Brief:

• Fitbit, the wearable technology maker whose sales fell 40% to $353.3 million in Q2 2017 from a year earlier, announced its first smartwatch in a company press release yesterday. The Fitbit Ionic will take on the Apple Watch, one of the most popular wearable tech products. Fitbit's watch is focused on health and fitness, but will also include a Fitbit Pay feature to handle transactions without a cell phone or wallet.
• In the next few months, Fitbit Pay will become compatible with eligible American Express, Mastercard and Visa credit and debit cards in more than 10 countries. The Fitbit Ionic will be equipped with smartphone notifications and the ability to receive call, text and calendar alerts. Notifications from smartphone apps like Facebook, Gmail, Instagram, Slack and Snapchat will also be a key feature.
• The Ionic is available for pre-sale for $300 on Fitbit.com and at select online retailers. It will be widely available at more retail locations starting in October. Fitbit plans a Fitbit Ionic Adidas special edition device for 2018. The Fitbit app software development kit (SDK) will be open to developers next month.

Insight:

Fitbit was an early leader in wearable technology and helped to establish a market for high-tech products to help monitor physical activity. The Apple Watch, which isn't considered a hit product like the iPhone or even the iPad, grabbed attention with its health-related features and all the abilities that Fitbit previously lacked. Apple Watch's sales rose more than 50% in the past year, Apple CEO Tim Cook said in a recent call with investors, although the company doesn't break out sales of the device.

Growth forecasts for the wearables category from several industry observers were downgraded at the end of 2016. Health and fitness applications are proving to be the bright spot, however, continuing to draw the interest of investors. Fitbit combining its specialty in this area with a proprietary mobile payment option and also social media integrations from channels like Snapchat, Facebook and Instagram could turn the Ionic into a more appealing draw for mobile marketers and developers who have, to date, often opted for smartphones' larger screens.  

At the end of December, eMarketer changed its outlook for 2017 from 60% growth in the wearables category to just 24.7%. Price sensitivity was cited by eMarketer analysts as one reason for the dramatic forecast shift, especially for smartwatches. A recent report from research firm Strategy Analytics reached a similar conclusion. Its industry analyst cited low-cost fitness bands sold in China as one of the primary drivers of category growth last quarter.

In January, ABI Research provided a more optimistic view for wearables with expected growth to steadily rise through 2021, but with a shift to more body- and head-mounted devices than wrist-worn ones. This might be surprising as wrist-worn gadgets are generally the type of wearable many people have adopted. ABI Research based its prediction on a major increase on enterprise uses for head-mounted wearables, however.