Can GoPro's Fusion 360 and Hero 6 Fend Off Competition?

GoPro, Inc. GPRO has been in the news again, thrust into the spotlight by the launch of the latest camera equipment from technology giant Alphabet Inc. GOOGL. The move was preceded by similar releases from other established tech companies, thus pitting GoPro’s flagship cameras against tough competition, and forcing investors to question whether the Hero cameras can continue to hold their own in a rapidly expanding industry.

The Evolution of Competition

In early days, GoPro had taken the action camera market by storm, but in recent times the company has grappled with stiff competition from lower-priced action camera alternatives.

Earlier this week, Google rolled out a camera called Google clips, which has a 12-megapixel sensor and a 130-degree field-of-view lens, with 8GB of internal memory. The camera is priced at just $249, which is half the cost of GoPro's new Hero6 camera. Even though Clips is not as advanced and high-tech as the Hero line-up, it is cheaper and comes from a well-known company. GoPro's market could suffer further as Alphabet leverages its brand value and channels to aggressively market this product.

Another such product is Sony Corporation’s SNE latest action camera RX0 — which has features similar to GoPro’s line, and is waterproof and shockproof as well. The RX0 is due to be released in October.

Then there is competition from Spectacles — Snap Inc.’s SNAP augmented reality and camera glasses — priced at $130. Olympus Tough TG –Tracker ($299), Garmin’s VIRB Ultra 30 ($380) and VIRB XE ($310), Sony’s FDR-X300 ($368), TomTom’s Bandit Action Cam ($170) and Nikon’s KeyMission 170 ($397) are a few of the other leading products which compete with the Hero cameras. GoPro’s latest Hero6 camera is priced at $499.

Such lower-priced alternatives could corrode GoPro's market share and now, even its new video-editing software has a formidable competitor in Alphabet.

Amid an onslaught of such tough competition and with reviewers increasingly recommending cheaper alternatives, we believe GoPro's market share faces a very real threat. Granted, the company has a huge fan following, but it’s increasingly plausible that its brand value might not be enough to fend off competition at this scale. Even its subscription and licensing revenue plans stand at risk, and might not be as successful as previously anticipated.

GoPro’s Kitty

Late last month, GoPro unveiled the next version of its flagship action camera — the Hero6.

The latest Hero6 Black camera enables 4K video recording, with 60 fps, and 1080p recording, with 240fps. It boasts enhanced video stabilization, a built-in zoom that can be controlled from the touch screen, and packs 5Ghz for faster video offloads. The Hero6 Black operates on GoPro’s new processor — GP1— and is quite a bit faster than its predecessor.

The company also launched Fusion, its new 5.2k 360-degree spherical camera designed to capture both virtual reality, and standard video and picture. Earlier there was Omni, a video rig with six cameras, but the Fusion looks to be a more user-friendly, affordable version for the masses.

Fusion’s USP is something the company calls “over-capture” — which enables users to capture an entire scene, and then frame just the shots they want afterward in the GoPro app.  Priced at $699, the camera’s shipping commences in November. 

No doubt, Fusion will face tough competition from Garmin, VIRB 360 camera of which seems impressive, but costs a steep $800. There are several other spherical cameras already in the market. With GoPro's brand recognition and deep foothold in the action sports world, the company has a real chance to take the lead in this market, provided it gets Fusion right.

Getting it Right

GoPro has struggled in recent years, with messed-up product launches, operational stumbles and hitting the right price points. GoPro's shares have slumped nearly 70% in the last couple of years, as the company grappled with production delays and bungled up product roll outs, and lost ground to competitors like Sony, Garmin Ltd. GRMN, and Nikon Corporation NINOY. This culminated in some significant layoffs, restructuring measures and the decision to shutter its nascent entertainment business.

This year has been kinder to GoPro, as the company cut its losses and started to journey toward profitability. In fact, the company has been increasingly aligning itself with the smartphone era. Consider the content creation war between Facebook FB and Snap — it shows a secular trend toward individualized, social content creation. GoPro’s concept fits perfectly with this trend.

However, the company’s products have failed to achieve mass traction in the absence of an effective sharing aspect — which is a key element. Interestingly, GoPro is now working on making the smartphone the central focus of creating stories, which could help the company break out of its shell.

To keep a hold of its fragile market share, GoPro has to make sure that it gets its products and pricing exactly right. We remain optimistic on the company’s products, and hence have a Zacks Rank #2 (Buy) on GoPro. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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