It was a poorly kept secret in the realm of wearable technology, and now the cat is officially out of the bag. Fitbit (FIT) unveiled Charge 2 and Flex 2 yesterday, a pair of updated fitness trackers that will go a long way in dictating the way that sales play out during the latter half of this year.
Fitbit Charge 2 is an update to its top-selling Charge HR, raising the bar on the fitness tracker by quadrupling the size of the band's display. Some of the new features include the ability to generate a cardio fitness snapshot, a deep-breathing relaxation mode, and other enhanced features and design elements.
Fitbit Flex 2 is swim-proof, a welcome update to the original that was merely water-resistant but not ideal for actual immersion in water. As Fitbit's first swim-proof band, it will be an easy sell to the swimming community since it can track activity in the water. It's also 30% smaller than the original. Flex 2 uses the same system of five LED lights to track daily progress in 20% chunks, but those lights can also provide call and text notifications on Bluetooth-tethered smartphones.
Stealing a page from the Apple Watch playbook
Fitbit knows that Apple (AAPL -0.57%) is a fierce rival, even if the two don't compete directly in the fitness band market. Apple's iPhone offers entry-level health-monitoring and activity-tracking features, potentially eating into sales of dedicated bands. There's also Apple Watch, the consumer tech giant's push into the smartwatch market that will likely be updated next month.
There's a wide pricing chasm between the two companies. Fitbit Flex 2 and Charge 2 are now available to pre-order for fall availability at price points of $99 and $149, respectively. Apple Watch starts at $299, for now. Fitbit did throw its hat into the smartwatch ring earlier this year with the $199 Blaze, but even at that price point it's angling for a different market.
The Apple Watch hasn't been the monster hit that would make the device go mainstream, but it has made the smartwatch fashionable with its wide array of designer bands. Fitbit is hopping on that trend, offering replaceable bands for the Flex 2 and Charge 2. Fitbit fans may not be the type to want to color-code their trackers with their clothing, but it still opens the door for the niche leader to cash in on what could be high-margin accessories. The ability to switch out bands is why Fitbit may make more money this upgrade cycle than it has in the past.
Band on the run
Fitbit's growth has been decelerating lately, though it's hard to call the 46% year-over-year top-line growth spurt it generated in its latest quarter a letdown. Fitbit's shortcoming has been the way that margins have been brutalized as it rolls out new products, ramps up its marketing efforts, and deals with an increasingly competitive marketplace where markups have to be kept leaner than before.
The stock took a beating during the first half of this year, but it's started to bounce back in recent weeks. It stumbled earlier this month when leaked promotional stills suggested that retail availability may be bumped until late November, but that is thankfully not the case. Fitbit Charge 2 pre-orders will ship within a week, and Flex 2 orders will go out by the end of September.
It wasn't just news about Flex 2 and Charge 2 put out by Fitbit yesterday. Stylish collections are also on the way for the Blaze smartwatch and Fitbit Alta. It also introduced a new Fitbit Adventures challenge feature within the platform's smartphone app. However, given Fitbit's past financials -- where the lion's share of its sales are generated by the newest trinkets -- it's easy to see why all eyes are on the updated Flex and Charge models. It's what will ultimately dictate if the stock loses its recent momentum or continues to claw its way out of its status as a busted IPO. The progress will be tracked, fittingly enough.
