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Can Fitbit's New "Mass-Appeal" Smartwatch Sell Better Than Ionic?

By Evan Niu, CFA - Mar 15, 2018 at 9:30PM

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Fitbit's Versa looks more promising than the Ionic.

Following an inauspicious start for the Ionic, Fitbit ( FIT ) earlier this week introduced its latest smartwatch, the Versa. While the Ionic was "more of a performance product," according to CEO James Park, the Versa is the "mass-appeal" smartwatch that the company alluded to on its fourth-quarter earnings call last month.

Priced at $200 (compared to $300 for Ionic), Versa is certainly more approachable for mainstream consumers. How will it sell?

Versa alongside metal band accessories

Image source: Fitbit.

Meet the Versa

The Versa bears more than a passing resemblance to the Apple Watch, which isn't necessarily a bad thing. Apple Watch is Fitbit's most important competing product, and it's currently gobbling up the smartwatch market. Fitbit bills Versa as the "lightest metal smartwatch in the U.S. market," and the device retains Fitbit's biggest advantage over the Mac maker's watch: strong battery life. Versa's battery is expected to last over four days on a single charge, just like Ionic. However, Versa will not include built-in GPS, which Ionic has.

Given the increasing importance of fashion in the smartwatch market, there will be a variety of accessories to cater to a wide range of consumer preferences. Fitbit Pay, the company's new NFC-based mobile payment service, will only be available on the Versa Special Edition, which costs an extra $30.

Fitbit is already taking preorders, and Versa launches next month at retailers around the world.

Platform progress

Arguably more important is Fitbit OS 2.0, which will launch alongside Versa. The updated operating system will feature a new personalized dashboard, quick replies to notifications (only supported on Android), as well as other personalization features. Fitbit's burgeoning smartwatch business is built on Fitbit OS, so it's not an exaggeration to say that these smartwatch products will live or die based on Fitbit OS' success or failure.

That will include getting more third-party developers onboard to create apps for the platform. Fitbit is launching an online simulator for developers to help onboard them without the developer needing to purchase a device for testing purposes. The company is making some progress, highlighting some new additions last month after running a contest.

Competing these days in consumer electronics often boils down to the strength of the underlying platform, with the physical device itself mostly a gateway into that platform. Versa does look like a more compelling smartwatch for average consumers, but Fitbit OS is really what's going to be the determining factor.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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