Malcolm Owen
Peloton is switching gear to try and cut its costs, with a plan to use Apple's suppliers and other external firms to construct its fitness products rather than relying on its own factories.
Peloton has been struggling to keep costs down amid talks of a potential buy-out or investment from a major company like Apple or Amazon. In its latest bid to reduce its outgoings, the firm is apparently turning to companies that work with Apple in assembling products.
Instead of splitting manufacturing between its own facilities and partners, Bloomberg reports it will stop production at facilities acquired in 2019 in favor of relying solely on third-party firms. Work performed by facilities operated by subsidiary Tonic Fitness Technology will instead be solely performed by existing partner Rexon.
"We are going back to nothing but partnered manufacturing," said Peloton chief supply chain officer Andrew Rendich. "It allows us to ramp up and ramp down based on capacity and demand."
Rendich reckoned that having dual supply chains required more resources, and so a simplification to an external-only approach could both cut costs and improve product quality.
Along with going down the same route as Apple for its main manufacturing efforts, Peloton is also working with firms that exist in Apple's supply chain. It already works with Quanta Computer on touch screens for its workout devices, but it's also tapping Pegatron Corp for its rowing machine.
The shift in strategy is the latest move by Peloton to try and improve its standing. After financial woes resulted in reports it was a potential acquisition target, the fitness equipment maker then moved to right the ship.
This included a major shakeup in February involving a new CEO and the laying off of 2,800 employees, and in April, a considerable cutting of prices on hardware at the same time as increasing subscription fees.
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7 Comments
I see a huge opportunity for Apple that others don’t. It seems everyone thinks if Apple acquired them it would just be a bunch of bikes with low sales.
Here’s a bigger picture:
Apple could use “2nd party”* equipment to market not only to homes but gyms across the globe. GymKit is pretty much dead. Apple equipment can revive it and will be a selling point to get into the Apple eco-system.
*”2nd party” is a term I use to describe a company within a company like Beats to Apple. I don’t think I’d want Peloton to change their name to “Apple”.
Anyways…
The added content would make it similar to the Beats acquisition. Add Watch and Apple’s OSes support. Done. Now you have twice as much content on your Fitness+ subscription.
I don’t wanna see another Amazon Alexa situation where Apple lost because they didn’t have 1st party products. With Peloton losing value fast, it’s the best time for Apple to swoop in and take them
Edit:
Just looked up GymKit on YouTube to make sure I wasn’t crazy and maybe it was gaining traction somewhere and the first video that showed up was titled “Is the Apple GymKit dead”.
I ran across this comment that further proves Apple needs to get their sh** together here.
interesting notion but I don't see it happening.
Peleton business model is the key problem. Tying fitness classes to expensive, dedicated hardware.
why buy into that hurt when you could do a different approach?
promotion of GymKit? Why would they need peleton to promote that? They could just much more cheaply provide incentives for mainstream fitness equipment manufacturers. That would create a faster network of GymKit compatible equipment.