GoPro is off to a good start in 2019 after generating $243 million in revenue, a 20 percent increase over its first quarter last year. While the camera company did post a loss of $24 million, that’s way down from the $76 million loss GoPro suffered to start 2018. The company was confident enough after posting these results on Thursday that it raised its guidance to investors for 2019 and said it will turn its first annual profit since 2015, which was the first full year of sales for the popular Hero 4 camera lineup.
A big reason for the company’s recent success (GoPro also recently notched its first quarterly profit in over a year) is the Hero 7 Black, which is off to the best start ever for one of the company’s cameras. Another reason is that GoPro has finally healed (financially, at least) from the decision in January 2018 to shutter the Karma quadcopter and exit the drone business completely. That’s a good thing, too, because based on a number of recent leaks and rumors, DJI is about to make a move into GoPro’s space by releasing a direct competitor to the Hero 7 Black.
GoPro didn’t mention Karma by name in its letter to shareholders on Thursday or dwell on it during a subsequent call with analysts. But it did say in the letter that “excluding our aerial business, [quarterly] revenue would have increased 27% year-over-year.” Reading between the lines here, GoPro acknowledges Karma brought in some money, but that extra bump in revenue ultimately wasn’t worth the operating costs and R&D expenses it required. Karma was a big reason why the loss in last year’s first quarter was so much bigger. Returning the focus to cameras has helped GoPro get to a more sustainable footing.
There are other signs of GoPro’s post-drone revival in the numbers released this week. The company’s gross margin for the quarter was 33 percent, up from 22 percent in the first quarter of 2018. Part of that increase is likely attributable to the fact that GoPro is no longer selling the Karma, which CEO Nick Woodman has repeatedly said simply wasn’t making the company much money while it was on store shelves.
By refocusing on its higher-margin camera business (and building out a better internal customer research team), GoPro has not only been able to increase the amount of money it’s taking in with each sale, but it has also gotten better at driving customers to the top-tier camera it sells, the $399 Hero 7 Black. About 85 percent of the 842,000 cameras GoPro shipped this past quarter were the Hero 7 Black, and the camera accounted for 90 percent of the company’s product revenue.
By the end of the quarter, the Hero 7 Black was the best-selling digital camera in the US by unit volume, and the company says it grew the amount of revenue it generated (year over year compared to the first quarter of 2018) in all regions where it currently sells cameras. GoPro has had a vice grip on the action camera market for years, even before its only real direct competition — Sony — stopped making them. But because the Hero 7 Black has been so successful, that grip is now stronger than ever.
It’s good timing because here comes DJI. The Chinese company has been slowly dipping its toe into other categories beyond quadcopters over the last few years, starting with handheld camera stabilizers like the DJI Osmo and the new Osmo Pocket. But now it’s allegedly on the cusp of releasing a direct Hero 7 Black competitor called “Osmo Action.”
All we have so far are a few scattered leaks and rumors, but if there’s any truth to them, the Osmo Action looks like it will be a pound-for-pound alternative to the Hero 7 Black. Packaging from a retail leak shows the camera is likely going to be waterproof out of the box. Information on a Chinese site implies it will match GoPro’s flagship on most specs. It appears to have a front-facing selfie screen, which would be a clear differentiator.
The Osmo Action even appears to be the same shape and size of the Hero 7 Black, meaning it could fit on GoPro’s mounts. It’s a clever shortcut that would allow DJI to take advantage of the California company’s vast ecosystem of accessories without having to build out its own.
It’s impossible to say how the cameras will stack up against each other, and a lot can go wrong with a new product in a new category. But if this really is what DJI is about to announce at its event next week, it will serve neatly as an inverse of what happened with GoPro’s Karma drone. With Karma, GoPro tried to enter a market that was essentially dominated by DJI. Now, DJI will do the same — crash a market that GoPro created and thoroughly owns.
Woodman recently sounded receptive to the idea of more competition. In his eyes, some of GoPro’s non-Karma mistakes (refusing to drop the price of older cameras, cluttering the lineup) were partly a result of having no competitors.
“A competitor would help us understand the dynamics of our market, our business, pricing sensitivity. The challenge has been, frankly, that in many cases the only data we had access to was our own,” he told investors a year ago.
As he told me at CES 2018: “AT&T has Verizon. Ford has Chevy. BMW has Mercedes.” Now, it looks like GoPro will have DJI — again. This time, at least, it will take up the fight without the financial baggage of a struggling drone business.
Powered by WPeMatico
The post GoPro rebounded from its drone flop, but now DJI’s making an action cam – The Verge appeared first on PCStoreNearMe.