Yes, subscriber growth has been spectacular as compared to all rivals and customer retention rate is also extremely high (e.g. over 3x better than TR).
When the app was originally launched (about 1 1/2 years ago), it’s primary intent was to get users interested in the Peloton experience and trade up (as you hypothesized). Since then, the app features have expanded significantly (strength training, stretching, yoga, etc) and are mostly serve as an added service to the bike subscribers.
[FWIW: My wife has been a Peloton user for 5 1/2 years and uses both the bike and the app. The spin bikes are actually very high quality, but they are not training bikes for serious athletes].
As for your disappointment with the app: the app can’t rival the bike, because doesn’t have native connectivity to live classes and thus can’t show leaderboards as it does on the bike. Fortunately for Peloton, they won the patent battle when rivals tried copying the leaderboard idea (you can think of Strava segments but in real time on a class basis).
As for TrainerRoad: The data it presents was not developed by TR, but rather is licensed from Training Peaks (most metrics invented by Andy Coggan), including FTP, NP, and IF. So TR and its users (i.e. us) are very lucky that it is available as such.
As for your disappointment with the app: the app can’t rival the bike, because doesn’t have native connectivity to live classes and thus can’t show leaderboards as it does on the bike.
If I were king of Peloton, I would solve for this and unlock the full potential of their experience (leader boards, shout-outs, etc…) via the app.
As for the bike, perhaps I was being a bit dramatic, but other than the screen, the build didn’t strike me as being anything extraordinary. Seems like any other solidly built spin bike with a manual knob for cranking up resistance albeit with a nicer paint job.
Anyway, I confess. Part of me wanted to diss Peloton, but once I tried it, while not my cup of tea, I was really impressed by the content and can see why the platform is having subscriber success. I can’t help but to imaging the growth they could have if the app was fully functional. Plus, imagine the Peloton bike experience if the app could drive a smart trainer in ERG mode?
A couple of things on this point….1) IIRC, Coggan does not charge anyone for that license, simply asks for credit. Anyone is free to use those metrics. 2) The value in TR is not in those metrics….those are just the ones used on a superficial analysis. The value in TR is the combination of the workout library, the training plans and now the new AI features. I doubt anyone is using TR just to get their TSS, IF and other metrics.
I agree with you other comments, although much could be discussed. However, the one above . . .
FTP was a breakthrough for the cycling world. Previously, coaches needed to draw blood at the top of climbs (or after sprints) to measure lactate accumulation.
NP (along with IF) took power analysis to a whole new level (e.g. its used to calculate ATL, CTL, and TSB). Without it you would still have power curves (power at time), but the best you could do regarding training load is average power over some fixed interval length.
FTP, NP, IF, and TSS are the basis of all great training plans. It’s how good coaches and knowledgeable, self-coached athletes determine training load, and in particular training load in zone, in order to put together well-design plans for targeted events.
I’m talking about the value of such data on TR, not their value as a training metric…again, the value in TR is their workout library, training plans, etc. not their use of Coggan metrics.
Closed at 8.34 today which is its lowest point ever. Wondering if it will just hover around $10 from here on out? They made a move to no longer make their own bikes which will apparently save them some cash
In related news, Tonal (which for those that don’t know is like Peloton but for strength training) just cut a whopping 35% of their staff. It’ll be curious to see if they plan on going public soon
Peloton will stop making its own equipment, as the former pandemic darling pivots its focus from spin bikes to subs
Hour-long Backstreet Boys ride… all uphill. Peloton has been on the struggle bus this year. In January it paused production of its pricey fitness equipment as unsold spin bikes and treadmills piled up. Now the money-losing company will outsource all its manufacturing:
• Spinning out: Peloton’s Taiwanese partner, Rexon Industrial, will become the primary manufacturer of its bikes and treads, to save Peloton money on expensive US production. In February, Peloton scrapped plans for a $400M Ohio factory.
• Reverse, reverse: Mid-pandemic, Peloton spent hundreds of millions to build up in-house US manufacturing. The goal: avoid overseas-shipping snags. The assumption: pandemic-fueled demand would stay high for years (spoiler: it didn’t).
Waited so long for the P-ton… that your shipping address is outdated. Peloton’s sales boomed in 2020 as its $2.2K spin bikes rode off shelves. Then things took a turn for the worse: equipment sales have plunged 40% from a year ago, and Peloton notched its biggest quarterly loss as a public company in May. Wild stat: the value of unsold equipment has surged to $1.4B, up from just $19M two years ago. Peloton was worth $50B at its height, but its market cap has plunged to $3B.
THE TAKEAWAY
Pricey hardware is hard to bear… Owning several steps of production works for behemoths like Apple, Amazon, and Tesla, whose scale makes relying on third-party manufacturers untenable. But for strugglers like Peloton, making hardware in house can be financially unsustainable. That’s why Peloton’s new CEO is pivoting it to be a subscription-focused company (not an equipment maker). Peloton has slashed hardware prices while hiking monthly subs from $39 to $44.
From a cost perspective, this not only makes sense but is probably necessary for survival.
The challenge, IMO, is this: Peloton is #1 in content which can easily be seen by #subscriptions, subscription growth and customer retention. However, while much of the content is independent of the hardware, there are key portions that are, including leaderboards (that they have patents on) and displayed metrics (output, HR, etc). Thus, the question is whether they will be able to control/influence over the subcontractor to continue to support such feature set and enhance.
On the flip side, a potential opportunity is this: I wonder to what extent their new strategy is leading them to develop support for smart trainers (i.e. and provide industry metrics) and not just Peloton hardware. Such approach could open up a large market opportunity and become even a greater competitor to Zwift, TR, etc.
Not Peloton specific, but today’s WSJ has a fluff article on bike sales. Which is unfortunately about ElliptiGO and not actual bikes. But some of you might still find it interesting anyway.
“We were like a surfer who did not catch the wave,” said Mr. Pate, whose bikes start at roughly $1,500. “It’s an all-hands-on-deck battle to break even for the next 18 months.”
Surprising as it appeared that the sales/inventory issue was restricted to indoor trainers (e.g. Peloton, Saris) and not outdoor bikes.
A friend just bought their 11-R and loves it (he has anatomical nerve issues preventing him from cycling).
Bryan Pate, ElliptiGO’s CEO, is a frirend of a friend and founded the company here in the SF Bay Area, so there are a fair # of them, but they never seem to have taken off here, perhaps due to the hillier terrain. Meanwhile demand for serious bikes (road, MTB, and esp. gravel) remains extremely high (wait times well into 2023).
There were high expectations for McCarthy due to his Spotify and Netflix background. However, the only thing he seems to have done to date is cut jobs and raised subscription prices. And as many tech companies know, you can’t cut your way to success.
Short term, I can see why investors are happy. However, Netflix hasn’t faired so well (huge loss of subscribers) with their price increase. So we shall see what impact further price increases will have on Peloton, but they may be somewhat insulated as their bikes become of little use without a subscription.
Not really….the bike industry didn’t ramp up production capabilities like Peloton and others did. They never really met demand as a result, so when things started leveling out, they were able to adjust with no great issues.
I noticed the other day a ton of unsold bikes at Walmart.
It seems like the major bike makers were constrained by their ability to get factories to produce more during shutdowns and the lack of supply from Shimano.
I honestly still don’t get why Peloton costs $44/mo if you buy their bike but only $13/mo. if you ride your own bike. I know, you get to be on leaderboards but how many users really care about that?
Yeah, some of the changes make sense (in a business say), while others seem more accounting driven without the customer service reality basing them. Likely overstaffing at customer service? Yes, an unfortunate side benefit of massive/fast growth, and also unfortunately, I suspect the CS demand just isn’t there right now (just as it wasn’t for Zwift when they did the same).
I get the strong appeal to re-outsource delivery. Obviously, it saves them a boatload. But as any Peloton FB group, forum, Reddit sub, etc… can attest to, the 3rd party companies they’re using for delivery are absolutely downright horrific. Every single day bikes and treadmills getting delivered broken (remember, they’re being assembled by said teams partially onsite), where the staff just say “Call support to get a new date/unit, here’s a non-functional one”.
In McCarthy’s staff letter, he at least did acknowledge (multiple times), the situation isn’t good and they’re working on it. But, out of all the things to fix, this actually isn’t a hard one in the grand scale of it. He’s had 6 months to fix this one, and based on FB posts just yesterday, that’s still not happening. It’s not hard, institute a policy that says “If you deliver a broken bike, that entire team is fired, immediately”. Problem fixed. Yes, I understand there are undoubtedly upstream XPO type management challenges that are in turn probably driven by Peloton. But I don’t think delivery is the place they should be focusing first.
As for unit pricing, they’re been all over the map the last 4-6 months. Which, is actually fine. Trying to find the right price is perfectly acceptable in my book. And I don’t think going back to the previous Peloton prices is that dumb a move for the premium units for fall. Makes business sense to me.
The bike demand issue seems to be on the higher end. On our racing club’s slack channel, I see comments about needing to wait to 2023.
There’s a lot discussed in this thread about the Peloton experience. While you can read it to understand, you have to experience it to fully know. FWIW: My wife has been riding hers since Feb 2017, and virtually every day since the start of the pandemic in March 2020.
While McCarthy has some notable career affiliations, his functional background is finance (i.e. CFO). Just a suspicion, but he may not fully appreciate the customer challenges both upstream (needs, markets, sales, etc) and downstream (implications of weak mfg and c.s.). But he will learn the hard way through customer loss and employee departures, if he isn’t beginning to already.