5/18/2017 1 Tyler Brown | Kayla Baczewski | Ethan Smith | Maya Donoghue April 8 th , 2017 Your Workout. Your Data. Your Choice. Pathway to the Future of Fitbit START OVERVIEW SECURITY PRIVACY GLOBAL END FINANCIAL Summary OVERVIEW | PRIVACY | SECURITY | FINANCIAL | GLOBAL | SUMMARY 1 General Market Condition The wearable market is highly saturated and growing fast 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0% 1Q '14 2Q '14 3Q '14 4Q '14 1Q '15 2Q '15 3Q '15 4Q '15 1Q '16 2Q '16 3Q '16 4Q '16 Share of shipments Fitbit Xiaomi Garmin Samsung Jawbone Apple BBK Lifesense Other By the end of 2016, 5 main players (Fitbit, Xiaomi, Garmin, Samsung, and Apple) made up over 60% of shipments world wide 325 453 593 722 835 929 0 100 200 300 400 500 600 700 800 900 1000 2016 2017* 2018* 2019* 2020* 2021* Connected wearables in millions The Industry as a whole is growing fast, expecting to grow over 185% of 930 million wearable devices in 2021 Sources: Statista, Company Website 2 OVERVIEW | PRIVACY | SECURITY | FINANCIAL | GLOBAL | SUMMARY 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0% 2014 2015 2016* 2017* 2018* Share of unit sales Smartwatch Health & fitness trackers Wrist sport computers Other wearables General Market Condition There are large growth opportunities outside of the US and Europe but smart watches will quickly overtake pure fitness trackers in popularity China and the Asian Pacific have grown significantly since 2014 and will continue to with growing populations and increasing health awareness 0 20 40 60 80 100 120 140 2014 2015 2016* Unit sales in millions Western Europe Developed APAC China North America Other regions As the industry grows, consumer preference will shift to smartwatches over fitness trackers as they get cheaper and have longer battery life Sources: Statista, Company Website 3 OVERVIEW | PRIVACY | SECURITY | FINANCIAL | GLOBAL | SUMMARY
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Pathway to the Future of Fitbit - Foster School of Business · 2017-05-23 · Pathway to the Future of Fitbit START OVERVIEW SECURITY PRIVACY GLOBAL END ... Fitbit Xiaomi Garmin Samsung
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5/18/2017
1
Tyler Brown | Kayla Baczewski | Ethan Smith | Maya Donoghue
Smartwatch Health & fitness trackers Wrist sport computers Other wearables
General Market ConditionThere are large growth opportunities outside of the US and Europe but smart watches will quickly overtake pure fitness trackers in popularity
China and the Asian Pacific have grown significantly
since 2014 and will continue to with growing
populations and increasing health awareness
0
20
40
60
80
100
120
140
2014 2015 2016*U
nit s
ales
in m
illion
s
Western Europe Developed APAC China North America Other regions
As the industry grows, consumer preference will
shift to smartwatches over fitness trackers as they get cheaper and have longer
Fitbit should invest in technology that will support the existing market
Sources: Company Website, Wearables, Sports Illustrated, Business Insider
Key Takeaways
Market Conditions: The global wearable is growing rapidly with extreme growth in the Asian markets. The market is highly saturated and will start to become dominated by Apple and Samsung as smartwatches gain popularity
Technology Changes: Although there are lots of technology innovations upcoming in the market, Fitbit should focus on technologies that manage the existing market as well as focus on their software
Data Protection in the USData Protection Laws are a patchwork between federal, state, and best practices
No Current General Federal LawsFederal Trade
Commission ActHealth Insurance Portability
and Accountability ActBest Practices
Prohibits unfair or deceptive practices such as failure to protect data,
change privacy policy without adequate notice, and failure to comply with posted policy. Principles are voluntary in nature
HIPPA regulated medical information, focused on individually identifiable
health and medical information. HIPPA
regulated the use and disclosures of such
information
The FTC Fair Information Practice Principles
represent widely accepted concepts. They focus on
notice, awareness, choice, consent, access,
participation, integrity, security, and enforcement
Various State LawsCalifornia State Law
The California Online Privacy Protection Act requires a commercial website to conspicuously post its privacy policy on its websites and deals with the use of personally identifiable
information taken through the internet. Sources: Thomson Reuters, FTC Website
EU General Data Protection RegulationEU Data Protection Laws are more stringent and comprehensive than the US
Comprehensive Data Protection LawsExpanded Territorial Reach
Best Practices
Data Protection Officers
Accountability and Privacy
A company outside the EU that is targeting consumers in the EU will be subject to GDPR
Companies must designated a Data Protection Officer in certain circumstances
Data Controllers must demonstrate compliance by maintaining certain documentation, and implementing data protection
Data Processors
Data Processors have direct obligations to maintain a written record, designate a data protection officer, and notify the controller on becoming aware of a personal data breach
Consent
A data subject’s consent to processing personal data must be as easy to withdraw as to give consent. Data subjects have the right to object to personal data being used for direct marketing
Fair Processing Notices
Data controllers must provide transparent information to data subjects when data is obtained
EU General Data Protection RegulationEU Data Protection Laws are more stringent and comprehensive than the US
Comprehensive Data Protection LawsExpanded Territorial Reach
Best Practices
Data Protection Officers
Accountability and Privacy
A company outside the EU that is targeting consumers in the EU will be subject to GDPR
Companies must designated a Data Protection Officer in certain circumstances
Data Controllers must demonstrate compliance by maintaining certain documentation, and implementing data protection
Data Processors
Data Processors have direct obligations to maintain a written record, designate a data protection officer, and notify the controller on becoming aware of a personal data breach
Consent
A data subject’s consent to processing personal data must be as easy to withdraw as to give consent. Data subjects have the right to object to personal data being used for direct marketing
Fair Processing Notices
Data controllers must provide transparent information to data subjects when data is obtained
Sources: Allen and Overy
Key Takeaways
United States: The US has very little federal oversight into how companies protect the data they get from consumers
European Union: The EU’s new General Data Protection Regulations provide more stringent laws for companies in order to provide more protect for consumers
Overall: There is not clear leader in the wearable market in terms of privacy and security policy.
The data you create while using our technology is private, this is why we
protect it like it is our own using world class security.
We let you choose the features you want based on your privacy settings.
You can change your settings and delete your
data wherever and whenever.
We want to help you accomplish your fitness
goals. That’s why we have built the best fitness
tracking software and devices.
Marketing a New Era of PrivacyMarketing strategy will focus on Fitbit’s industry leading privacy and security policies
Key Takeaways
Marketing: Roll out the “Your Workout. Your Data. Your Choice” program through numerous channels to educate consumers about privacy and security which will increase demand for our products.
Privacy: Customers will have the ability to save and share their fitness data based on the categories they select. By default no information is saved or shared. All data recorded is aggregated and anonymized.
Security: Implement world class security by leveraging Bluetooth LE, stronger encryption, multifactor authentication, a new data protection officer, and external audits to ensure reliability and security.
Bits: Bit rewards are used to keep customers motivated to reach their desired fitness goals and increase the amount of active users.
Asia Pacific RegionLeveraging the geographic presence of current partners and corporate clientsKey Takeaways
Global Companies: Fitbit can leverage its existing global customers to penetrate into the Asia Pacific market
Strategic Partnerships: Strategic partnerships with heath and insurance companies will differentiate Fitbit, creating brand equity today, while laying the foundation for growth in the future
Marketing: Tailored marketing strategies for key global markets will be vital for increasing and maintaining future market share
Global Wearable Sales Global Wearable Sales/Product
Overall Global Sales
Wearable Unit Shipments
Active Users
Income Statement
People who Track DataCompetitor Policy
SWOTFitbit and Medtroic
Upgrade Costs
Australian Fitness Industry
Smartphones in ChinaOperating Systems in China
Projected RevenueHealthcare Projected Revenue
Australia Fitness Tracking
China Fitness Tracking
Corporate ClientsCorporate Clients cont.
Takeaways
5.39
13.36
17.65
4.08
3.28
1.98
5.93
14.02
23.12
0
5
10
15
20
25
30
35
40
45
2015 2018 2021
Sal
es in
billi
on U
.S. d
olla
rs
Smartwatches Sports, fitness and wellness trackers* Others**
Wearables sales revenue worldwide by category from 2015 to 2021 (in billion U.S. dollars)
Appendix: Wearable Sales Revenue Worldwide
39
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11
19%22%
5%
22%
31%30%
12%
50% 47% 81%
47%
30%
1% 2% 1%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
Western Europe North America Developed APAC China
Sha
re o
f sal
es
Wrist sports computers Health & fitness trackers Smartwatches (SIM + No SIM) Locators Others
Share of wearables sales by product category and region worldwide in 2015
Appendix: Wearable Sales by Product and Region
40
Wearable device sales revenue worldwide from 2015 to 2021 (in billion U.S. dollars)
12.33
18.04
26.83
38.84
53.62
72.27
95.27
0
20
40
60
80
100
120
2015 2016* 2017* 2018* 2019* 2020* 2021*
Rev
enue
in b
illion
U.S
. dol
lars
Appendix: Wearable Sales Revenue Worldwide
41
Forecast wearables unit shipments worldwide from 2014 to 2021 (in millions)
28.8
81.9
102.4
132
157.9
185
213.6
237.5
0
50
100
150
200
250
2014 2015 2016 2017* 2018* 2019* 2020* 2021*
Uni
t shi
pmen
ts in
milli
ons
Appendix: Wearable Unit Shipments
42
‐
10,000,000.00
20,000,000.00
30,000,000.00
40,000,000.00
50,000,000.00
60,000,000.00
2014 2015 2016
Devices
Devices sold Active Users
Registered device users Linear (Devices sold)
Linear (Active Users)
Over time the number use of wearable has
been degrading. Users lose motivation and stop
using there devices
Using current active users and registered devices we hope to capture at least 20
million users during the first year
Appendix: Active Users
43
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Year 1 Year 2 Data Sharing revenue ‐$ 460,841,940.00$ App Development 32,019,100.00$ 48,028,650.00$ Marketing Campaign 39,300,400.00$ 58,950,600.00$ Cost of rewards program ‐$ 177,246,900.00$
Partnering with health companies and using data 460,841,940.00$ 30% margin
Capture Rate Users CapturedCurrent Active Users of Fitbit 23,238,000.00 50% 11,619,000.00 Current Nonactive Users of Fitbit 26,917,000.00 30% 8,075,100.00
Further information regarding this statistic can be found on page 8.Note: United States; 2006 to 2015; 6 years and older; 32,658 (15,167 individual & 17,491 household surveys)
46
Fitbit Apple Samsung Xiaomi Garmin Jawbone
Sensitive Information
Limits on Collection and Use
Meaningful Disclosure
Limited Sharing
Consumer Access to Data
Transparent
Anonymization
Usability testing
Fair marketing practices
Current CompaniesNo company emerges as a leader for security and privacy policy
Sources: Statista, Company Website
Appendix: Competitor’s Current Privacy Policies
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SWOT AnalysisFitbit thrives in the middle market for customers who want a mix of lifestyle and fitness
SWOT
• Variety: Fitbit offers a large variety of fitness trackers at a variety of price points
• Software: Fitbit’s app is the gold standard for fitness tracking
• First in Market: Fitbit was one of the first fitness trackers
• Motivation: Less than half than customers continue to wear the device after 6 months
• Scandal: The recall and hacking scandals have affected consumer confidence in the brand
• Expertise: Lack an infrastructure for building competitive smartwatches
• Competitors: Smartwatches are becoming more and more popular and other competitors are better suited to compete
• Smartphones: smartphones are now tracking fitness data directly on the phone
• Asia: As middle classes grow, there will be strong opportunities in Asia
• Corporate Sponsors: More and more companies offer discounts on health insurance for fitness tracker users
Sources: Company analysis
Current CompaniesNo company emerges as a leader for security and privacy policy
Appendix: SWOT Analysis
48
Description: Combined Fitbit and Medtronic technology to monitor glucose levels of individuals along with daily activities
Reasoning: 29 M Americans suffer from diabetes mainly due to sedentary habits and bad diet
Solution: iPro2 myLog app (Medtronic) connects with Fitbit app to access data. Medical Practitioners access iPro2 myLog app to retrieve patient activity information
Medical Practitioners = Growth Catalyst
Appendix: Fitbit and Medtronic Partnerships
49
Most significant areas for growth for the fitness industry according to clubs in Australia in 2014
50.4%
37.4%35.7%
32.6%30%
22.6% 21.7%18.7%
16.5%
9.6% 8.7% 7.4% 5.7%3%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Sha
re o
f res
pond
ents
Appendix: Fitbit and Medtronic Partnerships
50
Share of population in China** that use a smartphone from 2015 to 2021
Source: Statista DMO; ID 321482
38.17%40.86%
43.48%46%
48.41%50.67%
52.77%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
2015 2016* 2017* 2018* 2019* 2020* 2021*S
mar
tpho
ne u
sers
as
shar
e of
pop
ulat
ion
Appendix: Fitbit and Medtronic Partnerships
51
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Market share held by smartphone operating systems in China from 2013 to 2017, by month
Source: Kantar Worldpanel; ID 260418
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
Jan'13
Mar'13
May'13
Jul'13
Sep'13
Nov'13
Jan'14
Mar'14
May'14
Jul'14
Sep'14
Nov'14
Jan'15
Mar'15
May'15
Jul'15
Sep'15
Nov'15
Jan'16
Mar'16
May'16
Jul'16
Sep'16
Nov'16
Jan'17
Mar
ket s
hare
Android BlackBerry iOS Windows Other
Appendix: Fitbit and Medtronic Partnerships
52
Wearable device sales revenue worldwide from 2015 to 2021 (in billion U.S. dollars)
Source: Tractica; ID 610447
12.3318.04
26.83
38.84
53.62
72.27
95.27
0
20
40
60
80
100
120
2015 2016* 2017* 2018* 2019* 2020* 2021*
Rev
enue
in b
illion
U.S
. dol
lars
Appendix: Fitbit and Medtronic Partnerships
53
Healthcare wearable device sales revenue worldwide from 2015 to 2021 (in million U.S. dollars)
Source: Tractica; ID 610433
105.27 344.59869.94
2,084.64
4,387.77
9,163.97
17,802.16
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
2015 2016* 2017* 2018* 2019* 2020* 2021*
Rev
enue
in m
illion
U.S
. dol
lars
Appendix: Fitbit and Medtronic Partnerships
54
Appendix: Fitbit and Medtronic Partnerships
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Appendix: Fitbit and Medtronic Partnerships
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Corporate Clients Geographic ReachAsia Pacific Region