Thusday, CNBC reported that the fitness unicorn Peloton was in dire straits. The company saw its value plummet on the news that it was “temporarily halting production of its connected fitness products as consumer demand waned”. As the pandemic begins to shift into many minds, there has been a significant drop in the number of people looking to purchase expensive home workout equipment. Because of this, the idea of Apple buying Peloton came back. It dragged on for a while, but now the idea is gaining traction in the press. I think everyone needs their jets cooled.
Let’s start with a quick recap of Apple’s work in fitness technology. Apple has been developing fitness technology since its partnership with Nike began in 2006. The first Nike + iPod Sports Kit transformed the iPod nano into a powerful fitness gadget that can track your walks and runs.
In 2014, Apple introduced the Health app as part of iOS 8 and the first generation Apple Watch. They continued their partnership with Nike with their first Nike co-branded Apple Watch in 2016. In 2017, the company launched GymKit to extend Apple Watch compatibility to gym equipment. More recently, in 2020, the company launched its first paid fitness subscription service that turns Apple TV into a workout hub.
For 16 years, the company has slowly expanded its reach and control over the fitness tech space with sleek solutions that fit seamlessly into our everyday lives. Apple has been making fitness products longer than Peloton has been a company. The Apple Watch isn’t just a beautiful watch, it’s the most comprehensive health and fitness companion you can buy, and it’s on hundreds of millions of wrists. Clearly Apple has bigger ambitions, and Fitness+ is the first step towards something bigger.
Peloton manufactures some of the most popular large fitness equipment in the world. They offer treadmills, bikes, weights and a host of accessories – the company also competes with Apple in the video space with its own subscription service. The main argument for Apple to buy Peloton is that it would help them strengthen their grip on the health and fitness industry. But I don’t think it’s necessary and I don’t think it will happen, even if they can buy the company at a huge discount. Here are some reasons why it shouldn’t happen…
1. Anti-trust watchdogs will throw a tantrum
Apple is closely watched by governments and anti-trust watchdogs around the world; it’s just not the right time for the company to make a gigantic acquisition of a competitor. This is particularly the case in the area of services. At present, Peloton is worth around $8.5 billion, which would make it Apple’s biggest acquisition ever. It would attract a lot of unnecessary attention and undoubtedly create controversy.
2. They can just poach talent
Peloton’s most valuable asset is his talent. Not necessarily the people inside, but the public facing personalities that make people want to get on their expensive bikes in the morning. Platoon instructors have individual followers who enjoy training with them. There are more than 50 Peloton instructors split between treadmill, bike, and yoga workouts. Apple should just poach them for Fitness+ in an effort to subscribe Peloton users to the new service.
Fitness+ is already a great service for Apple Watch owners, and it already has some big personalities. But to really drive growth, they need big names and more fitness fanatics.
3. If there is no demand, there is no product to produce
The main problem faced by Peloton is the drop in demand for their products. Why should Apple buy a company whose core product is something people don’t want right now? Large pieces of equipment that cost thousands of dollars aren’t something people replace frequently, and demand won’t pick up for a while, especially with people wanting to get out of the house. Luxury home gym equipment isn’t an easy sell right now, and maybe not for a while.
4. Quality issues and a lot of baggage
Peloton went through quite a controversy last year with a major recall of its treadmills citing a danger to children. The poor design of their treadmill has resulted in over 70 incidents and one fatality. The products aren’t of the highest quality either – sure, they’re expensive, but that doesn’t mean they’re as good as they should be. Their products simply don’t live up to Apple’s standards.
Peloton has also been the subject of unflattering pop culture moments like the recent “And Just Like That” scene which features a character having a heart attack as a result of Peloton driving. There’s also the notoriously sexist Peloton ad campaign from 2019 which featured a man gifting a Peloton to a woman. In the end, Peloton just got too much attention and often for not-so-good things. It is a brand that does not have the wind in its sails.
5. They can make it themselves if they want
If Apple wanted to make fitness equipment, they could do it themselves. They make a car and they didn’t acquire a car company like Tesla. They make a helmet and have not acquired a helmet business. They made a watch and did not acquire a watchmaker. They launched a streaming service without acquiring a Netflix or a Hulu.
Apple makes top-notch hardware, and they could bring in the right expertise to partner with its already brilliant designers to unleash some amazing home gym equipment. They don’t need Platoon at all.
What do you think of Peloton’s potential purchase of Apple? Do you think that would be a good idea or do you agree with us? Let us know in the comments below!
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