The annual CES convention in Las Vegas is known as the launch pad for a dizzying array of hardware products ranging from concept cars and super-thin TVs to laptops and tablets.
So it might seem odd that rather than introducing a new fitness-tracking device, Fitbit (FIT) rolled into the show with a number of software updates for its existing wearables including new social features, an update to the company’s Fitstar app and compatibility with non-Fitbit devices.
The move, though, is part of a strategic turn for the device maker as it seeks to decrease its dependence on hardware sales and increase the importance of its software business.
“I think part of it is that we are trying to shift the perception of Fitbit from being just a hardware company to a connected device company where software is equally, if not more so, important,” Fitbit CEO James Park told Yahoo Finance.
“I think a lot of those announcements that we made really reinforced that fact, whether it’s our community feed, which I think is really critical for maintaining engagement and retention of our users,” he said.
User retention is of the utmost importance for a company like Fitbit, too. According to a survey by market research firm Gartner, 30% of fitness tracker owners abandon their devices because they “get bored of them or they break.”
Fitbit sees social features like its new Community Feed as a means to encourage consumers to continue using their devices long after the initial honeymoon period of buying their trackers wears off.
The feature, which launches in March, allows users to connect directly with their friends and family through the Fitbit app where they can share their workout stats, something Park says people already do via Instagram and Facebook (FB).
Users will also have access to information from Fitbit fitness experts and be able to encourage and compete with friends via a weekly workout leaderboard. A Groups feature lets users join communities-related to topics including fitness, nutrition and weight loss.
“People always ask us about competition, either from larger companies or cheaper competitors, and really the sustainable competitive advantage that Fitbit has had over the years is the strength of its user community,” said Park. “People are more likely to buy a Fitbit, because their friends and family are already users and less likely to buy a competing device or leave.”
A Health insurance push
In addition to its social push, Fitbit and UnitedHealthcare (UNH) announced that the insurer will begin providing Fitbit’s Charge 2 tracker to eligible UnitedHealthcare Motion subscribers. The program allows users to earn up to $1,500 a year toward their medical expenses by hitting specific fitness goals.