Just as the Karma with the Hero 6 camera was becoming a half decent drone, GoPro has announced in a public statement during its most recent quarterly earnings results that it will be exiting the drone market after the remaining inventory of the Karma drone sells out.
This will result in the lay off of 200-300 staff in the Karma Drone Division.
The action camera specialist blamed a slump in sales during the core US holiday season for the decision to restructure. GoPro also said that narrow margins coupled with a hostile regulatory market in Europe and the US that it claimed would “reduce the total addressable market in the years ahead” have made the unmanned aerial vehicle market “untenable.“
So the Karma drone which supposedly reached #2 market position to the DJI Mavic in the £1,000 -£1,200 price band will be the last drone GoPro ever make. The Company says it will continue to service and support Karma Owners.
Preliminary Q4 results issued to the market revealed that revenues included a negative impact of $80m (£59m) for price protection on a series of camera products, as well as the Karma drone. Overall sales were expected to reach $340m (£251m), down by more than 30% on the previous year.
This news has not come as much of a surprise to those following GoPro’s move into drones over the past few years.
We wrote three articles in late 2016 and another in early 2017 :
Will Karma Lift GoPro (Sept 16)
Black Sky’s for GoPro Karma (Nov 16)
Will GoPro be Taken Over (Jan 17)
The drone division has been a headache from the start, with technical limitations and a mass product recall causing it difficulties.
GoPro relaunched the Karma in February 2017 after recalling the first 1,500 sales and withdrawing it from the market in November 2016 after a small number of cases where batteries disconnected during flight, resulting in a loss of power. It subsequently identified the issue as related to the latch that secured the drone’s battery.
Karma faced massive competition from their one-time partner DJI, which introduced its own portable drones, the Mavic Pro and Spark, to the market.
Shares at the company tumbled upto 33% but CEO Nicholas Woodman put on a brave face:
“GoPro is committed to turning our business around in 2018,” he stated. “We entered the new year with strong sell-through and are excited with our hardware and software roadmap. We expect that going forward, our roadmap coupled with a lower operating expense model will enable GoPro to return to profitability and growth in the second half of 2018.”
News also broke that GoPro has put itself up for sale, but its CEO Nick Woodman has contested the rumor and said that GoPro has not engaged JPMorgan for a potential sale.
Woodman said in an interview with Bloomberg TV:
“If there were an opportunity for GoPro to partner up with a larger organization that would help us scale, that’s certainly something we would consider.”
“Our job is to align GoPro with consumer behavior and look for opportunities to expand the appeal and reach and relevance of GoPro.”
“Sometimes that’s easier if done with a partner or an acquiring company,” Woodman added.
The company lost $373 million in 2016.
GoPro’s current market value of $955 million is down about 70 percent from when it listed in its June 2014 IPO, an offering that was led by JPMorgan.
Who will step up to the plate and buy GoPro?.