Recently, wearables company Fitbit (FIT - Free Report) reported better-than-expected earnings thanks to the addition of new products. Fitbit is the number two player in the smartwatch area in the U.S., entering the market with zero share only 14 months ago. It is interesting to see that sales of smartwatches are still increasing, even though it seems as if the craze has died down. However, companies like Fitbit and Apple (AAPL - Free Report) are coming out with newer versions of their smartwatches, which is continuing to entice consumers. So, let’s take a closer look at Fitbit’s Versa smartwatch and the Apple Watch Series 4.
Fitbit sold 3.5 million wearable devices in the third quarter, with the average selling price up 3% year-over-year. Since the introduction of many new devices such as the Versa, Charge 3 and Aria 2, 62% of revenue came from these different wearables and smartwatches. More specifically, sales of the Versa smartwatch increased from the year-ago period, taking the lead over similar performers like Garmin (GRMN - Free Report) , Samsung and Fossil (FOSL - Free Report) . Throughout this year, the company has seen a 49% increase in revenue just from the Smartwatch sector of the company.
In its Q3 report, CEO James Park mentioned that the company saw sequential growth in both tracker and smartwatch products throughout the year. Due to that, they are re-affirming their full year guidance of $1.5 billion.
The watch has proved to be more popular among female consumers, making up almost 72% of consumers. A reason for this could be Fitbit’s female health tracking feature, which has seen a lot of engagement since its launch.
But if the company wants to see growth and success, they can’t solely rely on the sales of their smartwatches. A lot of the company’s products are fitness trackers, which have lacked sales in the past. In Fitbit’s recent quarterly report, their full year 2018 guidance projects a decline in sales of tracker devices but an increase in sales of smartwatches. Although the company has seen a decline in sales until now, it is apparent that Fitbit is trying to turn things around and is sticking to its promise to deliver products that its consumers want.
Apple Watch Series 4
According to TechCrunch, the Series 4 Apple watch is the best, most accessible Apple Watch to date. Apple has a very die-hard consumer base and it’s those consumers that buy almost all of Apple’s new products. With a brand new design, features and updates, Apple has captured its consumers to buy the “perfect” smartwatch in the market right now.
In Apple’s Q4 report, the company reported revenue of almost $63 billion, an increase of 20% from the year-ago quarter. The company ended with a record year with September being their best quarter ever, growing double digits in a lot of the different segments. Although the company didn’t specify numbers for the Apple watches, CEO Tim Cook mentioned that the company set records for iPhones and Wearables and that with the launch of many new products, they are entering the holiday season with their strongest lineup of products and services.
If what Cook mentioned in the quarterly report to be true and that this will be their greatest holiday season ever, investors can look towards higher sales and more demand for Apple products in the upcoming months. It seems as though no matter what product or new update Apple comes out with, its most loyal customers will always have it. It’s no surprise that investors have become used to Apple reporting better than expected results and saying only positives about the company in their press releases. Therefore, investors will look towards the individual units Apple produces and especially during the holiday season.
Which Smartwatch Takes the Reign?
It can be said that both brands of smartwatches have their pros and cons. Seeing as the Versa is almost half the price of the Series 4 and includes many of the same features, it would be reasonable to purchase the Versa over the Series 4 watch. However, for those consumers who are loyal to Apple’s brand would lean more towards buying their products instead of Fitbit’s. If we look towards the design and processing features of the Series 4, it can be said that more consumers would lean towards buying that. However, for those looking to buy a simpler and cheaper version of Apple’s smartwatch, Fitbit would be your best bet with its Versa smartwatch.
It is clear that Apple has consumers buying their watches and it’s also clear that people are buying Fitbit’s Versa smartwatch. However, during Q3, Fitbit’s competition wasn’t as stiff as it will be now. Apple’s Series 4 watch came out at the end of Q3, so there wasn’t really much to compare to. But with the holiday season coming up, both companies can look towards competition with their respective products.
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