Fitbit vs GoPro IPO

downloadFitbit has announced plans to go public. Although the firm has first mover advantage in the wearable fitness space, I’m a little skeptical of its long-term prospects. Namely, I think that the days of the single-use device – and especially, wearables – are numbered. As the Apple Watch – and to vastly lesser extents, Android Wear and Pebble – slowly become more accepted, I think that it’s unlikely people will buy dedicated fitness trackers for any reason beyond a very low price or a very high resilience to sweat.

Fitbit’s plans reminds me of another recent IPO: GoPro. Like Fitbit, GoPro is a sports-centric, self-contained product whose functionality can be easily replicated by a smartphone. But I think there is a critical difference between GoPro and FitBit. GoPro has developed a following – and to a certain extent, a lifestyle – that makes the media its fans produce worth almost as much as the devices themselves. Indeed, even if GoPro were to eventually exit the camera business altogether and just make ski-themed apps or iPhone harnesses for extreme sports, the brand would still live on, if only as an extremely successful YouTube channel.

In contrast, I don’t believe that FitBit has an audience that is as large or as devoted as GoPro. And fundamentally, it’s hard to make fitness data sexy in the way that footage of jumping out of helicopters is. I do think that FitBit is a viable business over the next 2-3 years, but I’m skeptical of its long-run prospects, in the face of more refined wearables. Put simply, Nike pulled the Fuelband from the market for a reason, and it wasn’t FitBit. Given the gradual consolidation of connected fitness apps, devices, and sporting goods companies – namely the purchase of MapMyRun by UnderArmour in 2014 – I suspect the FitBit may eventually be an acquisition target for a second-tier fitness player like Adidas or Reebok.

Fitbit vs GoPro IPO

You Can’t Really Hear Me Knocking

As a die-hard Stones fan, I was thrilled to hear that the band had put out a previously unreleased version of their earbud-shaking “Can’t You Hear Me Knockin’,” off of the band’s 1971 ‘Sticky Fingers” album.

Stones re-releases and alternate versions can be a lot of fun – think of the newly-released acoustic “Wild Horses,” or the lesser-known “Tumblin’ Dice” counterpart, “Good Time Women,” which featured on the 2010 re-release of ‘Exile on Main Street.’

The alternate version of “Can’t You Hear Me Knockin'”, is, unfortunately, a tantalizing disappointment.

This version has a refreshingly different samba backbeat, and retains the tight and practiced interplay between Keith Richards and Mick Taylor. The only thing missing is intelligible vocals. Where Taylor and Richards instill a sort of casual elegance into this seventies-style blues number, Mick’s vocals are frustratingly inscrutable. The original “Can’t You Hear Me Knockin'” wasn’t particularly clear, but this iteration has only five clear words – the eponymous title. It’s no wonder this version didn’t make the cut, but it’s still worth a listen, if only as an intro to its more polished counterpart.

You Can’t Really Hear Me Knocking

Apple Pay’s Credit Card Reliance

Apple Pay

Juan Pablo Vazques has an article in Harvard Business Review about how Apple Pay’s reliance upon credit cards is ultimately iterative, but not disruptive. He writes:

Apple executives could have negotiated with retail banks, just as it did with the recording labels, to launch Apple Pay. If it had, Apple Pay would have been a substitute for credit cards, and would truly be disruptive to the credit card industry. Instead, Apple negotiated with the credit card companies, which is why you need to introduce your credit card number, instead of your bank account number, to configure the application. That merely positions Apple Pay at the end of the existing credit distribution value chain, as a reseller for the credit card companies.

Vazques draws the comparison between the inception of iTunes – wherein Apple inked aggressive deals with music labels – and the potential for it to have engineered comparable deals with banks. The thinking is, Apple could have cut out credit card companies entirely, and just engineered a system that withdrew funds from a consumer’s bank account and deposited it into the merchant’s, taking a cut smaller than Visa or American Express.

He is, in theory, correct. Apple is one of the few companies whose customers are ubiquitous, loyal, and tech-savvy enough to have conceivably gone through the steps of linking their checking account to their Apple Pay account (the others are Amazon, Google, and maybe Facebook). But there are a few roadblocks that rightfully prevented Apple from taking that leap:

1. Record labels and credit card companies aren’t in the same strategic positions. When Apple approached record companies in the early-00s, the labels were desperate to combat the effects of file-sharing and piracy. And not unreasonably. Single-song downloads presented far more convenience than piracy, and far less cost than a full CD. Credit card companies are not in the same position. Both Visa and American Express have had years of solid growth, and the legitimate cybersecurity threats they face are not existential in the same way piracy was a mortal threat to the music industry. Apple may have been able to use its massive user base as clout, but it’s not nearly as certain a case as it was fifteen years ago.

2. Fraud, fraud, fraud. The way things stand now, credit card companies absorb the cost of illegitimate charges on users’ cards. Unless Apple Pay were completely airtight, Apple would not enter the business of shouldering consumers’ risk, and doesn’t have the technical infrastructure to spot unusual spending, or the procedural means of chasing down fraudsters the way Visa and Amex have been doing for fifty years. The excellent podcast Exponent covers this aspect in depth.

3. Apple’s not in the value game. Cutting out credit card companies might save merchants – and eventually, customers – 5% or so on transactions. It would take a considerable amount of risk, and capital, for Apple to see meaningful revenue on Apple Pay transactions. And Apple doesn’t do low margin. If Apple were getting into the transaction processing game, it would likely want a higher percentage than retailers would be willing to concede.

I agree with Vasquez’s fundamental premise, but not his castigation of Cupertino. In the literal sense, Apple missed an opportunity to reimagine the mechanics behind mobile payments. But I think that Apple is a more conservative entrant to the mobile payments space, and that it is rightfully hesitant to expand from consumer electronics – and now, fashion – to financial services. It is eminently possible that, down the line, Apple will attempt to squeeze Visa and American Express out of the value chain. But I think that as long as fraud is a legitimate concern, Apple will sooner play it safe than play it cheap.

Apple Pay’s Credit Card Reliance

Reviewing the New Macbook

Wired has a solid review of the new Macbook. Their conclusion is spot on:

Much like that first Air, the new MacBook is for the future. It’s a vision of our next computer, the one we’ll buy when our Airs or ThinkPads can’t keep up anymore. The MacBook is a work in progress: The processor and the battery will improve, and the price will drop. It won’t take long. The future’s getting here faster than you think.

Reviewing the New Macbook