Personal Finance

Fitbit Reportedly Struggling With Smartwatch Development

Many Blaze models next to each other

Activity tracker maker Fitbit (NYSE: FIT) has made its smartwatch ambitions abundantly clear : A full-fledged smartwatch that supports third-party apps is in the pipeline, and will leverage the recent acquisitions of Coin, Pebble, and Vector. What's been less clear is the timing that Fitbit has been targeting to unveil and launch the product in order to defend from the impending threat of Apple (NASDAQ: AAPL) Watch.

Yahoo! Finance is reporting that Fitbit was originally hoping to launch its smartwatch this spring, but various problems during development have delayed the timeline to the fall, citing two anonymous sources. The GPS antenna had to be redesigned to improve signal performance, and waterproofing continues to be a difficult nut for Fitbit to crack. Waterproofing is quickly becoming table stakes for smartwatches, among other gadget categories; it's one of the headline features of Apple Watch Series 2.

"definitely not sexy"

According to the report, the smartwatch will include integrated GPS, heart-rate monitoring, as well as contactless payments (which is where Coin's NFC technology comes into play). The device will be able to store music locally and hopes to offer battery life of four days, significantly better than the Apple Watch's daily charging needs. Wearables must also factor in fashion preferences, and Fitbit will offer swappable bands just like its larger rival. Fitbit is supposedly targeting a $300 starting price point, which would represent a further move upmarket ; the Surge is currently Fitbit's most expensive product at $250.

Many Blaze models next to each other

Fitbit Blaze. Image source: Fitbit.

Yahoo! Finance was able to review a slide deck that Fitbit has shared with retail partners, and says the device looks similar to the current Blaze. One of the sources said, "It was very retro-looking with the lines and stuff -- definitely not sexy." Ouch. The design reportedly also had a few critics internally. The Blaze is rather bizarre looking with its boxy shape, and it could be a mistake to borrow design cues from that product.

Two new product categories for the price of...two

Fitbit may be looking to encroach on Apple's turf. The company is reportedly working on a set of Bluetooth headphones to accompany the forthcoming smartwatch. While Apple has long made headphones, the Mac maker bought its way to the top of the premium headphone market with Beats a few years back. Fitbit's headphones will reportedly look similar to what Apple and Beats offer, and will come in two colors.

Headphones would represent an entirely new category for Fitbit to jump into. Beyond wearable fitness trackers and watches, the only other product that Fitbit offers is a Wi-Fi smart scale that allows users to monitor and track health data such as weight and body mass index. Expanding into headphones risks becoming a distraction when Fitbit should be focused predominantly on its smartwatch. It just laid off 6% of its staff (110 employees) a few months ago as it tries to become "more focused and efficient." Jumping into a category where it has little to no experience and probably has little to offer in terms of differentiating factors undermines the concurrent goals of focus and cost savings.

The saving grace here is that the smartwatch market is stalling as consumers continue to debate the category's value proposition. Fitbit has some time to keep working on its smartwatch, but it needs to keep its focus; delays beyond 2017 would be hard to justify.

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Evan Niu, CFA owns shares of Apple. The Motley Fool owns shares of and recommends Apple and Fitbit. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. The Motley Fool recommends YHOO. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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