Champagne days over for GoPro

GoPro, the undisputed leader in the action camera market and a popular brand in photo specialty stores, has hit some financial turbulence, with a sales slump in its last quarter leading to a loss of around $50 million on sales of around $600 million.

GoPro CEO Nick Woodman will have his managerial skills tested in 2016.

GoPro CEO Nick Woodman will have his managerial skills tested in 2016.

There was a dramatic share price slump in response, but the company actually turned a profit for the year, and still enjoys gross margins above 30 percent.

Sales were in fact up 16 percent in 2015, but that compares to 41 percent growth in 2014 and 87 percent growth in 2013.

GoPro appears to be making the transition from a company experiencing the kind of growth that masks all sorts of management inadequacies to one where sound management will be critical to future survival.

For instance, the current in-house ‘creative team’ of 230 people out of a workforce of 1500 seems somewhat extravagant.

GoPro's 2015 proiject, The Hero+ LCD and the other two entry-level models are to be dropped from the range.

GoPro’s 2015 project, The Hero+ LCD and the other two entry-level models, are now to be dropped from the range.

GoPro has announced it would lay off 7 percent of its workforce and will drop all the lower-riced cameras from its  range. The  Hero+ LCD, Hero+ and Hero cameras will go in April, with the $299 Hero4  Session the new entry-level camera, accompanied by the Hero4 Black and Hero4 Silver. This halves the range, and represents something of a U-turn, as GoPro focussed devoted 2015 to adding de-featured entry-level models to its range, arguably ignoring its established customer base. The Hero4 range was released in September 2014 and there hasn’t really been anything at the high end to excite the GoPro fans since.

The big hopes for the company in 2016 are the Hero5 and a drone called Karma. Karma is first cab off the ranks, with the Hero5 probably not launching until deep into the second half of the year.

The Karma drone will be backward-compatible with the company’s cameras.

GoPro hopes Karma will be good for the company.

GoPro is hoping Karma will be good for the company.

GoPro’s founder and CEO Nick Woodman is attributing the sales slow-down to poor retailer sell-through (it’s always the lazy/stupid/greedy retailer’s fault!) but conceded it needs to do a better job developing ‘software solutions that make it easier for our customers to offload, access and edit their GoPro content.’ Increased competition? Meh.

It’s hard to see more user-friendly software alone reversing the downwards sales trend until some new products are added to the mix. Woodman also talked about spending more on conventional ‘above-the-line’ advertising rather than relying on its user generated content (UGC) strategy.

GoPro anticipates its first quarter sales will be dramatically below analysts’ US$300 million expectation, falling between US$160 and US$180 million.

 

 

 


4 thoughts on “Champagne days over for GoPro

  1. GoPro had a great idea at first – one that leading brands should
    have seen and exploited – but the flush of initial success masked the dangers ahead which opened the door for competitors.
    Although OK at first because of such an original idea, they continued
    to overprice their core products, with outrageous pricing of many of
    their accessories. They also failed to control their distribution and so
    retailers moved away from GoPro to alternative brands with better
    margins and in many cases, better features. Innovation (a strength of Apple) slowed while they took
    their eye off the ball to count their money.
    That initial surge of money should have funded innovation that made
    life difficult for competitors. Imagine paying all of that money and still having to pay for a postage-stamp screen of average quality.
    They may recover their market position, but probably not as the horse may have bolted. And God help you without a dedicated
    dealer network. That lesson has still to be learned by some of
    leading brands – but it’s coming. It’s coming fast. Alan

  2. Funny we dumped our Go pro stand today then I came home and read the report…….. We were the first to stock it and then the jeweller the hairdresser and the coffees shop undercut us ….free go pro with a flat white
    no ….joking but it was nearly that good… today we dumped it .. the margins stink, the proliferation of outlets is a joke .. so let the shoe shop take it over and run with it… as for drones .. first hurdle is the local authorities with their regs and then they start crashing… and who picks the pieces. up .. Yes it was a rocket ride up ..but rockets then come down..
    now its no no go pro !!

    • – I was a little surprised when I looked into GoPro a couple of years back that not only are there too many outlets selling the things, but GoPro was dictating variable margins depending on what channel you were in. http://www.photocounter.com.au/2013/tough-gopro-gets-going/ – So photo retailers received less margin than surf shops because the skilled staff in photo shops would find it easier to sell the cameras, according to GoPro. And there was a stage where they seemed to be trying to enforce resale price maintenance by cancelling supply if the price was below their stated RRP. I’ve never found GoPro to be too interested in being part of the photo retailing community. Never seen a press release from ’em, for instance.

  3. Don’t we Aussies love to see a tall poppy fall.
    We got in early to GoPro and yes it had a great market dominance and breakthrough product appeal which translated to huge volumes for those of us lucky to get enough stock at the time. I worked with my agent in forward ordering and we had a great supply because of that.
    Since the move to VSport as a distributor sure there are many clones available, and these should be seen as viable alternatives. The volume has dropped because of these options but if that was all we cared about Apple wouldn’t be around, still lots of consumers are brand proud and will pay for that.
    I had a visit from VSport a month ago and they asked “What can we do for you to get more happening?” I suggested a few things and they acted immediately on them. There are not many distributors with this support around at the moment (Maybe because they don’t make enough to offer support).
    Personally I think it is unrealistic to expect a single idea fashionable product manufacturer to have a long life span. If Canikon had only cameras they would both be long gone.

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