Article Thumbnail

Why Are Fitbits So Freakin’ Expensive?

There’s a lot going on under the hood of these little devices — but that’s just the start

Fitbits: They track your heart rate. Your sleep. Your steps. The calories you burn. Your cocaine benders. That’s great! But, like, isn’t technology super cheap these days? Some fitness trackers can be bought for a twenty, so why are Fitbits so expensive? Then there are the smartwatches. Why do those have to be several hundred dollars? I mean, my Casio also goes around my wrist, and it cost me less than $15! Alongside Ramon T. Llamas, an industry analyst who’s a research director of mobile devices at IDC, we’re tracking some answers. 

Come on then, why are Fitbits so expensive? And what all goes into one of these things, anyway?

Taking away the bands and accessories and stuff like that, according to Llamas, the most expensive components are as follows: First is the display. For one thing, it’s big, and that means a lot of diodes underneath that have to blink and hit the right color, intensity, contrast and brightness along with everything else. “That by itself is one marvelous piece of machinery,” Llamas says. “And now you want to make it touch-screen sensitive. Why don’t you ask for the moon next? This is a marvel of engineering that you can get a display this small, this sensitive, this bright and not kill a battery in 10 minutes. You’re asking a lot of this.”

Next is the processor. Not all are created equal, but it’s basically the air traffic controller. It’s making sure your device is doing whatever you’re asking it to do while still running things in the background (counting steps while you’re listening to Spotify, for example). If the smartwatch has phone capabilities, that LTE antenna inside isn’t cheap either — nor are the tiny microphone and speakers that are necessary for telephony. After that, it’s the battery and all the charging components: Whether it’s inductive charging that requires a bunch of coils or it’s a plug-in that requires transistors, this stuff adds up.

After that? All the sensors: heart-rate sensor, SpO2 sensor (the oximeter), plus accelerometers to detect and measure your movement. These have been coming down in price as time marches on, Llamas says. Oh, and let’s not forget about the case itself: The hunk of metal it’s in doesn’t come for free.

Fair enough. How do Fitbits compare to other smartwatches on price?

They’re fairly inexpensive as these things go. smartwatches come in all prices: You can find them under a hundred bucks or over $3,000. That’s mostly because of branding — the higher end of the market is driven by watch companies who normally make $10,000 products: TAG Heuer, Louis Vuitton, Mont Blanc, Movado, etc. Apple’s average selling price is about $420 this year, while Fitbit’s is much lower, at $220. The company’s smartwatches, then, are actually quite inexpensive, relative to everyone else’s.

According to Llamas, through the first three quarters of 2020, Fitbit is in second place overall — but that’s a distant second. Apple has 73 percent market share! Fitbit has 11 percent, just ahead of Samsung, which has 10 percent. Garmin has 5 percent, and a lot of other companies are fighting among that remaining 1 percent.

And yet, the company pretty much dominates fitness trackers.

Yep, they have 77 percent of the market share. “It’s Fitbit’s world, everybody else pays rent,” Llamas says. In second place is a company called Whoop, which has a whopping 5 percent market share, a couple of companies with 3 percent and then a bunch fighting over scraps. Fitbit’s average selling price is about $120, which, not coincidentally, is very close to the average sales price of all fitness trackers — even though its main competitors sell for more, and you can also get ones for as cheap as $15.

Why do they dominate?

Community. Investing in that infrastructure was smart because it allows a user and their friends to monitor each other’s progress, encourage each other or — obviously — talk trash. But it’s also a multiplier: It gets other people to buy Fitbits in order to participate in all of this. Then there’s Fitbit Premium, at $9.99 a month, which is a lot cheaper than a gym membership. And since Fitbit’s average price is right in line with the average fitness tracker price, it doesn’t seem like some extravagant upgrade. But Fitbits do cost a lot more than the cheapest fitness trackers, which suggests to Llamas that all of Fitbit’s extras play a strong part.

How hard is it, really, to make one of these things?

All those aforementioned components are one thing, and sure, there are a lot of companies pumping out fitness trackers. But Llamas points out that when it comes to R&D, Fitbit doesn’t rest on its laurels. Taking the limited data and triangulating outcomes isn’t easy — like determining if a wearer has atrial fibrillation, for example, or sleep apnea. “That isn’t an insignificant undertaking,” Llamas says. “So when I put it all together and I look back at that R&D, the benefits from that have been multifold.”

What’s the lifespan like?

Llamas estimates it at about two years. Think about all the wear and tear that these smartwatches and activity trackers suffer: It gets knocked around against walls, doors, desks and tables. It slides in and out of shirt cuffs several times every day. It’s exposed to heat, cold, water, sweat, stink and grease. It’s on you all the time! Many people can stretch out the lifespan for longer, “However, chances are you’re going to find another feature or service available on a new device that you’re not going to be able to get on your current one,” Llamas says. “You may place value on that, and maybe then it’s time to upgrade.”

Those accessories, though. Why are straps and stuff so expensive?

The short answer is that the market will bear it! People need a replacement strap if theirs snaps, even if it’s damn near half the cost of a new device (which also entices you to consider just getting the new device). And people like to wear a fancier upgrade from the cheap, rubber strap. 

But why does the market bear this? 

“Unlike many other personal consumer electronic devices, your wearable device is an incredibly personal one,” Llamas says. “You want it to be an expression of yourself, right? I look at my own Fitbit watch, and as much as I’ve enjoyed the simple runner wristband, I really like this cloth pattern one because it looks cool. But that’s just me.”

And so because a fitness tracker or smartwatch not only tells you personal information about yourself, but also tells the world a bit about yourself through its styling, well, that’s why these devices cost what they do — and why they’re on so many wrists.