Fitbit, the top fitness band maker in the world, could finally launch its first smartwatch, the Fitbit Surge. Leaked promotional materials, first revealed by The Verge, indicate that the Surge will include built-in GPS tracking, a heart rate monitor, smartphone notifications, and all the activity tracking features of the Flex for $249.
The Surge will join two other new fitness trackers from Fitbit, the Charge and Charge HR. The Charge will apparently replace the Fitbit Force, which was recalled in March after some users reported skin irritation. The Charge HR includes a heart rate monitor.
Fitbit hasn't announced the official prices and launch dates for all three devices yet, but all signs point to an imminent clash with Apple (NASDAQ:AAPL).
Earlier this month, Fitbit announced that its devices wouldn't be compatible with HealthKit, Apple's unifying platform for fitness apps and wearables for iOS 8. In an apparent response, Apple announced that it would stop selling Fitbit devices at its Apple Stores.
Now, with a real smartwatch on the way, Fitbit seems ready to launch a pre-emptive strike against Apple's Watch with a device that costs $100 less. Does Fitbit actually stand a chance at disrupting Apple's plans to expand into wearables, or is the company overestimating its own brand appeal?
Why Apple shouldn't underestimate Fitbit
Apple and FitBit are respectively giants in the smartphone and wearables markets. IDC estimates that Apple controls 11.7% of the world's smartphone market. NPD Group reports that Fitbit controls 69% of the global fitness band market.
Since FitBit is the top dog in wearables, most companies assumed that it would be one of Apple's key HealthKit partners. Meanwhile, Samsung (NASDAQOTH:SSNLF) currently controls 43% of the market for full-featured smartwatches, according to Kantar Worldpanel ComTech, but it obviously has no plans to pair its watches with iOS or HealthKit. This means Apple needs Fitbit, and not vice versa.
Fitbit devices are compatible with Android, iOS, and Windows Phones, which means that the Surge could be compatible with nearly the entire smartphone market. Fitbit's price tag of $249 also stay below $300 while Apple exceeds it, which could be problematic according to recent pricing studies. Research firm ON World, for example, reports that only 8% of 1,000 U.S. respondents would pay over $299 for a health-tracking smartwatch.
Apple should also be worried about Fitbit's growing mobile health ecosystem. Fibit already has at least 37 partners -- including MyFitnessPal, MapMyFitness, Walgreens, and Microsoft -- which sync their apps to Fitbit's devices. That makes Fitbit's ecosystem a major threat to HealthKit.
Why Fitbit shouldn't underestimate Apple
Although the Fitbit Surge has distinct advantages, Healthkit is backed by major EHR (electronic health record) companies Epic, Cerner, and Athenahealth, and Mayo Clinic.
This means that the Apple Watch could streamline data sharing between doctors and their patients -- something that Fitbit's platform is unable to do. Fitbit's customers also aren't thrilled about the HealthKit decision. A current thread regarding the topic on Fitbit's forum has now attracted over 1,600 comments, with over half of participating users voting in favor of HealthKit integration.
Fitbit faces other problems as well. Although the Surge is $100 cheaper than the Apple Watch, it doesn't offer any game-changing features that set it apart from the crowd of $200 to $300 smartwatches on the market. It also runs on its own proprietary OS, which means that the Surge's iOS users can't access features like Apple Pay, while Android users won't benefit from Android Wear and Google (NASDAQ:GOOG) (NASDAQ:GOOGL) Fit integration.
In other words, Fitbit is trying to carve out its own ecosystem within iOS and Android, while Apple and Google are launching unified health dashboards for both operating systems. As a result, customers who tire of Fitbit's unwillingness to "play nice" with others could simply buy fitness bands and smartwatches from companies that do.
Both Fitbit and Apple want to capitalize on the growth of the mobile health market, which could grow from $1.95 million to $49 billion by 2020, according to Grand View Research. However, Fitbit clearly has issues with Apple's vision of mobile health, in which all apps and wearables are tethered to its Health app.
While Fitbit's Surge could be a decent competitor, it's going to have to be very impressive to stand out in the crowded Android Wear market and compete against the premium appeal of the Apple Watch. In my opinion, Fitbit might convince some of its longtime users to upgrade to the Surge, but its proprietary ecosystem will ultimately limit its appeal and throttle sales.
Leo Sun owns shares of Apple. The Motley Fool recommends Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.