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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: staring who wrote (58514)	11/19/2016 1:55:41 PM
From: E_K_S	Respond to of 78748

Is there any indication that the company is looking at other potential revenue streams from their large installed base? I would think (& hope) that revenue growth will be more than from just selling new updated hardware devices. Does management have some longer term plan to monetize their installed user base by selling some type of ongoing service subscription plan and/or custom software integrated smartphone apps? Like fit-bit exercise/diet/health consultants, and/or software apps that link the fit-bit devise to your smartphone. I have a few different Withings devises (scale, blood pressure) that integrate an Android/MAC smartphone app. Their long term plan is to provide electronic health data collection that can be shared w/ your doctor and/or health adviser (ie trainer). There are many revenue streams available as they develop their gigital 'health' platform. Withings is now a Nokia company that was purchased for $191mln in early 2016. Nokia completes Withings acquisition, will reveal its digital health plans next week Nokia plans to acquire Withings to accelerate entry into Digital Health FIT has an EV 7x that of what Nokia paid. This market is just emerging and a Microsoft and/or Apple could really develop it by building a cloud based 'health' database for all users. This information could then be shared w/ users doctors updated on a real time basis so AI and/or doctor's assistants could monitor base line and current data. I know that my Doc only sees my weight and blood pressure when I come in for an annual physical. Now w/ my data collection, I can show daily updates including miles walked/run, calories burned over days/month/years. You can then corroborate this information w/ blood work and/or daily prescription pills and/or any other 'big data' information and AI algo bots could scan and alert Doc to possible events. Health Systems Collaborating with Fitbit to Use Connected Health Technologies for Research and Patient Engagement There is a growing emerging market in this space and it look's like it is Fitbits to lose: from the linked article: "...the company has been working with Fitabase, a research platform that collects data from internet-connected devices, in order to pull and collect more than 2 billion minutes of Fitbit data for use in health research..." EKS

To: staring who wrote (58514)	11/19/2016 5:55:59 PM
From: Graham Osborn	Read Replies (1) \| Respond to of 78748

I'll have to think more about your argument regarding user metrics. To me referring to people owning a device as "users" is a bit silly since the vast majority of their sales come from hardware and not services. I do not see them ever creating a services franchise since they would be trying to create a tiny network in a world where much larger, more powerful networks exist. Like Apple, the key to their success is to make the platform open, and I think they are doing that somewhat. So the proper metric is annual device sales, and perhaps upgrades/ replacements vs new customers, although you won't be able to get that granular with the disclosures. As to the replacement period, I think 6 years is too long. I have an iPhone that is 4 years old and essentially useless since the software updates are no longer compatible with the hardware. Ironically, the OS is the hardware manufacturer's best weapon in controlling replacement time. I didn't quite follow your valuation multiples for the different cases. If sales level off or decline somewhat, 0.5 EV/ Rev ought to be a reasonable multiple for good-to-modest margins. P/ TB at 1 would be ideal, but 1.8 ain't bad. I thought the Fool article was typical of the garbage on their site, but like you I read everything when evaluating a stock. I sold my stock at a 5% loss the day after I bought it. I usually have a rule not to buy into a death slide but I decided to violate the rule since the valuation seemed so compelling. It would seem that the market is not done yet, so I will reinstate my rule sheepishly and wait for some kind of meaningful support before I reenter. Buffett typically averaged into a trade, which I do not do, and hence I am more sensitive about a good entry. I'd like to see it move sideways for 3-6 months before I consider getting back in.