Fitbit faces challenges as smartwatch, fitness band competition heats up

As Fitbit prepares for its impending initial public offering, new research claims the wearables maker is struggling to maintain dominance in the smartwatch market and that its leadership in wearables is less than 50 percent, which is much less than its 68 percent ownership of the fitness band segment.

Argus Insights expects Fitbit's market share to slip in the global wearable category and says the fitness band leader, which introduced its first band in 2011, needs to differentiate itself in a big way to remain competitive.

"While Fitbit is clearly the overall leader compared to the other fitness bands such as Jawbone, Garmin and Misfit--a lead that is continuing to grow even over the last month--in the overall wearables category where smartwatches come into play, fitness bands in general are dropping as a share of the market," states John Feland, Argus Insights CEO and founder, in an announcement of his research firm's report.

The research comes just weeks after Fitbit filed for a $100 million IPO. The wearables maker's portfolio includes six trackers and a smart watch-tracker band. As of the end of March, Fitbit had sold 20.8 million devices and led the fitness activity tracker market with a 68 percent share in 2014, according to a NPD Group report, which Fitbit cited in its IPO filing.

Feland says one challenge is consumer behavior with fitness bands in general, and that more comprehensive devices are starting to beat out the traditional fitness tracking devices. Another trend impacting the market: consumer interest in fitness bands is dipping faster than interest in smartwatches.

"People get tired of the fitness bands and throw them in the sock drawer," Feland says. "They stop being useful, people lose their fitness momentum--all similar reasons as to why people quit going to the gym. For Fitbit to continuously grow, they will need to keep users engaged and give them reasons to buy new versions of the products."

Argus also points to a "slack demand" for Fitbit's smartwatch, which hit the market last December.

"We recommend a wait-and-see attitude when it comes to Fitbit and their future," Feland says.

For more information:
- purchase the report
- read the announcement

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