Data Sheet—Why Fitbit Is Looking So Sickly
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Despite my two decades of covering Silicon Valley I’m neither an early adopter nor besotted with the coolest gadgets. I used a BlackBerry until 2012. I got my first Amazon Echo well after its first holiday retail triumph. And I wrote my book about Apple on a PC.
The advantage of not being in the Wirecutter crowd is that you don’t fall in love with products that break your heart by dying before reaching maturity.
That’s why I’m all the more distressed by the drain-circling behavior of Fitbit, a product I find I love more as time goes by. I characterize my Fitbit obsession as a healthy one. I take walks after dinner to make sure I obtain daily 10,000 steps. I fret if my resting heart rate drifts abnormally high. (Altitude and sleeplessness aren’t helpful.) I get in bed earlier if my weekly average is trending down. Colleagues have come to understand my appearance at their end of the office just before the top of the hour doesn’t mean I’m coming to visit; Fitbit has nudged me to take 250 steps.
Sadly, it appears I’m worse than an early adopter. I’m an outlier.
Fitbit reported a horrid quarter Monday, and its shares swooned. It sold 7 million fewer devices in 2017 than the previous year. It is de-emphasizing fitness trackers—the object of my devotion—for smartwatches. The latter is a crowded category, dominated by far better capitalized global companies. Fitbit even lost money in the quarter. When I profiled the San Francisco company’s erstwhile competitor, Jawbone, in 2015, Fitbit bragged about its tight cost controls. Now it is focusing on “managing down expenses.”
Fitbit isn’t finished, but it’s looking sickly, a sad commentary for a company whose product makes me feel healthier.
Calling great leaders. In May Fortune will publish its annual list of World’s Greatest Leaders. We’d like you to nominate outstanding people from all kinds of organizations who’ve demonstrated greatness, both within and without. What type of leaders are we looking for? Here are Matt Heimer and Erika Fry, the editors overseeing the project: “As always, we want to feature people who’ve used their influence and status as CEOs or corporate leaders to make a difference in the wider world. But we’re also seeking outstanding leaders in all sectors of society —government officials, chiefs of NGOs, clergy, coaches, athletes, artists, and more. Great educators can be great leaders; so can scientists, engineers, and physicians who help solve major social and economic problems. Writers, thinkers, jurists, activists—bring ‘em on.”
I’ve written feature stories for the last three lists, in reverse chronological order on Alibaba’s Jack Ma, Amazon’s Jeff Bezos, and Apple’s Tim Cook. (We’re open to CEOs whose companies don’t begin with the letter A.) Each profile allowed me to peak into the leader’s extracurricular activities, like Ma’s global philanthropy, Bezos’s support for journalism, and Cook’s focus on civil rights.
Not to be overlooked. Ready for the biggest iPhone ever? I know am. In the wake of new phones from Samsung, Sony, and others at MWC this week, Bloomberg reports that Apple will have three new models later this year. One will be much like the current iPhone X with its 5.8-inch OLED screen and another sort of like an iPhone X Plus with a rumored 6.5-inch screen. A third model will be a lower cost variant. Famed investor Warren Buffett is a believer. He tells CNBC that he invested more in shares of Apple than any other stock last year. "Apple has an extraordinary consumer franchise," he says. "I see how strong that ecosystem is, to an extraordinary degree."
Not to be shut out. A U.S. appeals court overturned a controversial ruling from 2016 that had protected telecom companies from enforcement actions by the Federal Trade Commission over misleading advertising claims. The U.S. Court of Appeals for the 9th Circuit in an en banc ruling said the FTC did have jurisdiction over AT&T and all so-called common carriers when the companies offered other kinds of services, like Internet connectivity. The FTC sued AT&T in 2014 for falsely claiming it offered "unlimited" Internet service that was limited in download speed.
Not to be deterred. Federal Communications Commission chairman Ajit Pai signaled that he would like to speed up the deployment of 5G wireless networks by auctioning off more airwave licenses. The agency will look to sell rights covering the 28 GHz band in November and the 24 GHz band later, Pai said in a speech at the Mobile World Congress.
Not to be informed. In an unusual peek behind the curtains, the Securities and Exchange Commission forced Google parent Alphabet to disclose just how much information is supplied to CEO Larry Page on a regular basis and other internal practices. It turns out that while Page gets lots of reports at a high level, he does not regularly receive detailed financial information about any product areas within Google.
Not to be outbid. In a bid that could muck up Disney's efforts to buy many of 21st Century Fox's assets, Comcast offered $31 billion to take over European broadcaster Sky. Fox owns a minority stake in Sky, but was seeking to gain control and include the stake in the package it was selling to Disney for $52 billion.
Not to be underbid. Qualcomm doesn't much like Broadcom's $79-per-share takeover offer. But something like $90 for each share, or a total of $160 billion including assumed debt, would be acceptable, the Financial Times reported.
FOOD FOR THOUGHT
Digital currencies like bitcoin are in the midst of a long, slow transition from the fringes of finance to the heart of Wall Street. In Boston, a startup called Circle helps investors make big trades ($250,000 and up) in cryptocurrencies, much like the old equities trading desks at shops like Goldman Sachs and Lehman Brothers. Fortune's own Robert Hackett has a deep profile of Circle, which made news acquiring crypto exchange Poloniex on Monday, and its CEO Jeremy Allaire. The story is global and futuristic, no surprise:
Allaire knows this. In the fall of 2016, during one of our first in-person meetings, he invited me to a WeChat channel where Bitcoin miners across the world—many of whom live in China—jabber all day long. Allaire told me that he believes the strange mishmash of Mandarin and English concocted there is likely to become the lingua franca of the future, a prediction that reminded me of what sci-fi enthusiasts might have said about a Japanese-English hybrid in the ‘80s, when the cyberpunk aesthetic of Neuromancer and Blade Runner held sway.
Many of Circle’s top executives have a worldly bent too. Marieke Flament, Circle’s lead in Europe, speaks English, French, Spanish, and Mandarin. Rachel Mayer, head of Circle Invest and an alum of Lehman Brothers and J.P. Morgan, is Venezuelan. And Circle Trade’s Jack Liu, born in China, has lived in Japan, Canada, and the U.S. (He’s now building out the trading desk in Hong Kong.) Circle’s 175-person team expects to roughly double its headcount this year—and its composition reflects the border-smashing promise of the digital currencies it holds dear.
IN CASE YOU MISSED IT
Why You May Pay More for This Year's New Samsung Galaxy Phones By Aaron Pressman
Review: Colgate's New Smart Toothbrush Is Fun for the Whole Family By Don Reisinger
Are You a Coinbase User? Your Data Could Be on Its Way to the IRS By Casey Quackenbush
BEFORE YOU GO
Billionaire Paul Allen's dream of lofting the biggest airplane ever (measured by wingspan) is moving somewhat closer to reality. Allen's Stratolaunch Systems put its 385-foot wide plane on a runway in the Mojave Desert and drove it at speeds up to 46 mph. Cool video, but still not airborne, yet.