa 2. In line with rumors that the second-generation smartwatch was imminent, the company has officially announced the new device. The new model packs in quite a few meaningful upgrades compared to the first-generation Versa.

Here's everything you need to know about the Versa 2.

Versa 2 with a pink strap

Versa 2. Image source: Fitbit.

Just in time for the holidays

For starters, the Versa 2 will support Amazon Alexa, and the device now has a microphone to activate the e-commerce giant's wildly popular virtual assistant. Fitbit has reduced the number of physical buttons to just one while slimming down the bezels for a sleeker look. Unlike other gadgets that integrate with Alexa, the smartwatch won't always listen for a wake word. Instead, users will need to press a button to invoke the assistant, which will respond with text on the display.

Fitbit is adding a faster processor and adopting an AMOLED display, which will help improve battery life because OLED displays are more power-efficient than traditional LCDs. Accordingly, battery life has been extended from four days to five, and Fitbit is introducing various features related to sleep tracking. Thanks to its better battery life, sleep tracking is a key area of differentiation from Apple's (NASDAQ: AAPL) smartwatch. Most Apple Watch users need to charge their smartwatches overnight, making sleep tracking inconvenient.

Water resistance is unchanged at 50 meters and all Versa 2 models support Fitbit Pay, Fitbit's fledgling mobile payments service. The new product does not include cellular connectivity or stand-alone GPS, two important selling features of the Apple Watch. Versa 2 will rely on a paired smartphone for GPS. Apple has in recent years been trying to untether Apple Watch from relying too heavily on the iPhone and making it more of an independent device.

Versa 2 starts at the same $200 price point as the previous version, with a special edition model costing $230. The pricier model includes a three-month trial of Fitbit Premium, the health and fitness subscription service that the company separately launched today and costs $10 per month (or $80 per year). The device ships next month.

Diversifying away from hardware

Like most consumer electronics companies, Fitbit's hardware business depends largely on product cycles to spur demand. At the same time, Fitbit hopes to build a tech platform for digital health with Fitbit Premium in an effort to grow its subscription business and diversify away from the fickle consumer hardware market.

"In addition, we're accelerating our hardware product development cadence for an annual cycle," CEO James Park noted recently. "This will not only enable us to adapt faster to changing market conditions, it should make our business more predictable on a year-over-year basis since new product introductions comprise the majority of our sales."

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Evan Niu, CFA owns shares of AMZN and Apple. The Motley Fool owns shares of and recommends AMZN, Apple, and Fitbit. The Motley Fool has the following options: short January 2020 $155 calls on Apple and long January 2020 $150 calls on Apple. The Motley Fool has a disclosure policy.

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