In a grey t-shirt, baggy jeans, and fluorescent striped sneakers, Ryan Krems fits right in with the many tech workers on a late summer day in Boston’s buzzy Seaport District neighborhood. But the Fitbit director of devices arrives at a hip restaurant near the company’s engineering offices here with a big secret: He’s wearing Fitbit’s first true smartwatch, the not-yet-for-sale Ionic.
Ionic is a big bet by the decade-old company to get back on track after sales of its popular but simpler fitness tracking devices tanked last year, along with its revenue and its stock price. Pre-orders for the $300 watch, with a square-screen and a bright color display, opened on Monday, although they don’t reach stores until October.
Krems is the proud papa while munching on a burger and chips, running through the watch’s top features. Using a knife, he points where the Ionic’s tiny body relies on plastic bands that are fused to an aerospace-grade aluminum shell to create a better antenna for GPS and Wi-Fi signals. The complex technique to create the body, known as nanomolding, has previously been used on phones but not watches, he says.
“It’s a great time to be working at Fitbit,” Krems says. Now that the Ionic is just about done, “we’ll be jumping right into the next one,” he adds without revealing more details.
What comes next may depend on just how well the Ionic sells in what is a highly competitive business. Fellow smartwatch makers Pebble and Jawbone have already shut down, while bigger players like Apple and Google (GOOGL) have been forced to revamp their strategies.
Lacking attractive new devices and hampered by manufacturing problems, Fitbit sold only 6.5 million trackers in the key fourth quarter holiday season last year, a 21% drop from the same period a year earlier, according to International Data Corp. In contrast, overall sales of wearables increased 17% during that time.
Fitbit’s business was hammered by low-priced Chinese rival Xiaomi, whose sales nearly doubled. Additionally, sales of higher-end smartwatch from Apple and Samsung picked up, with the iPhone maker seeing a 13% gain and its Korean rival a 38% jump.
Return to growth
Fitbit CEO James Park says his goal for Ionic is to capture a lot more of those high-end sales and to return the company to growth. The higher price and larger size of the Ionic compared to the company’s earlier trackers allows for more sophisticated and costly sensors, thus enabling more serious health-related uses, he explains.
For example, new red and infrared light sensors on the bottom of the watch will let Ionic calculate relative blood oxygen levels of people wearing it, eventually opening the door tracking their sleep apnea, a dangerous condition that affects some 22 million Americans. “It kind of straddles the line between what’s considered a traditional medical device and a consumer device,” Park says.
Analysts are unsure the device has what it takes. Park’s announcement about the smartwatch two months ahead of time meant that most outside software developers haven’t had a chance to create apps for it yet (software tools are coming for them next month). And while the Ionic’s price is comparable to low-end Apple and Samsung smartwatches, the design and features may lack enough pizzazz to attract much more than modest sales.
Additionally, Apple (AAPL) is widely rumored to be just a few weeks from unveiling the third version of its watch. It is said to come with a direct cellular connection built in that would make the device much less dependent on a smartphone connection (and a feature Ionic lacks).
“For now, we really don’t know how compelling the selection of apps will be, how well this thing will actually perform in the final version that’s released to consumers, or what exactly the competition from Apple will look like,” says Jan Dawson, chief analyst at Jackdaw Research. “My guess is that the Ionic will end up selling maybe a couple of million units over its first year—maybe slightly more if the app support turns out to be decent. But it’s not going to make a big dent in the overall smartwatch market.”
Investors, who had driven Fitbit’s stock down 61% over the past year, seemed to be pleased if less than ecstatic about the Ionic’s premiere. Fitbit’s shares gained almost 4% on Monday and remain more than 70% below the company’s 2015 initial public offering price.
Park insists that Ionic will be a hit because Fitbit has incorporated some of the best fitness and health features, which he says are the killer apps for the smartwatch market. The waterproof Ionic can track swimming, running and other fitness activities automatically, for instance, and has more accurate sensors than competing products for everything from collecting heart rates to using GPS to track distances. Smartwatches from the last few years flopped because they didn’t get it, he argues. “Back then, I think a lot of people were kind of wandering around in the desert trying to figure out what to do with these things,” Park says. “I think the picture is getting a lot more clear—for us it’s always been clear. Ionic is launching at the right time.”
For typical use, Fitbit says Ionic has a battery life of four or more days on a single charge, walloping the Apple Watch and most competitors that must be charged every night. That gives customers peace of mind and allows them to wear the Ionic all night for sleep tracking, a challenging task for more power-constrained wearables, Park notes.
The Ionic’s outward appearance may limit some of its appeal, however. Until now, ugly but functional fitness watches have largely been the purview of Garmin (GRMN), whose fenix 5 line of stainless steel smartwatches go for $600 and up.
I found the new Fitbit watch more high tech than high fashion after wearing a pre-release model for a few days. Chaim Gartenberg, a writer with tech news site The Verge, called the design functional but perhaps too fitness-oriented. “I can’t really see myself wearing it to a more formal event, unlike an Apple Watch or a dressier Android Wear device,” Gartenberg writes. And Gizmodo’s Alex Cranz, while loving the fitness focused features, calls the Ionic’s design “profoundly ugly.” The chunky, large screen device could be too big for many women’s wrists, Emily Bary at Barrons, says.
The inspiration for the watch’s controversial aesthetic borrowed partly from the Ionic’s angular-shaped predecessors, like the Blaze, Surge, and Alta. But it also came from the design team’s efforts to create the emotional feelings of a journey— space journey. The watch comes in three colors—silver grey, dark grey and orange—that were all inspired by science fiction movies about space, like last year’s hit The Martian and director Chris Nolan’s 2014 thriller Interstellar, says vice president of design Jonah Becker. The three muted colors give a clean look, but without much panache. A couple of hand crafted bands for the Ionic coming from top shelf leather maker Horween could improve the picture.
The effort to point to the future also swayed Fitbit’s designers away from traditional round watch shapes, either for the overall device or even for the watch faces the company created for the initial product (though outside developers will be able to create additional watch faces).
“Philosophically, I believe round is a result of hour, minute and second hands that sweep radial circles,” Becker says. “That makes a lot of sense on a mechanical watch. Doing that with something that is digital is in some ways looking backwards and playing on that comfort that people had with the past.”
Fitbit (FIT) prefers to be more forward-thinking, he says. Whether consumers will envision the same kind of future is yet to be seen.