GoPro quits the drone business

Authored by theverge.com and submitted by ChumbaWambah
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GoPro has announced that it’s exiting the drone business, citing the challenges of turning a profit in an “extremely competitive” market. The company revealed the news during its earnings report today, saying that its Karma drone would be the last it would make. The company is also laying off hundreds of staff and reducing the pay of CEO Nicholas Woodman to $1 as it struggles to manage its rocky financials.

The $799 Karma drone was first unveiled in late 2016, but proved to be an unfinished and expensive product. All Karma units were recalled in November that year after a fault caused the aircraft to lose power, while reviewers compared the drone unfavorably to rival devices by companies like DJI. GoPro subsequently lost $373 million in 2016, although its financials did improve a little in 2017.

“These factors make the aerial market untenable.”

In its earnings report today, the company said that although the Karma “reached the #2 market position in its price band in 2017, the product faces margin challenges in an extremely competitive aerial market.” (Translation: it’s tough to make money selling drones, especially when you’re selling hardly any.) The company also blamed the decision on new regulations being mooted in Europe and the US that it claimed would “reduce the total addressable market in the years ahead.”

“These factors make the aerial market untenable and GoPro will exit the market after selling its remaining Karma inventory,” said the firm in a statement. “GoPro will continue to provide service and support to Karma customers.”

News of today’s layoffs were expected and first reported late last week. They’ll be the company’s fourth round of job cuts since 2016, and will reduce its global headcount from 1,254 employees to “fewer than 1,000.” This restructuring will cost tens of millions of dollars, the firm estimates.

In earnings news, GoPro said that revenue for the fourth quarter of 2017 would be approximately $340 million. That’s a big downturn compared to the same quarter in 2016, and even lower than its original — and originally disappointing — prediction for the holiday shopping season of $470 million in revenue. It would also represent the company’s worst financial holiday season since GoPro went public in 2014. In an apparent effort to encourage sales for the flagship Hero 6 Black camera going forward, the company announced a price cut for the device from $499 down to $399.

In a statement, CEO Nicholas Woodman said that GoPro is “committed to turning our business around in 2018.” Woodman said that the company’s new hardware and software roadmap, combined with lower operating expenses, would allow GoPro to return to “profitability and growth in the second half of 2018.” Profitability might be possible, but GoPro’s flying days are over for good.

EvelcyclopS on January 8th, 2018 at 17:00 UTC »

Their cameras are just too expensive for the average person. I have an original hero and very much want to upgrade to what are now far better modern cameras. But come on, £500 and it’s not even properly waterproof anymore?!

Also I can guess the market is completely saturated. Like I say, I’ve had my hero for nearly a decade now.

Edit: a good solution would be to pay people more! I don’t mind GoPro charging what they need to make a reasonable profit, my problem is the sheer lack of disposable income for most people these days.

HelplessCorgis on January 8th, 2018 at 16:50 UTC »

If this means the Karma gets cut to something like $300-400, it might be an interesting alternative to the Mavic Pro.

opsteamsix on January 8th, 2018 at 16:20 UTC »

GoPro really shot themselves in the foot, in my opinion. They have the brand recognition down. I (and many others) see a camera strapped to a helmet, a car, whatever, "it's probably a GoPro".

But the cost of the device is their problem. Yes, I get it, you're paying for the premium, but when you're getting undercut by China and the clone market you need to do something to step up your game, especially when the Best Seller on Amazon for "action camera" is a $50 knockoff. For the casual user of something like this, they're going to see the price of even the HERO Session at $200 (and the sticker shock as you move up the line to the $700 Fusion), balk, then find the knockoff and say "good enough".