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Friday, December 11, 2009

Hamstrung by Delays, Fitbit Explains and Tries to Deliver

Nicholas Cole was determined to shed a few pounds after the holiday season. So when he heard about a nifty new fitness device called the Fitbit Tracker, a wearable sensor that tracks movement, distance traveled and calories burned, he decided to take the plunge and order one.

That was 13 months ago. Mr. Cole is still waiting for the $99 gadget to arrive, as are legions of other eager customers.

“I haven’t heard anything yet, but I’m hoping I’ll be able to get it in a month or two,” said Mr. Cole, a 20-year-old student living in New Brighton, Pa.

Others, unwilling to wait any longer, have forked over as much as $350 to buy a Fitbit on eBay from other consumers.

That was 13 months ago. Mr. Cole is still waiting for the $99 gadget to arrive, as are legions of other eager customers.

“I haven’t heard anything yet, but I’m hoping I’ll be able to get it in a month or two,” said Mr. Cole, a 20-year-old student living in New Brighton, Pa.

Others, unwilling to wait any longer, have forked over as much as $350 to buy a Fitbit on eBay from other consumers.

Fitbit’s tale of expectation and delay is a classic start-up story: a couple of entrepreneurs with a hot idea generate excitement, then run into a range of real-world problems in actually trying to make their product and get it to customers. With bigger companies like Nike and Philips Electronics making similar fitness devices, Fitbit runs the risk of getting stomped by competitors before it can really get going.

But the company’s unusual frankness about its problems may also help it survive its growing pains.

“They’ve been really open and transparent about where they are in the process, and that’s made it easier to tolerate the wait,” Mr. Cole said.

A prototype of the Fitbit Tracker was introduced in September 2008 by the co-founders, James Park and Eric Friedman, at TechCrunch 50, an annual showcase of innovative products and Web services.

The thumb-size device uses an accelerometer to sense a user’s movement, then translates that into calories burned. In addition, users can wear the device at night to track the quality of their sleep and can manually input their food consumption to get a better grasp of their overall health and well being. A home base station collects information each time the user passes by and uploads it to Fitbit.com.

The concept appealed to fitness enthusiasts, and Fitbit began taking preorders right away, expecting to be able to ship them within a few months.

Instead, the company, which is based in San Francisco, found that it took eight months to refine its prototype into something that was ready to manufacture, Mr. Park said in a recent interview.

Mr. Park and Mr. Friedman are experienced entrepreneurs, having started two previous tech companies together.

But this was their first foray into hardware. The Fitbit has more than 100 electronic components and 22 plastic and metal parts. Its complexity resulted in unexpected problems in making everything work together.

For example, “we would discover the product used more power than we’d originally thought and have to decide if we wanted to include a larger battery,” Mr. Park said, “which meant going back to the drawing board to figure out how that impacted the size and form factor.”

The company also encountered setbacks during the testing phase, including equipment that at one point got stuck in customs in Indonesia.

Even now, once the products arrive in California from the manufacturer in Singapore, Fitbit employees must spend several minutes updating the software on each device before sending it out to fulfill orders.

To assuage the growing restlessness of its customers, Fitbit has been e-mailing them and posting updates on the company blog about the progress of the Fitbit Tracker, including photos and videos showing production and testing of the devices.

“It’s definitely a way to help people stay interested,” Mr. Park said. “Most products on back order are in a black hole of information.”

Some customers who have received their Fitbit, like Andrew Chen, a Silicon Valley entrepreneur, say it is worth the wait. “I love how simple and convenient it is,” he said. “I just put it on and don’t think about it.”

However, Mr. Chen managed to get his device only after complaining on Twitter about his mounting impatience over his back order. One of the investors in the company then shipped him a unit directly.

Now, Fitbit says it is planning to ship the remainder of its back orders by the end of January, when the stand-alone devices will also be available in retail stores.

Jon Callaghan, founder and managing partner of True Ventures, which led a $2 million round of seed financing to Fitbit, acknowledged that it would have been better not to miss the holiday shopping season.

But it was more important to get the product right. “I would not like a warehouse full of products customers didn’t like,” he said. “That would be disastrous and short-term thinking. We’re going to be around for next Christmas.”

Bernie Tenenbaum, an expert on small businesses who has no connection to Fitbit, said the delay was not likely to do permanent damage to the company’s reputation.

“Yes, they’ve missed some sales and some revenue opportunity” and created some excitement prematurely, “but that’s not fatal” compared to shipping a flawed product, said Mr. Tenenbaum, managing partner of the investment firm China Cat Capital.

Still, Fitbit may have lost valuable momentum, he said. “It’s not as if there aren’t enough other shiny new tech things floating around at this time of year. That’s not to say the passionate aficionados won’t be there with bated breath, but for everyone else, there are too many other choices in the world.”

While the Fitbit struggles to fill old orders, the competition has moved in.

Many Web sites allow users to track various aspects of their health, similar to what users can do on Fitbit.com.

And other companies are getting into the gadget side of the business. Philips, a consumer electronics heavyweight, has introduced a fitness tracking device called DirectLife. And other rivals have come out with the BodyBugg, a calorie-tracking monitor worn on the arm, and WakeMate, which monitors sleep cycles and selects the ideal time to rouse its wearer within a given time slot.

So far, none of this appears to have diminished demand for the Fitbit — which does not surprise Jim Silver, an industry analyst and editor in chief of TimetoPlayMag.com.

In the age of Twitter and Facebook, word of mouth operates on hyperdrive, whether it is for the Fitbit or this holiday season’s hot toy, the battery-powered hamsters called Zhu Zhu Pets.

“Even people who aren’t parents or associated with toys know what they are, which opens the door to more sales, just because it’s a hot item,” he said.



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