Fitbit shares closed 16 percent lower Monday to a new record low of $6.06 after the company reported it will cut 6 percent of its global workforce -- about 110 employees -- to account for losses and lower than expected sales for 2016's holiday quarter. Fitbit expects its Q4 sales to come in at a range of between $572 million and $580 million, compared with a forecast of $725 million to $750 million, when it reports actual results Feb. 22, the company said in a Monday announcement. It expects to incur a Q4 net loss of up to 56 cents a share compared with a previously forecast net profit of up to 18 cents, it said. Nevertheless, Fitbit’s management is “confident this performance is not reflective of the value of our brand, market-leading platform, and company’s long-term potential,” CEO James Park said in a statement. “We believe Fitbit is in a unique position to stimulate new areas of demand by leveraging the data we collect to deliver a more personalized experience while developing upgraded versions of existing products and launching additional products to expand into new categories.” Softness in “overall demand” for wearables and activity trackers was among the factors Fitbit cited in early November when it forecast that revenue growth in its holiday quarter would top out at only 5 percent (see 1611030051). That revelation sent the shares plunging 33.6 percent to what then were record lows for the 17-month-old stock. At $572 million, the lowest end of its new 2016 guidance, sales for Fitbit's Q4 would actually incur a 20 percent decline from the $711.6 million in sales in 2015's holiday quarter.
More than half of smartwatch owners pay for Spotify or another digital music subscription service, Parks Associates said in a Friday news release. The research firm said 60 percent of smartwatch owners and 58 percent of fitness tracker owners subscribe to streaming audio. But 69 percent of those without digital wrist wear have no music subscription, it said. About one-third of all U.S. broadband households pay for streaming music, it said. The reason for the correlation may be fitness, analyst Glenn Hower said. “Exercising has become a prominent use case for streaming music. People are carrying connected devices with them to the gym or running trails.”
Fossil Group said at CES it’s doubling its wearables production to 300 new products for 2017, including new brands, up from 140 models last year. Armani Exchange entered the wearables market with Armani Exchange Connected, a collection of hybrid smartwatches. Fossil Q Accomplice, a new hybrid smartwatch, will be the company’s slimmest case to date, and Skagen added the Jorn and Hald hybrid smartwatches, also offering thinner case designs. The new Misfit Vapor is the brand’s first touch-screen smartwatch and includes a heart rate monitor, GPS and stand-alone music functionality, said Fossil.
A research team from the National Institute of Standards and Technology (NIST) said it developed a way to build safe, nontoxic gold wires onto thin plastic film, clearing the way for wearable devices that are flexible enough to be worn on or inside a human body. In a Wednesday report, NIST said the findings could open a path for electronic devices that monitor health long term without exposing a person to harmful chemicals. The medical field has been studying personalized medicine with sensors as a way to keep track of real-time changes in the body, from potassium fluctuations to blood sugar levels, that could mark the onset of a disease before it’s detectable by a doctor, it said. NIST biomedical engineer Darwin Reyes-Hernandez found that a commercially available porous polyester membrane with the feel of plastic wrap could conduct electricity through affixed gold wires. During research, pores in the material kept gold from cracking, allowing the wires to continue to conduct after bending, Reyes-Hernandez said. The porous membrane’s electrodes showed even higher conductivity than their counterparts on rigid surfaces, an unexpected benefit, said NIST. Next steps are to test changes in conductivity long term after “many bends and twists” and to build a sensor out of the electrode-coated membrane to explore real-world use, it said. The thin membrane could fit into “very small spaces,” said Reyes-Hernandez.
The wearables category is new to Fossil, “and we're learning as we progress,” CEO Kosta Kartsotis said on a Thursday earnings call. “We can see that playing out” with the company’s recent launch of its Michael Kors Access line of wearables, he said. “We expect we'll learn even more from the important holiday season.” Fossil is “especially excited” about its “hybrid” smartwatch launches in a total of seven brands, he said. These are “truly unique products that will bring more interest and new customers to the watch business,” he said. “At first glance, these watches look just like traditional watches, incorporating all the same designs, styling and fashion that have given us a strong competitive advantage.” But on closer look, their “enhanced feature set is broad, incorporating fitness tracking, notifications and a robust branded app experience, all powered by traditional coin cell batteries,” he said. “These can be game-changing products and give us significant opportunity for share gains, and we'll be working hard to educate consumers about the capabilities and features of these watches.” Before the wearables category “was even around,” 45 percent of the sales in the “watch business overall” were done between Thanksgiving and Christmas, he said: “We hear that wearables is even skewed even more heavily towards that, maybe even 50 percent or so, but it's not that much different than our typical watch business.”
Wearable health device maker Mio said a Norwegian Consumer Council report (see 1611030007) that criticized the privacy practices of several companies that make fitness wristbands does have merit. "Having reviewed the comments and concerns in the report, there are some immediate changes that we can address such as the privacy policy access on our website, formatting and layout," emailed a Mio spokeswoman Thursday. "Regarding the concerns around personal information required, Mio only requests information that is used in our algorithms -- the core part of how we set heart rate zones and supply accurate workout data to the end user." The NCC said Mio, Fitbit, Garmin and Jawbone's wristband devices collect more information than needed and don't provide clear enough language in their terms and conditions for collecting and sharing data. The Mio spokesman said the company is "putting significant effort into maintaining best practices in privacy and security to comply with all regulations, giving consumers the protective measures necessary."
Fitness wristband makers Fitbit, Garmin, Jawbone and Mio might be collecting and sharing more personal data about users' health, activities and locations than needed, potentially violating privacy-related laws, said Norway's consumer protection agency in a Thursday news release. "We fear that this information can be exploited for direct marketing and price-discrimination purposes, and that basic privacy principles are being neglected," said the Norwegian Consumer Council, or Forbrukerrådet. An NCC report analyzed each product's terms and conditions. The council said it's submitting a formal complaint to the Norwegian Data Protection Authority and Consumer Ombudsman for breaking both European and Norwegian consumer, data protection and marketing laws. Besides collecting more data than needed, NCC said, the companies don't fully explain with whom they might share the data or how long it will be retained. They also don't give proper notice about changes to the terms of service, the agency said. Jawbone said in a statement it's reviewing the report but it gets permission from users to share their data, and they can ask the company to delete it. "We want to reassure our users and let them know that we only share their data if they ask us to -- for example to integrate with a 3rd party app," said Jawbone. Fitbit said in a statement it doesn't sell or share data without user permission and tries to use "clear, non-legalese language in our policies" so users understand data collection and use. Fitbit said it was self-certified under Privacy Shield, the trans-Atlantic data transfer arrangement to protect Europeans' personal information. Although Garmin said it disagrees with some unspecified statements in the NCC report, it's working to make some language clearer in its privacy policy, enhancements that will be released in the coming weeks. It said other NCC suggestions will be integrated into data protection practices and policies that will be made in preparation for the general data protection regulation. The company said it doesn't share or sell data to third parties without explicit consumer consent. Mio didn't comment.
Some 42 percent of smartphone and tablet owners use at least one fitness app and more than a third use two or more, said a Friday Parks Associates report. Roughly 45 percent of fitness app users log food and calories, and 18 percent join coaching sessions online or via app, said Parks. It forecast that increasing adoption of connected health and wellness technology will have a “ripple effect” on growing consumer acceptance of connected healthcare devices. Parks has seen a “strong surge” in interest from health systems, insurers and their affiliates to develop patient engagement strategies and capabilities in patient education and outreach and for on-demand and virtual care solutions, new-generation care management solutions, and fitness and wellness services, said analyst Harry Wang.
Privacy rules for health apps and wearable devices are complicated and continually evolving, said panelists at a Georgetown Law Center on Privacy and Technology event Wednesday. For instance, the Health Insurance Portability and Accountability Act's privacy and security rules apply only to health plans, healthcare clearinghouses and healthcare providers who electronically transmit health information, said Deven McGraw, Department of Health and Human Services deputy director-health information privacy. Health wearable makers may or may not be covered depending on whether they're working for a health plan or provider in whole or in part, she said. An app funded by a plan or provider may be covered, but it may not if bought by an individual, she said. The Future of Privacy Forum (see 1608170013) and Center for Democracy and Technology (see 1606100029 and 1606200027) issued best practices to help app developers and wearable manufacturers consider privacy implications and implement safeguards. Michelle De Mooy, deputy director for CDT's privacy and data project, said legal frameworks and policies are rapidly becoming outdated as individuals are being tracked ubiquitously by sensors. She cited issues with advertising and algorithmic bias, and said the concept of "dignity," which straddles privacy and ethics, should come into play by considering an individual's expectations. FTC attorney Cora Han said the agency's enforcement authority under Section 5 of the FTC Act overlaps with areas HIPAA covers but doesn't reach nonprofit entities and other areas. She cited a recent example of the agency's enforcement with electronic health record company Practice Fusion over publicly posting patient's sensitive personal and medical information on the internet without telling the individual (see 1606080010).
Panasonic will use next week’s CEATEC Japan show to showcase a flexible, rechargeable lithium-ion battery it developed for wearable devices, which measures only 0.02 inches in thickness, the company said in a Thursday announcement. The battery can retain its characteristics even after repeatedly being bent to a radius of nearly an inch or twisted to an angle of 25 degrees, Panasonic said. The company plans to start sample shipments of the battery by the end of October, it said. “Product development will continue towards mass production, with an eye to an even slimmer form factor ideal for various IoT devices such as card devices and wearable devices.” Repeated bending and twisting of conventional lithium-ion cells “can cause a big impact on the charge and discharge cycle and life of a battery,” it said. The new battery has been shown to have 80 percent “initial capacity retention” despite 1,000 charge and discharge cycles, and 1,000 bending or twisting repetitions, it said. CEATEC Japan opens Tuesday at the Makuhari Messe convention center for a four-day run.