This week’s sports tech news wasn’t all positive. The general “tech news” alone hasn’t been a strong week. Most of the time, the talk is about price increases or layoffs, and very little actual new tech. On the bright side, the news will change in the coming days and weeks, and the pipeline will start filling up a bit with new products. Until then, though, it’s worth diving into his two items that have surfaced over the past two days.
First, there’s the debt rating memo on Wahoo Fitness, which paints a bleak picture. Below is an overview of possible next steps and some thoughts on what we think Wahoo needs to focus on.
Tonal followed up with a price increase, which seems to be an example of how it works. Even if you don’t like paying more, at least the company communicated it correctly and transparently.
Let’s dive into it.
Wahoo Economic Viability:
Another debt rating memo was released on Wahoo Fitness following a similar memo last fall. The memo exacerbates the dire situation Wahoo is in regarding its ability to meet future debt obligations. Last fall, these memos outlined scenarios for major restructuring or worse.
It’s not a long note, so please read it. Picking one or two quotes is a bit silly. Because the traditional way of thinking about news quotes is literally every line deserves a quote. However, none of the quotes are pretty. I think the most balanced ones are:
“The negative outlook reflects our expectation that the business environment will remain challenging for the foreseeable future, and without any liquidity-enhancing deals, the company will face liquidity shortfalls over the next six months. .”
The memo basically states that it covers what everyone in the industry knows. Smart trainer sales plummeted after COVID and Wahoo has too much inventory to sell and no other products people are interested in buying. Remember, you are selling yourself. Neither the Tacx nor the Elite, on the other hand, have had any problems. In fact, Tacx isn’t just expanding physically, it’s hiring.
That being said, don’t worry about buying Wahoo products in terms of support etc. I (well, my wife as part of this purchase) purchased her Wahoo KICKR Bike V1 Refurb last month during her holiday sale. Basically, you’ll see some core scenarios.
1) Wahoo will be infused with cash from outside investors (likely to require a major restructuring)
2) Wahoo couldn’t figure out how to sell enough to cover the debt themselves.
3) Wahoo enters Chapter 11 and finds a slimmer way out the other side
4) Wahoo sells (whether knowingly or not) to another company/brand
One thing people outside the US forget is how lenient the Chapter 11 bankruptcy system is. Many companies have gone through this and come out on the other side without meaningful consumer/customer impact. It’s a process. The main influence here is who Wahoo owes money/products to (which could include your local bike shop).
Like many indoor businesses, Wahoo basically has to get ready for next winter. This is the timeline where most indoor-focused businesses will see more revenue recovery options four years after the peak of initial product purchases due to COVID, and consumers will see new/renewed It’s time to become more proactive in purchasing products.
During this time, however, Wahoo really needs to focus on making the product people. [really] Want to buy. This probably includes stopping her RIVAL watch (even if the resource isn’t under heavy pressure at this point). This includes updating the KICKR vNext to be feature-rich enough to make all his 2017-2021 KICKR buyers say “Take the money!”, and the KICKR CORE This includes finding new pricing strategies to be competitive with Zwift HUB. Whether or not Wahoo wins his lawsuit against Zwift remains to be seen. With Wahoo’s own court approval, it’s no longer price competitive. So… do something about it. That price floor will be set and either other trainer companies or OEMs will hit that price range (or even lower, as they already do in Europe). So maybe $599 to $649 (cassette included) he builds/sells his V2 KICKR CORE with WiFi and for $499 his CORE is more accurate/connectivity/climb compatible than the Zwift Hub What makes it Wahoo Premium is that it excels in terms of performance and more.
No easy button solution to the ELEMNT line of GPS bike computers. No doubt we will see expired updates to Wahoo’s competing product lines from Garmin and Hammerhead at some point in 2023. Wahoo has two challenges for him. First, their hardware is no longer competitive from a display standpoint. Sure, simple usability is part of his Wahoo life, but overwhelmingly, the sales numbers don’t lie. it is what it is. Wahoo could flip that story around by re-pricing the unit below his $200 like his Lezyne. Of course, this takes away from his Wahoo Premium appeal.
Then there are also cool stuff like the KICKR Desk for easy money making. Add a power port, water bottle holder, and wheel locks and charge a premium yet reasonable price. Wahoo has demonstrated that people pay ridiculous amounts of money for his Wahoo branded accessories (myself included). But if it’s 3-4 times the price and half the features (myself included), they stop paying that money.
Finally, you can also include new products that are exciting enough to make consumers spend money. The ideal is a low-cost, high-profit product.
Oh, what about RGT/SYSTM? My guess is that their current subscription probably covers the department’s expenses. And realistically, these software developers won’t easily transition to writing device firmware (because platform developer and embedded developer are two very different things). So it’s not like you can say, “He has a higher ROI by developing the ELEMNT functionality.” So assume all is financially equal and stick with it. But really, make an Apple TV version of SYSTM. Overall I think SYSTM is very good, so that’s the only reason I don’t use it.
Wahoo is a solid company that makes solid products and has made a huge impact on the sports tech industry. Without Wahoo, you might still be dealing with trainers operating in their own little protocol space. Rapid growth like Zwift wouldn’t have happened without the open app integration Wahoo has driven. Because before that there was no controllable app integration. He may never have competed in the cycling GPS space we see today, and he may never have had a desk. Wahoo needs to find a way to create the next generation of products that change the environment. Then they will be fine.
Tonal shows you how to do price changes right.
I don’t have a tonal one. It looks cool, but I live in Europe and it doesn’t get delivered here (I’ve taken an entire Peloton bike apart and flown it on a plane before, but this mirror is at United’s desk as hand luggage It seems a little difficult to check). ). What is clear, however, is that they know how to properly communicate price changes.
They sent the user an email containing the following:
1) The exact date the new pricing will take effect
2) Accurate new price
3) Also a comparison table showing all the new features since the original price in 2018
4) Not a giant fluff/puff corporate PR email
They also announced at the same time that additional taxes would be collected, as TrainerRoad did. But again, they were clear about that fact and clarified that it varies by zip code.
I think most consumers understand the reality of the world that things are getting more expensive. That’s a 20% price increase (but higher in states with sales tax). But it’s also the first since 2018, so there’s that reality.
Meanwhile, a week after Strava’s unannounced price change, Strava remains silent. Pricing is still unclear, users have not been contacted yet, and a huge amount of confusion from consumers continues. For Fancy, the video alone has about 300,000 views and about 2,000 comments. post? Hundreds of thousands of views.My original tweet about it? More than 350,000 views. Are there subsequent media articles that mention the confusion and anger? What is Strava waiting for?
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Thank you for reading!
