Fitbit may be delivering some bad news along with its fourth quarter earnings today. According to a report from The Information, the fitness wearable company may be cutting 5 to 10 percent of its workforce, with the cuts coming from multiple departments. The exact reason for the cuts are unknown, but Fitbit is reportedly undergoing reorganization to focus on not just hardware in the coming year but software changes as well. This reorganization and the job cuts are said to reduce the company’s costs by $200 million.
The company is expected to announce lower-than-expected earnings for Q4, with the blame falling on the sluggish wearables market. In light of that news, the cuts are not a total surprise, but we also knew changes were coming to Fitbit since the company bought Pebble last December. According to a source in The Information’s report, Fitbit wants to develop an app store filled with third-party apps for its devices. Pebble already had this when it was making smartwatches, so Fitbit is likely tapping into Pebble’s software developers for the initiative.
Over the past few years, Fitbit’s app has been left on the back burner while the company introduced ever more new hardware into the market. One of the best features of the Fitbit app is that is can receive and share fitness data with numerous third-party apps, and for a while it seemed the company relied on that compatibility to boost the usefulness of its own app. However, at CES in January, we saw the beginnings of the changing Fitbit app, which focuses on making the experience more social with a new Community section, the ability to find Fitbit users in your area that you don’t already know, and group capabilities that connect you with other users that have the same fitness interests. Rather than being the bridge between different fitness social networks, Fitbit is now trying to be the place for users of all fitness levels to socialize.
This new focus on software doesn’t mean we won’t see new devices from Fitbit. The company is likely working on a new smartwatch thanks to its Pebble acquisition as well as its purchase of Vector, the European luxury smartwatch startup. Fitbit’s Blaze fitness watch is the only one of its devices with a makeshift OS, but it’s not a full system. Fitbit will likely develop its own wearable OS using the brainpower of former Pebble and Vector employees that it can use on a future smartwatch.