On news that a Fitbit has helped save a man's life and with the stock being up over 10%... Today I want to talk about the true potential of Fitbit.
Right now, Fitbit is a fitness company. The company has a focus on helping people get in better shape. The social platform allows users to interact and compete against each other. However, the great opportunity for the company lies beyond fitness, it is in overall healthcare and corporate wellness programs.
A Fitbit may help insurance companies save money. If people wearing Fitbit devices lead healthier lifestyles, insurers may pay out less in health care costs in the long run. Health insurers may begin subsidizing Fitbit devices to their customers. After all, just a few days ago it was reported that a Fitbit saved a man's life. The doctor was able to utilize data from the Fitbit to administer medical treatment properly.
I see three points of focus for Fitbit to transition further into being an overall healthcare company.
1. Greater analytics & appealing visual dashboard
2. Statistically proven health benefits of the device
3. Increasingly accurate sensors
Fitbit is doubling R&D spending for this year. CEO James Park has mentioned they view themselves as a "digital health and wellness company" and 2016 will be a year for increased
"software improvements, more algorithms, and coaching". This speaks beyond getting people up and running more, he is looking beyond the hardware and seeing what these devices can tell us.
Analytics provided to healthcare insurers can help them understand how a Fitbit leads to a healthier lifestyle, what level of activity or heart rate can lower the chance of heart disease. Actionable insights from Fitbit will force the hand of insurance companies. It will become clear that they must find a way to get these devices into the hands of their customers. At that point, not only will sales from the physical devices soar but also Fitbit will begin to monetize additional aspects of the business. The data and analytics they provide can be monetized.
Of course, for all of this to occur, the sensors on the devices must improve. It's a safe bet that Fitbit engineers are working hard to do just that. If you believe that this is a possibility, it may a worthwhile investment while the company is valued at just over $3 Billion. After all, the healthcare sector is a $1 Trillion plus business per year.