Video: Fitbit unveils Versa and Ace wearables
The Fitbit Versa is officially available in stores and shipping from various online retailers. The company's first "mass appeal" smartwatch, the $199 Versa, is arguably its most important product launch since becoming a public company in 2015.
Must read: Fitbit Versa review: Finally, a smartwatch that can make Fitbit proud
In a few short years, the wearable market has transitioned from one of clip-on trackers and bracelets to smartwatches with a range of functionality -- from basic fitness tools to cellular connectivity.
For some time, it appeared Fitbit was too dedicated to its core mission of providing users with health and fitness tools; the company either didn't see the smartwatch, or it discounted it altogether as being too complicated. And while we still don't know if Fitbit's newfound smartwatch ambitions will help the company lead the wearable market, one thing is clear now: Fitbit is all in on smartwatches.
ZDNet recently spoke with Fitbit CEO James Park about the company's past, present, and future. Park revealed his company plans on developing more smartwatches across different price points, streamlining its dedicated tracker lineup, software, and services, expanding outside of wearables, and how Fitbit can compete with Apple.
Below is the conversation, edited and condensed for clarity.
ZDNet: I first signed up for Fitbit in 2011. I've used Fitbit products for a long time, going from a little tracker to Versa. It has been a long journey. What's the journey been like for you, and for Fitbit?
Park: I think it's an interesting point you bring up about the journey. We've always seen ourselves not as a devices company, but really as a company trying to help people get healthier whether it's through devices or software and services. I think that's reflected in the way that our products have evolved over the years.
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We started with clippable trackers and trackers on the wrist, to now full blown smartwatches. What we are doing is just evolving with consumer needs and expectations.
A lot of that's been driven primarily because what's possible and consumer expectations have changed.
What's driving the launch of Ionic and Versa is the fact that larger form factor devices really allow us to integrate more sensors at an earlier stage in the development of the technology while maintaining really good battery life and increasingly greater interactivity right on the wrist.
ZDNet: How did the Fitbit Ionic do overall, and where does it fit in your current lineup?
Park: We call Ionic our first real smartwatch primarily, because although Blaze is a watch, it really wasn't classified as a smartwatch because it didn't have a lot of the things that people expect out of a device of that type like third-party apps.
Ionic was helped a lot by the acquisition of Pebble. The rationale behind Ionic was that's a successor to Surge, and being at the high end of the lineup, allowed us to introduce a lot of different new technologies, whether it was Fitbit OS, which is the true evolution of the original Pebble operating system, to new health sensors like our relative SPO2 sensor.
Read also: Fitbit unveils Versa and Ace wearables
Ionic was our first attempt to really see what greater interactivity on the wrist could drive along with developing a third-party ecosystem. Ionic was an ambitious first attempt for us, but one that was really necessary.
When we launched the product, I think it didn't do as well as we had hoped, and we were pretty upfront about that. It's still doing incredibly well as a product on its own. It's outselling Fitbit Surge at the same point in its lifecycle, so we're pretty happy with it, and the investments that we made in a lot of the technologies, whether it was Fitbit OS and the new sensors, are being leveraged in Versa, which is what we call our first real mass appeal watch in this category.
ZDNet: Why do you think Ionic didn't do as well as you had hoped?
Park: I think it really wasn't appealing to the mass audience. It's a performance-oriented watch with a lot of features from GPS to the introduction of new sensors, along with the form factor which is more performance orientated.
The price point as well, at $299. All those things made it much more appealing to a minor set of our user base.
ZDNet: In the past, Fitbit positioned the Blaze as a "fitness focussed" watch. There was a lot of dancing around the word "smartwatch." Now you're fully embracing smartwatch. What's changed in the past two years for Fitbit to go from a company that believed consumers don't really need -- or want -- a smartwatch, to now embracing the "smartwatch" name?
Park: It all has to do with making sure that the products we launch always have a very clear purpose that's apparent to our users and customers.
When we launched Blaze, I think the whole smartwatch category was still trying to find its way. People weren't quite sure why you'd want to buy one of these devices, the technology hadn't really evolved yet, the marketing and the positioning wasn't quite there.
At the time when we launched Blaze, we really wanted to make sure that the value proposition was clear, and that's why we didn't call it a smartwatch. We heavily focussed the messaging and the positioning on the fact that it was health and fitness focussed.
Read also: Fitbit announces its first wearable for kids, new mainstream smartwatch
What's happened in the years (following Blaze), I think technology and consumer expectations have evolved, as well. The product landscape around us has also evolved.
I think people are comfortable with the idea of smartwatches being part of their daily lives. I think the interesting thing is that health and fitness have emerged as the killer app on this class of devices which really plays into our strength.
We felt the combination of consumer comfort and our focus as a company lead us to really embrace Versa and Ionic being smartwatches as opposed to dancing around the issue.
ZDNet: Coming from the standpoint just a couple years ago that users didn't need to do a whole lot on their wrist, and now, embracing it with an app store and watch faces, where do you draw the line of it being too much?
Park: For us, it's a little bit evolutionary. Where we will continue to release and iterate a lot on is the health and fitness features. There's a lot of cool things that the smartwatch form factor allows us to experiment with.
There are a couple of cool apps that our Labs team has launched: Fitbit Pet, for example. We've seen that people using that app end up walking up to 50 percent more per day.
We have another cool app, called Think Fast, which is a quick little brain game where we end up correlating scores with your sleep quality, and what we've seen is that more sleep improves your reaction times, but there's a point where you get too much sleep and your reaction times decrease.
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When it comes to health and fitness we feel more is better, although we still have to be conscious of what it means to the interface.
On the general purpose stuff, we're much more judicious. We'll add things there gradually over time. You've seen us already do that with notifications early on, or third-party apps or reply to notifications, payments, and music. Those are things that we didn't jump into straight from the get-go when you think about Blaze or Surge.
ZDNet: According to the IDC, Apple is now the wearable market share leader. How do you plan to take on the Apple Watch, which has surprisingly seen success even though it's priced at $350 to $400?
Park: For us, it starts with the mission of the company, which is to make everyone in the world healthier, and that's going to come through a combination of both devices and services. On the device side, our strategy has been and always will be to provide people a wide range of different possibilities. That's one way we differentiate between Apple and other players is that we're still going to offer trackers, and we have smartwatches now, at a variety of different price points and form factors.
Read also: Does Fitbit have time to pull off its digital healthcare transformation?
The second aspect is being independent our devices are cross-platform compatible. It works on both Android and iOS, and when you think about health within the family, which is a very important topic for us, especially with the launch of Fitbit Ace our kid-focussed product, you don't really want to worry about whether certain members are on Android or iOS. It's important that everyone be able to connect with each other and support each other throughout their health goals.
When you think about healthcare it's such a huge industry there's more than enough room for multiple companies to succeed. I'm incredibly optimistic about our future as a company, and I think if you look at the overall healthcare industry as a whole, I think people are really starting to embrace the fact that wearables do have a role. Connected health devices do have an important role.
ZDNet: Right now, the experience is consistent across Android and iOS, but soon, you'll release an update that gives Android users the ability to reply to notifications from a watch. How do you walk that line of giving Android users what they want while still making iOS users feel like they're getting value?
Park: There are going to be things that over time are available on one platform first versus the other and that might just be an indication of how we prioritize things internally or limitations of a particular platform at that point in time.
I wouldn't read too much into how notifications, in particular, is rolling out, but what I think is going to remain consistent is our focus on making sure that that experience across both platforms is pretty consistent over time.
Best gifts: Wearables for the whole family
ZDNet: During your last earnings call, you talked a lot about a multi-year transition process to get Fitbit back on track. Specifically, you talked about non-device revenue, can you talk more about that?
Park: We're in the process of transitioning our business model from one that's purely device centric today to one that's more of a balance between the two and much more focused on developing recurring revenue streams.
There are a few ways that we are approaching it. We acquired a company called FitStar a few years ago that got relaunched as Fitbit Coach. It's a paid offering that gives people a lot of dynamically adaptable workouts across video and audio. That's been doing well since the launch. I think the last stat that we published had Fitbit Coach growing over 70 percent year over year.
Read also: Fitbit buys startup Twine Health to grow health services, revenue
We are continuing to add to our premium offerings. We acquired a company called Twine Health a few months ago, which offers human based coaching for a variety of different health conditions on a paid basis. Initially, that's going to be sold primarily through enterprise channels, but we do have plans at some point to potentially offer that to consumers as a paid offering.
There's a lot of things that we are doing internally from a product development point of view to really start developing those recurring revenue streams.
ZDNet: In relation to the smartwatch and services, the device is then the entry point to your ecosystem where users can then upgrade and pay for service. Is that a fair assessment?
Park: It's definitely a fair assessment. I think as part of our transformation one of the things, we are considering is the services business being something that could potentially be open to others as well. If you look at our Twine offerings, we do allow other devices to connect to it. We're being pretty broad about how we think about our overall services strategy.
ZDNet: Also discussed in the earnings call was repeat users. Half of the repeat users you discussed were inactive in the last 90 days, meaning they had been a Fitbit user at one point, quit using it for 90 days, and then bought a new device. How common is that?
Park: There's a lot of nuance to the stats that we don't break out publicly, but I think what's apparent that we're starting to do a much better job of retaining our users.
That means that the more users we have at any given time the more likely they are to upgrade to a new generation of devices.
Read also: Fitbit Ionic update brings new apps, watch faces, banks, and Fitbit Labs
I think the reactivation number is indicative of the fact that in the health and fitness industry people do have ebbs and flows in their health journey, and I'm really optimistic about the fact that we're able to bring people back in when they need us.
If you look at our active user numbers they actually increased year over year, even though our unit shipments decreased and that just goes to show our R&D investments in the software and services side are really starting to pay off.
ZDNet: Software updates improve the feature set of an existing device, and that increases the value, in turn leading to users that keep using a product What's the plan for adding new features and updating Fitbit OS?
Park: Our plans for Fitbit OS are to provide regular updates over the year that not only fix bugs but add significant new functionality. That's one of the benefits of finally having a common operating system that we're starting to leverage across multiple Fitbit devices.
Read also: Fitbit aims for device to data pivot: Can you monetize 90 billion hours of heart rate data, 85 trillion steps?
In the past, for every device, we ended up creating a bespoke OS, and with the launch of Ionic, that's a thing of the past for us.
You're absolutely right, while people's health and fitness journeys ebb and flow, as smartwatches and other devices in our lineup have increasing general utility that just improves the probability that people continue to see this as a key piece of what they need to have on them on a daily basis.
ZDNet: Fitbit recently announced Fitbit Ace, a tracker dedicated to kids. Why?
Park: Unofficially, we already know there are a lot of kids that use Fitbit, so we thought it was a good opportunity to make that official.
With the launch of Fitbit Ace, one of the things we had to tackle upfront was making sure that things around privacy and data collection were in compliance with COPA and other regulatory frameworks around the world.
Read also: Fitbit announces #Made4Fitbit challenge winners, extends Pebble smartwatch support for six months
The thing that's driving all this is the fact that childhood obesity is a pretty huge issue in the US and increasingly in other parts of the world. We know that kids use Fitbit, and making that official and actually adding some new features that support this idea of kids health, and in particular family health, is really important.
One of the things that we're thinking strategically about is how we really get the whole family engaged in everyone's health and fitness. A lot of the features that we're launching along with Fitbit Ace really support that concept.
ZDNet: Even though kids were unofficially using Fitbit, this is also another area for potential growth for you guys, right?
Park: It is, definitely. We're trying to address different demographics. While kids were using our product, even though we weren't specifically marketing to them our penetration with kids was more limited than it will be now that we have a specific product that we can openly market.
ZDNet: Do you have any idea of how many kids are using Fitbit devices right now?
Park: We can't break out any numbers in particular, but we're always pretty judicious about new product launches because it does take a lot of internal resources, from capital and people. When we looked at [kids using Fitbit], we felt it was a significant enough opportunity for us to launch this new product.
ZDNet: Why is the age cutoff for Fitbit Ace 8 years old?
Park: In particular it was due to the form factor of the product and the way the designed the band is really appropriate for eight-year-olds. It's not to say we won't revisit younger kids in the future, but, when you talk about kids younger than eight, it's a different form factor, and it's also a different interactive experience, as well.
ZDNet: Looking ahead, obviously, smartwatches are something you are committed to developing and releasing going forward, but what about the rest of your lineup?
Park: Over the next couple years what you'll see is us doing a few things. One is streamlining our tracker roadmap. We have a lot of trackers right now, which I think appropriate when we were in the early stages of the market development, and now that the category is maturing more, streamlining it definitely makes sense.
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On the smartwatch side, we're starting to work on much fuller portfolio of devices to really capture the full range of needs that we're seeing people ask for in smartwatches.
The other thing that I've said publicly is that Fitbit is not just about things on the wrist. We're really about devices and services that help people in a different variety of health conditions. When you think about Flyer (wireless headphones) or Aria (a smart scale), those are things that make a lot of sense for us, and you'll likely see us improve or develop other products beyond the wrist in the future.
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