Fitbit Blaze. Image source: Fitbit.

Earlier this week, Fitbit (FIT) unveiled its latest gadget: The Blaze smartwatch. For the most part, investors were unimpressed, sending shares down by 12% when the new device was announced. Blaze isn't the first smartwatch that Fitbit offers, but it does show that Fitbit is serious about its continued move upmarket into full-featured wearable territory. This strategic shift has already translated into meaningful increases in average selling prices, and the market for smart wearables is expected to eat into the market for stand-alone wearable devices going forward.

But Blaze is also a defensive play against Apple (AAPL 0.64%) Watch. Fitbit is scared.

How Blaze compares to Apple Watch
Blaze is more similar to Apple Watch in a few ways. Notably, it now has a color touchscreen and more fashionable styling than the Surge. Fitbit is also offering numerous different bands that can easily be swapped out for different occasions, much like Apple Watch. In no uncertain terms, Blaze also wants to appeal to your fashion sense.

Like most of the smartwatch competition, Blaze is priced well below the Apple Watch. Blaze starts at just $200, compared to Apple Watch's $350 starting price tag. Blaze has feature parity in pretty much all other aspects that you'd expect from a fitness-tracking smartwatch, except that it doesn't support third-party apps. The importance of third-party apps in the long-term can't be understated, though. It's true that while the current batch of third-party Apple Watch apps are mostly mediocre in terms of functionality and performance, there is incredible long-term potential as a platform.

It's pretty unlikely that Fitbit can create a viable platform for third-party developers, since it has no prior experience in doing so.

How Blaze compares to Surge
Apple Watch isn't the only thing that Blaze is undercutting on price. Fitbit is also undercutting its own $250 Surge smartwatch, which presents clear cannibalization risks.

Fitbit Surge. Image source: Fitbit.

There is one notable difference between Blaze and Surge in terms of features: GPS. Blaze uses connected GPS when paired to a phone for location data, while Surge uses its own stand-alone GPS signal without depending on a connected phone. This distinction probably only matters to Fitbit's core market of fitness enthusiasts that place high value on not having to bring a phone on a run or a bike ride. Since Surge is positioned as Fitbit's core "performance" product, this makes some sense.

But as far as the average consumer goes, Blaze might appeal more thanks to a lower price tag and better aesthetics. Fitbit has never disclosed product mix explicitly, so investors don't know how many Surge units it sells, but we do know that ASPs have been on the rise and 79% of revenue last quarter came from Charge, Charge HR, and Surge.

D-E-F-E-N-S-E
Fitbit is working hard to defend its turf and double down on its biggest strength: fitness. Fitbit users may never enjoy the types of third-party innovation that Apple Watch offers, but Fitbit is very much building a fitness-centric platform -- a platform that is quite intentionally mutually exclusive to Apple Health. For Fitbit, the best defense might be Blaze, but Apple isn't giving up anytime soon.