January 26, 2016

The Next Casualty of the Smart Phone: GoPros


Image courtesy of the author

After an update to its guidance for the upcoming quarter, GoPro’s stock took a major tumble. After trading at over $90 a share in October of 2014, the action camera maker saw its stock drop to under $15 last week. I personally have never seen the appeal of a camera without some sort of a viewfinder, but beyond that, I never understood the sustainability of its business model. GoPro cameras have no discernible differentiator (there’s no unique software or physical part that is difficult to obtain or fabricate). So, what is to stop another company from using the same readily available components from making a similar, cheaper camera? Answer: nothing.

The bigger problem for niche hardware makers is the continued rise in ownership and ability of the smart phone. When the original iPhone launched, it included 15 icons on its screen. On day one, previous pieces of single purpose hardware were relegated to mere apps on a screen (phone, iPod, calculator and clock), and the need to purchase those individual pieces of hardware vanished.

Over time as the capability of the smart phone increased, items as small as keychain flashlights and as large as point and shoot cameras have seen a significant decrease in sales and will likely be close to obsolete in a matter of years as smart phone ownership continues to rise. And sadly for all those Fitbit enthusiasts, I’m afraid a similar fate awaits the fitness tracker as well.