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Fitbit to cut $200M in jobs & expenses after encroaching Apple Watch sales cut into market

Fitbit —Apple's main competition in the wearables space —announced a reorganization on Monday in the aftermath of a weak fourth quarter, that includes the layoff of 6 percent of its workforce.

The changes should reduce costs by about $200 million, but at the expense of 110 people who will lose their jobs, according to Engadget. The company sold 6.5 million units during the December quarter, generating $580 million in revenue —it had however expected a figured between $725 million and $750 million, helping to bringing its annual growth down from a forecast 25 percent to just 17 percent.

CEO James Park blamed "softer-than-expected holiday demand for trackers in our most mature markets, especially during Black Friday," but did point to fast growth in some markets like the EMEA (Europe, Middle East, and Africa) region.

Fitbit has traditionally specialized in dedicated fitness trackers and dominated the wearables market, but previous reports indicated it lost some sales to the Apple Watch in the month running up to Cyber Monday. While more expensive and limited to iPhone owners, the Apple Watch is a multi-purpose device, and in its Series 2 incarnation is better suited for fitness applications than the original release thanks to waterproofing and built-in GPS.

To compete more directly, Fitbit recently bought out two smartwatch makers, Pebble and Vector, the latter headed by former Bulova, Citizen, and Timex executives. It has also picked up Coin, which could translate into an alternative to Apple Pay on future devices.

At CES, Park said that Fitbit is even working on its own app store, which while unlikely to challenge stores belonging to Apple or Google could possibly expand the usefulness of the company's products.