A new report has revealed that Fitbit could slash 10 percent of its workforce to save around $200 million in costs. Rumors indicate that Fitbit is compelled to make such a decision because the fitness bands market is slowing down. On Monday, the wearable technology company is expected to announce its problematic Q4 2016 financials and confirm it's laying off up to 10 percent of its employees. At the moment, the company employs approximately 1,600 people so such a reduction could result in up to 160 employees losing their jobs. On the other hand, this decision would allegedly help the San Francisco-based company to save approximately $200 million in revenue. Fitbit has yet to comment on this report.
By laying off employees, the company is reportedly looking to diversify its business portfolio. Many cheap fitness bands from Chinese brands and smartwatches with integrated fitness tracking features are gaining in popularity while the market as a whole is experiencing a decline in sales. Due to that state of affairs, Fitbit decided to diversify into other prospects like developing its own app store and acquiring Pebble. The company reportedly intends to build an app store to better support third-party developers and extend its list of software partners.
In December, Fitbit confirmed that its acquisition of Pebble cost the company approximately $40 million. Nearly 40 percent of former Pebble employees — mostly software engineers — have been offered new jobs at Fitbit. The acquisition has allowed the company to obtain Pebble's operating system, smartwatch apps and all related cloud-based services. It is also rumored that Fitbit will stop manufacturing fitness bands in a bid to make a more serious push into the smartwatch market. This could explain why the company recently decided to acquire Vector Watch, a European luxury smartwatch maker. Given recent developments, Fitbit may launch a more traditional smartwatch supported by a dedicated app store in the near future. Provided the company decides to follow that course of action, it could soon start competing with other smartwatch manufacturers like Samsung, LG, and Apple. More information on the matter will likely follow soon, possibly even next month once the annual Mobile World Congress 2017 kicks off.