Latest great, smart and insightful guest post from our friend at Brinc, by Bay McLaughlin, and also panel member of the Irish Tech News 2017 IoT awards (more details coming soon).

Hardware, IoT, Quantified Self and much more. Entrepreneurial insights with Bay McLaughlin

In the last few years, we’ve seen some exciting innovations in consumer electronics with a slew of new startups challenging the incumbents like Apple, Samsung and Microsoft. Case in point GoPro a darling of Silicon Valley, that introduced the world to a new way of filming some of the most adventurous aspects of life. They’ve enjoyed considerable success, until recently, with a full recall of their first drone product, 15% employee layoffs, and their stock sitting at ~11% of its historical high for the last year. The issues facing GoPro are a lesson for all types of companies, especially when it comes to dealing with the old economy (offline products) and China.

GoPro’s Rise and Fall

Many remembering GoPro’s rise may be surprised to hear of the trouble they’re in today. For a while, about 2011 to 2014 GoPro seemed to have taken over the world. But here’s where they made their first mistake. While they were smashing their camera sales targets and growing the company, GoPro failed to make the important transition from hardware to software that all their competitors were undergoing successfully.

Think about the iPhone without iOS or your Mac without OS X. Everyone knows that hardware is a commodity (at scale) and other than Apple, very few companies make healthy margins on their hardware.GoPro has known that this transition from a hardware to a software company was a requirement. In fact, it was their thesis for their IPO: they promised investors their IPO would focus on becoming a media company… but that never happened, and they’ve been suffering ever since.

GoPro’s next mistake: getting into China too late and, when they did, not partnering with a local provider for at least defensive regional support.

The Chinese outbound sports market is growing rapidly and Go-Pro rip offs litter the electronics market across Southeast Asia. To add insult to injury, Foxconn is already a substantial shareholder in GoPro.

What used to be an opportunity for the camera maker has turned into a near impossible long-shot: it’ll be impossible for GoPro to dominate the Chinese market. GoPro is a brand name in the West, but in the East, competitors like Xioami’s Yi action camera lineup is competitive,?if not better.

GoPro in China Today

GoPro is left with local competition that has the same if not better hardware technology being sold at a lower price point.This is a huge issue for hardware companies, as we’ve seen with Apple.

You have to figure China out or you’ll suffer the consequences.

GoPro CEO, Nick Woodman, made $284M in 2015

Adding insult to injury, GoPro CEO, Nick Woodman, was also the highest paid CEO in the United States in 2015 at ~$284.5M USD.

I was blown away by this considering, shortly after GoPro went public, their stock has only had one period of positive growth (Summer 2015).

With other issues like their recall of all of their Karma drones because they were falling out of the sky in November 2016 and layoffs of 15% of its staff (200 of the 1,700 positions), GoPro has been experiencing a “sky is falling” crisis ever since their IPO in June 2014.

A Falling Sky for GoPro

The recent news that GoPro is shuttering its entertainment division tells me they are scrambling to rethink their strategic direction, further illustrating the pitfalls hardware startups experience after initial hardware sale success.

It’s easy to fall into a false sense of security and fail to make the critical transition to a software and services business that also sells hardware. There’s nothing about the camera business or the existing GoPro distribution channels that give me confidence in the company’s future.

Even as a HUGE GoPro fan (with over 3 cameras and 2 bags full of expensive, accessories), I won’t be holding my breath for a turnaround. I have a feeling we could be hearing of a private buy out,?not unlike Pebble.


If you would like to have your company featured in the Irish Tech News Business Showcase, get in contact with us at [email protected] or on Twitter: @SimonCocking

Pin It on Pinterest

Share This