Harvard University Proposed Alternative for Fitbit Memorandum

Question Description

Can you help me understand this Business question?

Memos to Management (Cases/Presentations) – Learners PREPARE FOUR HBR CASE ANALYSIS. Two are INDIVIDUAL ASSIGNMENTS (which are LIKE MIDTERMS) and TWO are GROUP ASSIGNMENTS.

Whether the assignment is

Learner or TEAM (no more than 4 PPL – self formed) this assignment involves making a written presentation (

formatted as MEMOS TO MANAGEMENT

) based on Harvard Business Cases.

Learners should consider the method (

described BELOW

) in conducting and reporting on their analysis. The cases may have supplemental data in a spreadsheet; analysis of this data should support any conclusions.

ANY case Presentation should use the

following outline

(note, this mirrors the discussion of the case presentation process presented above):

(1) Identify Audience, presenter, date, and KEY ISSUE- you are preparing a memo so the TO/From should be appropriate (you are writing to the organization in the case and your are writing as a consultant or analyst) and the SUBJECT line should indicate the possible solution (e.g. to increase sales revenue….).

(2) Provide an executive summary (key Issue, Analysis, Recommendations and expected outcomes) THIS should be very concise and clear and action oriented.

(3) Define the problem or opportunity to be analyzed (use measurable/specific objectives for best impact). DO NOT REPEAT facts from the case – identify the challenge and how it relates to what the organization is trying to accomplish.

(4) Develop a relevant and balanced analysis (note SWOT and PEST are insufficient, but a good place to start)

(5) Identify viable alternative solutions (the case will always suggest some options, but there are always more options, including “walk away” or “stay the course/do nothing”).

(6) Analyze alternatives in context with defined criteria (Ideally, evaluate the option using pro/con analysis using insights developed in the analysis (step 4) and TIE back to the OBJECTIVES (step 3, above).

(7) Selects a recommended alternative and discuss issues related to implementation. I DO NOT WANT lots of detail on implementation (I know, other classes ask you to do this); I want to know if the organization does this, will it need more resources or skills, or investment, etc – think picture implementation.

Note – while Harvard Business Cases often POSE specific questions, these questions should only

guide

thinking. The objective of the assignment is to use a

decision making process

to identify opportunities and to support recommendations. LEARNERS SHOULD SEEK to EXPLICITLY connect the case to course material.

So that’s the basic outline of the memo presentation, but you need to do the ANALYSIS PROCESS; t

he basic steps to ANALYSIS/REPORT, which are covered extensively in the course, include a clear statement of:

Decisions:

What are the key decisions that must be made by the focal decision maker? Learners often isolate/focus on relatively minor decisions; learners need to develop analysis so that a full decision scope is identified. This discussion also includes a concise statement of the “problem” or “opportunity” faced.

Objectives:

What objectives is management trying to achieve? These often take the form of growth, market share, profit, or cash goals. Do these make sense, given analysis?

Analysis

Market Analysis:

What is known about the market size, growth, presence/evolution of market segments? What markets for other products forms impinge upon the market being considered?

Environmental Analysis:

What are the key imperatives and/or changes taking place outside of the industry that affect both the firm and its competitors? Examine the economic, technological, social, regulatory, political, and legal environments.

Industry Analysi

s: What is happening in the industry? What is the state of competition between existing competitors? To what extent are new firms entering the market? What is the level of competition from products made with different technologies? Are suppliers integrating forwards, laterally? Are our customers integrating backwards?

Customer Analysis:

Who are the customers? What sets of benefits do they require?

Competitor Analysis

: What are the strengths and weaknesses of competitors? What are their strategies? Can their strategies change? If so, how? What strategies might be expected from new entrants?

Firm Analysis:

What are the firm’s strengths and weaknesses? What strategies have been pursued in the past? How successful had these been?

Economic Analysis:

What does the economic analysis show? Given the set of decisions and objectives facing the decision maker, what is the nature of the consequences of the decision in economic terms?

Assumptions:

As learners reflect on their analysis, it is critical to state the key assumptions upon which the strategy is based.

Alternatives:

What are the two or three major courses of action that could be followed to reach the firm’s objectives? For each alternative identified, lay out pros and cons (this can be done as a table for conciseness, but learners should be prepared to defend their positions).

Action Plan:

What is being recommended? Lay out a broad strategy and identify specific action steps as well as a rough plan for implementation. Consideration of investments/costs must be made.

For the exclusive use of T. Xu, 2021.
9-317-007
REV: DECEMBER 1, 2020
REGINA E. HERZLINGER
CHRISTINE SNIVELY
SARAH MEHTA
Fitbit
Fitbit, a San Francisco, California-based manufacturer and marketer of wearable fitness trackers,
was founded in 2007 by 39-year-old serial entrepreneur and avid runner James Park and experienced
technologist, 40-year-old Eric Friedman. Before launching Fitbit, Park co-founded and served as Chief
Technology Officer of Epesi Technologies, a business-to-business (B2B) operation that offered Internet
infrastructure services and served as an application (app) service provider for e-commerce websites.
Friedman and Park also founded Windup Laps, a digital photo sharing service acquired by CNET. 1
Friedman and Park saw potential in incorporating sensors into wearable devices to create a fitness
tracker. 2 They were inspired by Nintendo’s use of wires and sensors in the Nintendo Wii video game
console. Released in 2006, the Wii was the first video game console to respond to the physical
movement of a controller, which contained built-in accelerometers (sensors). In the Wii Sports tennis
game, for example, players made the serving motion with their arms while holding the motion-sensor
controller. This movement was then reflected on the television screen. (Earlier video game consoles
had relied on a series of buttons on a controller to play the game.) Friedman and Park presented the
Fitbit prototype—clipped onto a user’s clothing to track the distance traveled and calories burned—at
the TechCrunch50 conference. Hoping to generate 50 pre-orders, to their surprise, they received 2,000
pre-orders in one day. 3
Fitbit’s suite of products grew to include wearable wristbands and watches. Fitbit benefited from
first-mover status, as its competitor Jawbone did not release its first fitness tracker until 2011. Early
Fitbit adopters, wearing Fitbit products on their wrists, provided visibility. 4 Prices ranged from $69.95
for the Fitbit Inspire tracker to the high-end Fitbit Ionic Adidas smartwatch, which sold for $279.95.
The Fitbit Charge 3 ($149.95), one of Fitbit’s best-selling products, was worn as a wristband and tracked
steps, calories burned, and sleeping patterns. The Charge wirelessly synced the recorded data to the
user’s smartphone and computer. (See Exhibit 1 for Fitbit products and features.) The company
marketed its higher-end products to fashion-conscious consumers and early technology adopters, and
its lower-cost devices to price-sensitive shoppers.
In 2019, revenues from 65 countries exceeded $1.4 billion, primarily from the sale of devices. 5 The
revenues from paid premium services on a subscription basis, such as virtual coaching and
personalized progress reports were less than $29 million. Fitbit Premium, for example, cost $79.99 per
Professor Regina E. Herzlinger, Case Researcher Christine Snively and Case Researcher Sarah Mehta (Case Research & Writing Group) prepared
this case. This case was developed from published sources. Funding for the development of this case was provided by Harvard Business School
and not by the company. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources
of primary data, or illustrations of effective or ineffective management.
Copyright © 2017, 2020 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-5457685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu. This publication may not be digitized,
photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.
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Fitbit
year and allowed users to compare their data against the entire Fitbit community and those within
their age group. It also contained a 12-week personal fitness plan. 6 In 2019, over 29.6 million Fitbit
customers were active users. 7 Although Premium subscriptions generated less than 2% of company
revenue in 2019, the company expected that number to grow. 8
In 2019, the global wearables market was 305.2 million units. 9 Apple was the market leader with
35.0%, followed by Xiaomi, a Chinese wearables manufacturer, with 14.6%, Samsung at 9.8%, Huawei
at 8.4%, and Fitbit a distant fifth with 4.1%. Would competitors continue to erode Fitbit’s position?10
While the Apple Watch gained market share on the high end, the Chinese Xiaomi competed on the low
end with its Mi Band, a step and sleep tracker that sold for $32.99. 11 Other competing devices included
wearable wristbands, smartphones with built-in health monitoring capabilities (Apple’s Health App),
and free or paid apps that served as fitness trackers such as RunKeeper, MapMyRun, and others. With
dozens of new threats, Fitbit sold 16 million devices. 12
Low engagement and high abandonment rates for activity trackers also posed a challenge to Fitbit. 13
Industry observers reported that one-third of consumers who purchased fitness trackers stopped using
them within six months. 14 Fitbit claimed a significant percent (28%) of active users among its
customers. 15 In 2019, 55% of new revenue had come from new products, with 39% of new product
activations from repeat customers, indicating that some customers found value in returning to the
platform. 16 It defined “paid active users” as anyone who logged 100 steps or connected a Fitbit product
to the company’s app; 17 but as Park noted, “Engagement levels aren’t what drives the business.” 18 He
added, “In context, you have to compare Fitbit devices to gym memberships or home gym
equipment.” 19 Gym membership abandonment rates were consistently 80% over the years. 20
As the fitness tracking wearables market became increasingly crowded, some companies expanded
into medical applications. One company, dorsaVi, received FDA clearance for its ViMove product—
wearable sensors placed on the body to measure, record, and report lower back/lumbar spine
movement and muscle activity. FDA clearance allowed dorsaVi to market ViMove as a medical device
to physical therapists. 21 The dorsaVi app also provided medication reminder notifications to patients.
Aging and/or chronic disease patients often had long lists of prescribed medications. For some,
missing a dose could lead to serious health consequences. One analyst estimated that “costs associated
with this non-adherence range upward of $1 billion annually in hospital costs.” 22
Though Fitbit was focused on wellness, should it evolve some of its products into disease
management devices? Park noted, “Our platform consisting of devices, apps, social motivational
features, advice and personalized coaching is aimed at helping people make key behavioral changes to
be more active, exercise more, eat smarter, eat better and manage their weight. These are exactly the
kinds of behavioral changes that experts in diabetes, hypertension, asthma, obesity, and sleep apnea,
as well as mental health conditions such as depression and anxiety, believe can change the course of
those diseases.” 23 If it entered the space, Fitbit would not necessarily be dependent on doctors or
hospitals to introduce its products to patients. Rather, Fitbit could rely on its customers to maintain
regular use of its products for efficacy and upgrade to new, more advanced Fitbit devices as they
become available.
Fitbit’s co-founders considered the company to be both a hardware and software company. Park
noted, “While press and analysts focus on Fitbit as a wearables company, the mission of the company
is actually a lot broader…. We’re all about ‘How do we use technology to help people become healthier
and more active, giving them data and inspiration and guidance?’ And we’re pretty agnostic about
how that’s done. It could be in the form of devices that are wearables, devices that are not wearable, or
software and services….” 24
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Fitbit
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About Fitbit
As of 2019, Fitbit’s diverse suite of products were sold directly to consumers through its website,
and were also carried in more than 39,000 retail stores and in 65 countries. 25 The company had grown
to over 1,600 employees worldwide. 26
Marketing to Consumers
Fitbit engaged consumers on platforms such as Facebook and Twitter. Demonstrating its reach, the
company garnered more than 2.8 million likes on Facebook alone. 27 One analyst noted that “Fitbit does
well because it’s built a community and helped make fitness a more social experience—they’ve created
staying power.” 28 “It often takes an expanding range of apps and hardware add-ons from third party
developers to create the kind of ecosystem that keeps drawing customers back,” another observer
added. 29
Gartner, the world’s leading research and advisory company, in its 2018 Digital IQ Index survey,
ranked Fitbit the leading small electronics brand with a “Gifted” designation. Fitbit scored significantly
above average in all four categories of Site & E-Commerce, Digital Marketing, Social Media, and Mobile
& Tablet Apps, demonstrating focus on its customers and its use of the digital medium as a customer
support tool. 30 (See Exhibit 2 for Fitbit’s digital media performance metrics.)
Fitbit ramped up its sales and marketing spending, expanding beyond purely digital advertising.
In 2019, advertising expenses accounted for 12% of revenue, or $170 million. 31 “You could say we’ve
been underinvesting as a brand over the years,” Park noted. 32 “The challenge of creating a whole new
category from scratch, which is what Fitbit has done, is in educating consumers and raising awareness.
It requires pretty significant sales and marketing.” 33 Fitbit ramped up spending in a number of ways
in 2019, including advertising during high-profile events. One digital media expert remarked, “These
online-born startups are reaching the point of maturity, looking for new audiences, and reaching the
point of diminishing returns.” 34
In 2016, the company began marketing across all media channels including television in Africa,
Asia, Europe, and the Middle East. The campaign generally aimed to draw attention to the Fitbit brand,
rather than one particular product, but also featured new products such as the Charge 2, released in
2016, which contained new features such as a cardio fitness level to measure breathing and provide
guided breathing exercises to reduce stress, and the Flex 2, Fitbit’s first swimming tracker. Some
models also sent the user reminders to move throughout the day, and synced to the user’s smartphone,
sending an alert when the user received a text or phone call. The company believed that these options
would cause more consistent use. 35
One Fitbit’ television ad featured an emotional, benefit-driven story about a girl and her father
competing against one another for the most steps prior to her wedding day. 36 The ads created
specifically for France and Germany focused more on the product attributes and featured popular
activities in those regions, such as soccer and cycling. Fitbit believed Europe represented a large,
unpenetrated market. Park noted in a conference call, “The population of the five largest countries—
Germany, France, the UK, Italy and Spain—equals the approximate size of the U.S., but less than 15%
of our total devices sold today.” 37 In the Asia-Pacific region, Fitbit believed the opportunity was likely
even larger. As Park said, “We are looking to bring greater localization and continue to refine our
marketing based on additional consumer research.” 38
3
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Fitbit
Marketing to Employers and Wellness Programs
Fitbit initially marketed exclusively to consumers, but in 2010 it launched Fitbit Wellness, providing
hardware, software, and services to corporate wellness programs. It began working with insurance
companies and employers that incentivized their policy holders or employees to use Fitbit as part of a
larger strategy to promote health and wellness. Some companies encouraged teams of employees to
compete against one another in various initiatives, such as exercising and weight loss, and offered
prizes and other incentives for participation. In some cases, employers or health insurance companies
subsidized the cost of the device.
Fitbit’s corporate wellness business actively recruited employers to encourage Fitbit usage. In
September 2015, retailer Target began offering Fitbits to its 335,000 U.S.-based employees. As part of
the deal, Target either purchased Fitbit Zip devices for its employees or subsidized the purchase of
another Fitbit device. A Target representative stated, “We’re putting a new focus on wellness across
our business—a commitment to helping our team members, guests and communities achieve wellness
through programs and initiatives that promote healthy eating, active living and clean-label solutions
(think simple, recognizable, easy to read ingredients and materials), and making them affordable and
accessible to all.” 39 Target and Fitbit also planned to work together on back-end software that allowed
Target to compare the activity of employees from different stores and organize challenges. 40 By 2019,
Fitbit worked with over 1,500 corporate partners including 70 of the Fortune 500 corporations. 41, 42
There was some insurer interest as well. U.S.-based insurer John Hancock, as part of a partnership
with corporate wellness firm Vitality, a encouraged policy holders to use a Fitbit and exchange their
activity data for lower life insurance premiums. Those who signed up for the optional program
received a free Fitbit and the device automatically uploaded activity data to the insurer. John Hancock
noted that the data would be shared only with Vitality. The most active customers could receive a
discount of up to 15% off their premiums, in addition to other perks such as Amazon gift cards. 43 Tivity,
a publicly–traded wellness provider for employers, health plans, and health systems, integrated Fitbit
and other fitness tracking devices into their wellness apps.
Research and Development (R&D)
Fitbit’s R&D was largely dedicated to enhancing the performance, functionality, and style of Fitbit
devices. Park explained, “The fruits of R&D are not just about new sensors but also miniaturized form
factors (hardware components), more power-efficient electronics, more fashionable designs, intuitive
user interfaces and engaging social and community features.” 44 Fitbit had 602 issued patents, with 335
patent applications pending as of 2019. 45, 46 Fitbit management believed this provided a strong
competitive advantage. 47 One firm questioned the strength of its portfolio, noting that while Fitbit has
been active, it lacked early and potentially foundational innovation. Further, Fitbit’s patents generally
covered the U.S. alone, with applications only extended to China, while competitors’ patents held much
broader geographic coverage. 48
R&D expenses jumped from $27.9 million in 2013 to $300 million in 2019, mostly to hire new
software developers and hardware engineers (a cohort that one company representative referred to as
“mad scientists”). 49
a For more information, see Regina E. Herzlinger, “The Vitality Group: Paying for Self-Care,” HBS No. 310-071, February 7, 2020.
4
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Fitbit
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The Six Factors
Structure
Fitbit faced many competitors, among them the manufacturers of mobile devices that helped to
facilitate ease of Fitbit’s use, since more than 200 iOS, Android, and Windows Phone devices were
Fitbit-compatible, allowing users to sync Fitbit data to these devices. 50 Though Apple, Google, and
Microsoft had to approve all apps submitted to their respective app stores, any fitness tracking
company could submit an app for a fee ($99 annual fee on the Apple App Store, $25 one-time fee on
Google Play, and a $99 annual fee on Windows Phone Store). Apple’s iPhone was also sold with a builtin Health app that tracked its users’ steps. In the past, Apple blocked competing products from its App
Store. For example, in 2012, it removed Google Maps from the iPhone and iPad when it released its
competing app, Apple Maps. But after users complained, Apple reintroduced Google Maps to the App
Store. 51
In 2019, analysts estimated about 31 million Apple Watches were sold. At an average price of $448
per watch, the Apple Watch generated $13.8 billion in revenue, almost ten times Fitbit’s annual
revenue. 52 But some analysts wondered whether the Apple Watch could sustain such sales at such a
price level and users had to carry an iPhone while wearing the watch in order for the watch to work
properly. 53
The “smart” clothing space was also developing. Hexoskin, a small company founded in 2006,
released a biometric shirt that measured heart rate, breathing, and sleep patterns. It was compatible
with the iPad, iPhone, and Android devices, and prices ranged from $169 to $579.
Consumers
Fitbit benefited from general trends toward healthy living. As of 2019, about one-third of all
Americans reported having used a fitness tracker. Women used fitness trackers slightly more than men,
and about 31% earned over $100,000 per year. 54 Demand for activity trackers spanned global markets. 55
Observers noted that the aging population in the U.S. could also yield higher demand for health
monitoring devices. 56 A 2017study found that Fitbit was most popular among all age groups, with
women aged 35-44 most likely to use a Fitbit and the segment of men and women over age 55 growing
the fastest. 57
The introduction of new Fitbit products bolstered consumer engagement. In early 2016, after Fitbit
released the Blaze and the Alta models, 20% of customers reactivated a dormant Fitbit account. 58 Fitbit
Alta was a more stylish fitness tracker with a longer battery life that synced with a user’s smartphone
to display basic phone notifications. 59 Fitbit Blaze tracked running, cycling, weight lifting, and elliptical
machine workouts. 60
Some experts warned against a price war between Fitbit and Xiaomi, whose no-frills Mi Band for
$32.99 contained many of the same features as the Fitbit Inspire, which sold for $99. Although the initial
Mi Band product was not sophisticated enough to track heart rates, Xiaomi’s Mi Band 3 (retail price of
$19.99) could report heart rates. 61
The social aspects of Fitbit’s devices—Fitbit allowed users to track progress against friends and coworkers—encouraged use and helped market the product. One fitness tracker reviewer noted, “Fitbit
has a hands-down lead on social features: not only can you find and add your existing friends who
have a Fitbit, but you can also find and add other Fitbit users who have similar activity levels to you.” 62
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Fitbit
In a 2015 survey, 36% of individuals using health and fitness apps indicated that these social functions
made them more likely to purchase a wearable. 63 Most Fitbit competitors also allowed users to connect
with one another.
Fitbit’s number of units sold and active users in 2019 (100 million and 29.6 million, respectively)
were substantial. 64 Researchers found that the larger the digital community, the more likely users were
to find friends with whom to connect. Part of Fitbit’s success could be credited to network effects.
Sports apparel and accessories company Under Armour’s entry into the wearables space and its digital
community of 200 million users could jeopardize Fitbit’s lead in social networking. 65
Commenting on Fitbit’s continued dominance, an analyst noted: “Key strengths include leading
market share, an open platform, social connectivity, creating a strong ecosystem and heightened user
engagement and a healthy balance between battery life & functionality.” 66 Through Fitbit’s application
program interface (API), external developers and companies (such as a wellness company) could
incorporate Fitbit data into their own apps, products, and services.
One observer noted, “[Fitbit has] done a great job at spreading awareness and targeting the growing
segment of fitness trackers. Apart from great devices . . . their growing distribution network have been
key in maintaining their lead.” 67
Technology
Fitbit faced several production challenges. In 2014, Fitbit recalled more than one million of its Force
devices after users reported rashes, blisters, and other irritations caused by the device. The Consumer
Product Safety Commission instructed Fitbit to provide warning labels indicating that the product
contained nickel, a common allergen, and new sizing guideline to ensure users wore looser
wristbands. 68 Some analysts reported on Fitbit’s struggle to keep up production, as the company was
in “hyper growth mode.” “Because many of the key components in our products come from limited or
sole sources of supply,” noted a Fitbit annual report, “we are susceptible to supply shortages, long lead
times for components, and supply changes, any of which could disrupt our supply chain.” 69 As an
analyst commented, “Fitbit’s growth would be limited if it struggled to find manufacturing capacity to
match demand.” 70
San Francisco, California-based Flextronics was the main manufacturer of most Fitbit devices and
the primary manufacturer of most wearable technology products, servicing Jawbone and Misfit bands.
The company reportedly produced 75% of the world’s wearable activity trackers. 71 Flextronics claimed
it was at “the forefront of designing and manufacturing wearable devices world-wide that deliver
brand-new capabilities in compact form-factors.” 72 The company provided their clients with “limitless
options for creating wearable technology by combining intelligent manufacturing techniques with
unique product innovations including flexible circuits, 3D printed circuit boards, and stretchable
sensors.” 73
Fitbit aimed to diversify its contract manufacturers and multi-source key components. Hardware
start-ups often struggled because of the pressure to continually release new products with short
production cycles. Commenting on the challenges associated with hardware, Park said: “When we
started, there was no public information on how to make hardware. The key to success in hardware is
access to information—about suppliers, manufacturers, techniques. The thing we spent the most time
on was gaining access to that knowledge.” 74 He continued, “Two-thirds of our engineers are in
software, not hardware. The lack of focus on hardware was what allowed us to take over the market
very quickly. Garmin and others that were already doing hardware gave software short shrift.” 75
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Fitbit
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Financing
In 2007, Fitbit was founded with an initial $400,000 in seed funding. 76 In 2008, in its first round of
funding, Fitbit raised $2 million from early-stage VC firm True Ventures and SoftTech VC. The
company raised three more rounds, totaling $63 million, before its 2015 initial public offering (IPO). 77
The IPO raised $732 million. 78 At the time of the IPO, Fitbit’s market cap exceeded $6 billion. 79 As of
2019, it had dropped to $1.6 billion. 80 Revenues increased from $745 million in 2014 to $1.4 billion by
2019. 81
The Fitbit user typically paid for the device directly. In some cases, employers or insurance
providers covered the cost of wearable fitness trackers, along with gym memberships to encourage
healthier lifestyles. In 2019, less than 10% of Fitbit’s revenue came from its corporate wellness arm. Its
enterprise customers included Wendy’s, Teach for America, Geico, Quicken Loans, and others. 82
Public Policy
In January 2015, the Food and Drug Administration (FDA) released a preliminary guidance
document (a non-binding document distributed for comment purposes) suggesting that it would not
seek to regulate general wellness products, such as wearables, that “present a very low risk to users’
safety.” 83 Further, “wearables will not be considered medical devices unless they make claims about
fitness to treat specific diseases or conditions… among the claims that the FDA will allow under the
umbrella of ‘general wellness’ are those related to weight management, physical fitness, relaxation or
stress management,” 84 and others. Devices that made claims regarding treatment or diagnosis,
however, were subject to FDA scrutiny. Apple, before it released the Apple Watch, reportedly met with
FDA officials to “ensure that the device would meet any forthcoming regulatory requirements due to
its strong focus on health tracking.” 85
Begun in 2013, the International Medical Device Regulators Forum, a voluntary group of regulators
from around the world chaired by the FDA, formed the Software as a Medical Device (SaMD) Working
Group to develop guidance regarding innovations in SaMD devices worldwide. The Working Group
agreed upon the key definitions, framework for risk categorization, the Quality Management System,
and the clinical evaluation of SaMD innovations. 86 By 2019, the FDA had adopted 16 of the Working
Group’s outputs in guidance documents governing SaMD devices like Fitbit. 87
Accountability
Fitbit claimed positive long-term fitness results when wearing the tracker. The company’s successes
included Emory University, which reported 92% of its employees were motivated to be more active,
and the South Carolina Statehouse, which reported that 18% of its participants lost significant weight. 88
The Dayton Regional Transit Authority also reported cost savings of $2.3 million over two years on a
projected $15 million spend. 89
Some studies questioned the accuracy of the devices. In one study, Fitbit’s measures did not match
that of treadmill output, and the faster the walking speed, the greater the error in distance measured.
Because Fitbit allowed users to specify their stride length (or generated a default stride length based
on the height the user inputs), some researchers suspected that the inaccuracy was due to varying
strides among users. 90 Another study found that Fitbit underestimated calories burned during certain
activities such as cycling or doing laundry. 91 Yet, in another study, whose participants wore a Fitbit
and a research-grade accelerometer while talking on a treadmill, the Fitbit showed a high correlation
with the steps recorded by the accelerometer, demonstrating accuracy. 92
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Fitbit
In an NBC News segment, a news anchor wore three trackers on a walk across Central Park in New
York City and noted that all three reported different step counts. Researchers at NYU’s Tisch Sports
Performance Center recorded the anchor’s steps on a treadmill and compared their numbers to what
the trackers reported. After taking 500 steps, Fitbit was the most accurate, reporting 502. 93 The devices
were less accurate when reporting calories burned. The lab computer recorded that the news anchor
burned 19.9 calories. Jawbone was the closest in calories burned with 43, followed by Fitbit with 67
calories and Garmin with 78. 94
The accuracy of other sensors found in wearable devices was questioned by several members of the
medical community. One cardiologist noted that the metrics measured by most wearables were “never
scientifically proven to have wellness benefits.” 95 For wearables to be accepted by physicians, one
noted that they need to be “designed with the kind of 99-plus percent precision” expected from clinical
devices. 96
But Fitbit also focused on another form of accountability: it aimed to support medical researchers
who wanted to incorporate Fitbit trackers into their studies. 97 Park explained, “Consumers are
interested in tracking deeper metrics about their sleep. [. . .] Right now, to really diagnose sleep apnea,
you have to go to a sleep lab, which is pretty expensive and impractical for a lot of people.” 98 Fitbit Zip
devices were offered as part of these programs. 99
A survey of members of the Association of Clinical Research Organizations reported a large increase
in the use of wearable technology in medical trials. Those surveyed reported that “wearables represent
a huge opportunity to gather additional data, and make clinical trials more efficient and more
convenient for participants.” 100 In 2019, the U.S. clinical trials database (clinicaltrials.gov) included 507
current, completed, or pending studies that involved Fitbit devices, covering a range of conditions from
obesity to cancer—either using Fitbit to gather data or to test the devices themselves. A smaller number
of studies involved Jawbone or Apple Watch. In addition, Fitbit technology was used in scores of
clinical research studies at Johns Hopkins University, Mayo Clinic, Northwestern Medicine, and other
institutions on conditions ranging from arthritis, breast cancer, heart disease, patient compliance, and
surgical recovery. 101
Chronic Disease Management for Fitbit?
Park stated, “A big theme for us is going to be the inclusion of more advanced sensors.” 102 He added
that the company wanted to reach a point where “not only are we addressing lifestyle conditions but
more chronic conditions as well, whether it’s heart disease, obesity, etc.” 103
Medication was a crucial part of the long-term management of chronic diseases. About 91% of all
prescriptions filled were for chronic disease management. 104 About 76% of adults aged 60 or older
regularly used at least two prescription medications, and more than one in three (37%) were on five
medications or more. 105
In 2016, Quest Diagnostics, a laboratory company with annual revenue of $7.4 billion, began
offering patient-initiated testing, allowing consumers to purchase a variety of lab tests without
consulting with a doctor. Tests could help patients monitor thyroid and lipid levels, and test for celiac
disease, hepatitis C, or sexually transmitted diseases. A physician would then reach out to patients
with concerning results and encourage them to visit a health care provider. The price for the tests,
which would not be covered by insurance, ranged from $29 to $379 each. 106
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Chronic Conditions
Chronic diseases included a range of long-term health conditions that progressed slowly and had
no immediate cure. 107 Unlike infectious diseases, chronic conditions were not contagious and their
causes could not be traced to a single pathogen. Common chronic diseases and conditions included
cancers, cardiovascular diseases, diabetes, obesity, and chronic respiratory diseases. 108 (See Exhibit 4
for chronic disease descriptions.)
Chronic diseases and conditions were increasing worldwide. As of 2019, 45% of American adults
(145 million) had at least one chronic disease or condition. 109 According to 2010 data, chronic diseases
constituted seven of the top ten leading causes of death in the U.S. 110 Of all chronic conditions,
cardiovascular diseases (including coronary heart disease, stroke, congenital heart disease, and
pulmonary heart disease) resulted in an estimated 610,000 annual deaths in the U.S., and were the
leading cause of death for both men and women. 111
Key risk factors for these diseases included smoking, excessive alcohol consumption, poor
nutritional status, and a lack of physical exercise. 112 While genetic predisposition influenced an
individual’s risk profile, these behavioral risk factors increased the likelihood of developing a chronic
disease. The World Health Organization estimated that as many as 80% of all strokes, cardiovascular
diseases, and type-2 diabetes could be prevented if these behavioral risk factors were eliminated. 113
The likelihood of developing a chronic disease increased with age: 92% of people over the age of 65
had at least one chronic condition. 114 There were also racial and ethnic disparities. African-Americans
were 40% more likely to have high blood pressure than their non-Hispanic white counterparts, and
African-Americans, Hispanics, and Asian-Americans were at higher risk for diabetes than nonHispanic whites. 115 Chronic diseases were also most prevalent in the Southeastern U.S. 116
In a survey of 3,000 people, the Pew Research Center found that people living with chronic
conditions were more likely to track essential health information—such as diet, weight, blood pressure,
and blood sugar—than individuals without chronic conditions. However, this population primarily
relied on pen and paper to track information (41%) as opposed to a mobile device or phone (4%). 117
Obesity illustrated the potential role of tracking devices in the management of chronic conditions.
At its core, obesity was caused by an imbalance between energy expended and energy consumed.
Others factors included a genetic predisposition to obesity, smoking, sedentary work settings,
insufficient access to healthy foods, and poverty. 118 The rise in obesity was linked to an increasingly
sedentary lifestyle and changes in the American diet. 119 Poor health outcomes associated with obesity
included heart disease, hypertension, diabetes, stroke, high cholesterol. 120
Some health care providers and organizations experimented with providing wearable devices and
wireless sensors to learn more about obesity and provide treatment. In 2018, the Foods for Health
Institute at the University of California Davis completed a validation study of a device to automatically
measure calorie and water intake. Calorie counting was tested by comparing the manually recorded
intake of test subjects and data from the device. Researchers analyzed the calorie content of items and
measured the correlation between recorded intake and data from device. Over a two week period, 27
test subjects wearing the device compiled an accuracy of 89.6% in calorie intake. 121
In 2019, scientists at Tufts University’s SilkLab reported work on tooth-mounted sensors that
monitor and report on diet. The sensors communicate wirelessly with a mobile device, sharing realtime information on glucose, alcohol, and salt intake. While uses for such an innovation are many, two
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Fitbit
early candidates identified were sugar monitoring for diabetics and salt monitoring for high blood
pressure patients. 122
Similarly, Medtronic plc, a global leader in sophisticated medical technology, announced a
partnership with Fitbit to integrate health and activity tracking for patients living with diabetes and
their physicians and care teams. The iPro2â„¢ myLog mobile app allowed Type-2 diabetes patients to
view their glucose levels and physical activity data in one application. The partnership aimed to
generate insights into how exercise affected glucose levels. 123
Reimbursement
According to a 2016 survey by Deloitte, the use of telemedicine for post-surgery recovery and
chronic disease monitoring was embraced across all generations, but younger generations were willing
to pay more out-of-pocket for such services. Of those surveyed, 20% were willing to pay (see Exhibit 5).
Millennials were willing to pay up to $100 for one-off telemedicine appointments and up to $88 for a
subscription monitoring service. 124
Willingness to pay could increase as companies earned the trust of consumers. The report
recommended “digital health businesses develop risk mitigation strategies that take into account
potential uses and misuses of personal information.” 125 The report also noted, “Many caregivers are
interested in using technology—but adoption thus far is low. Some focus groups have shown that
caregivers seek integrated, multifaceted platforms that help them coordinate tasks and selectively
disseminate information. Most caregivers also want tools to ensure that medications are managed
accurately and with ease.” 126
In the U.S., public and private insurers reimbursed health providers through a fee-for-service
system. Under this approach, providers received payment for each individual service performed.
Because payment was tied to quantity of services, this system rewarded providers for a high volume
of services, rather than for quality of care or efficiency. The fee-for-service system also did little to
incentivize care coordination among multiple health service providers, which were often involved in
chronic disease management. 127 But the growth of bundled payments schemes represented an
alternative to the fee-for-service system. Through bundled payments, insurers paid hospitals and other
care providers a flat fee for all care associated with a specific surgery or treatment episode (e.g., knee
or hip replacement). If the actual costs of care fell below the agreed-upon fee, providers kept most of
the profit. If the costs exceeded the fee, the providers assumed the loss.
Since the 1990s, the Centers for Medicare & Medicaid Services (CMS), which administered the
Medicare and Medicaid programs, had explored using bundled payments. 128 This gained momentum
in 2010, through the Patient Protection and Affordable Care Act, which aimed to disburse 50% of
Medicare payments through schemes different from fee-for-service by 2018. 129 In 2013, CMS’s newly
created Bundled Payments for Care Improvement Initiative designed four models for bundled
payments for 48 episodes of care (i.e., specific, defined medical events such as hip or knee
replacements). 130 This national, voluntary program recruited 1,448 participating care providers by July
2016. 131 CMS was well on its way to achieving its disbursements goal, with 30% of Medicare payments
made through alternative payment schemes by March 2016. 132
In October 2018, CMS initiated the Bundled Payments for Care Improvement – Advanced (BCPI
Advanced) program. BPCI Advanced qualified as an Advanced Alternative Payment Model, in which
participating providers were exempted from reporting requirements of the Merit-Based Incentive
Payment System (MIPS). Comprising 832 participating Acute Care Hospitals and 715 Physician Group
Practices located nationwide, participants could earn additional compensation under the new payment
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model if expenditures for an episode of care were less than a spending target factoring in measures for
quality, or reduced compensation if expenditures exceeded the target. The BPCI Advanced program
was scheduled to run through December 2023. 133
Going Forward
Fitbit could comprehensively monitor and effectively engage and communicate with patients to
drive better health outcomes. As Fitbit continued to grow, it could continue to target consumers,
employers, insurers, and wellness companies and/or aggressively help patients manage chronic
diseases. If it decided to enter this space, what strategy made the most sense: Should Fitbit appeal to
the medical community or instead maintain its focus on its consumer operations? And, if so, what
chronic diseases was it best positioned to help manage?
Assignment
1.
What kind of innovation is Fitbit: cost cutting, consumer facing, or technologycommercializing?
2.
Evaluate the alignment of each of the potential Fitbit market strategies below with the Six
Factors of Structure, Financing, Consumers, Technology, Public Policy, and Accountability,
and recommend which, if any, Park should follow: b
3.
•
Wellness targeting of consumers, employers, insurers, and wellness companies
•
Helping patients manage chronic diseases
If you recommended that Fitbit’s strategy should include helping patients to manage their
chronic diseases, please specify the chronic diseases it should focus on and the critical
elements of this business model.
b For more on the Six Factors and the elements of a business model, see Regina E. Herzlinger, Innovating in Health Care: Creating
Breakthrough Services, Products, and Business Models (New York: Wiley, 2021).
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Exhibit 1
Fitbit
Fitbit Product Introduction, 2012-2019
Year
Introduced
Price
(as of 2019)
Clip-on
Clip-on
2012
2012
NA
NA
Tracks steps, calories burned, and active minutes
Tracks steps, distance, calories burned, active
minutes, floors climbed; Includes an alarm
Aria
Smart Scale
2012
NA
Tracks weight, body mass index, and body fat
percentage
Flex
Wristband
2013
NA
Tracks steps, calories burned, active minutes,
distance, and sleep; Includes an alarm
Charge
Wristband
2014
NA
Tracks steps, calories burned, active minutes,
distance, floors climbed, and sleep
Surge
Fitness “super
watch”
2014
NA
Tracks steps, calories burned, active minutes,
distance, floors climbed, sleep, heart rate, and
workouts; Includes GPS tracking, call and text
notifications, and watch display; Plays music
Charge HR
Wristband
2015
NA
Tracks steps, calories burned, active minutes,
distance, floors climbed, sleep, heart rate and
workouts; Includes caller ID and time display
Blaze
Smart Fitness
Watch
2016
NA
Tracks steps, calories burned, active minutes,
distance, floors climbed, sleep, heart rate, and
workouts; Includes GPS tracking, music control,
an alarm, and call and text notifications
Alta
Wristband
2016
NA
Flex 2
Wristband
2016
NA
Tracks steps, calories burned, active minutes,
distance, sleep; Includes reminders to move, a
time display, and call, text, and calendar
notifications
Tracks steps, calories burned, active minutes,
hourly activity, stationary time, and swimming;
Swim-proof; Includes call & text notification
Charge 2
Wristband
2016
NA
Ionic
Smart Fitness
Watch
2017
$249.95
Tracks steps, calories burned, active minutes,
distance, floors climbed, sleep, heart rate, and
workouts; Includes GPS tracking, call and text
notifications, and watch display; Plays music
Versa/
Versa2
Smart Fitness
Watch
2018
$199.95
Tracks steps, calories burned, active minutes,
distance, floors climbed, sleep, heart rate, and
workouts; Includes GPS tracking, call and text
notifications, and watch display; Plays music
Charge 3
Wristband
2018
$149.95
Tracks steps, calories burned, distance, active
minutes, hourly activity, heart rate, and floors
climbed; Includes call & text notifications, calendar
Product
Type
Zip
One
Features
Tracks steps, calories burned, distance, active
minutes, hourly activity, heart rate, and floors
climbed; Includes call & text notifications, calendar
alerts, reminders to move, GPS, and multi-sport
tracking
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Year
Introduced
Price
(as of 2019)
Product
Type
Ace/Ace 2
Wristband
2018
$69.95
Inspire/
Inspire HR
Wristband
2019
$99.95
Versa Lite
Smart Fitness
Watch
2019
$159.95
Features
alerts, reminders to move, GPS, and multi-sport
tracking
Tracks steps, calories burned, active minutes,
distance, sleep; Includes reminders to move, a
time display, and call, text, and calendar
notifications
Tracks steps, calories burned, distance, active
minutes, hourly activity, heart rate, and floors
climbed; Includes call & text notifications, calendar
alerts, reminders to move, GPS, and multi-sport
tracking
Tracks steps, calories burned, active minutes,
distance, floors climbed, sleep, heart rate, and
workouts; Includes GPS tracking, call and text
notifications, and watch display; Plays music
Source:
Casewriter, compiled from Fitbit company website, http://www.fitbit.com, and the 2015 Fitbit 10-K filing.
Note:
The above table omits Fitbit products in the company’s tracker line that, as of June 2016, had been discontinued. These
include the Fitbit Tracker, the Fitbit Ultra, and the Fitbit Force.
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Fitbit
Exhibit 2
Source:
Digital Media Performance Metrics
Gartner ”Brand Lookup: Fitbit,” 2020, https://www.gartner.com/en/marketing/research/data-tools/brandsearch?brand_id=IdzEXqTcct&study_id=fe977f70-6f4c-4883-b3b4-6f74cdcf5668, accessed March 23, 2020.
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Exhibit 3a
Fitbit Consolidated Statement of Operations, 2013–2015
(in $ thousands, except per share and per share amounts)
2015
2014
$1,857,998
$745,433
$271,087
Cost of revenue
956,935
387,776
210,836
Gross profit
901,063
357,657
60,251
Revenue
2013
Operating expenses:
Research and development
150,035
54,167
27,873
Sales and marketing
332,741
112,005
26,847
77,793
33,556
14,485
General and administrative
Change in contingent consideration
Total operating expenses
Operating income (loss)
Interest expense, net
Other expense, net
–
–
552,865
(7,704)
199,725
69,205
348,198
157,929
(8,954)
(1,019)
(2,222)
(1,082)
(59,230)
(15,934)
(3,649)
287,949
139,773
(13,685)
Income tax expense
112,272
7,996
Net income (loss)
175,677
131,777
Income (loss) before income taxes
Less: noncumulative dividends to preferred stockholders
Less: undistributed earnings to participating securities
Net income (loss) attributable to common stockholders – basic
Add: adjustments for undistributed earnings to participating
securities
Net income (loss) attributable to common stockholders – diluted
Net income (loss) per share attributable to common
stockholders:
Basic
Diluted
Shares used to compute net income (loss) per share attributable
to common stockholders:
Basic
Diluted
Source:
37,937
(51,622)
(2,526)
(5,326)
–
(59,133)
(98,103)
–
114,018
28,348
8,821
10,175
122,839
38,523
0.88
0.70
(1.32)
0.75
0.63
(1.32)
129,886
40,351
39,179
164,213
61,179
39,179
(51,622)
-(51,622)
Fitbit Inc., December 31, 2015, Form 10-K,
https://www.sec.gov/Archives/edgar/data/1447599/000144759916000018/fitbit1231201510k.htm, accessed
December 2016.
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Exhibit 3b
Fitbit
Fitbit Consolidated Statement of Cash Flow, 2013–2015
(in $ thousands)
Cash Flows from Operating Activities
Net income (loss)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Provision for doubtful accounts
Provision for inventory obsolescence
Provision for inventory obsolescence related to
Fitbit Force recall
Depreciation
Amortization of intangible assets
Write-off of property and equipment
2015
2014
2013
$175,677
$131,777
(51,622)
1,115
864
651
5,060
2,964
1,099
–
–
10,251
19,405
6,131
3,012
1,702
–
–
1,206
1,004
1,712
Revaluation of redeemable convertible preferred
stock warrant liability
Amortization of issuance costs and discount on debt
56,655
13,272
3,370
961
795
82
Stock-based compensation
41,024
6,804
620
Change in contingent consideration
(7,704)
–
–
Deferred income taxes
(42,538)
(42,001)
–
Excess of tax benefit from stock-based compensation
(32,100)
(13)
(38)
(263)
–
–
(231,100)
(158,788)
(55,630)
Inventories
(68,108)
(61,595)
(47,376)
Prepaid expenses and other assets
(29,215)
(9,679)
(2,225)
Fitbit Force recall reserve
(17,354)
(60,462)
72,687
56,759
123,791
50,881
138,748
47,733
27,043
Other
Changes in operating assets and liabilities, net of
acquisition:
Accounts receivable
Accounts payable
Accrued liabilities and other liabilities
Deferred revenue
Income taxes payable
Net cash provided by operating activities
34,891
3,403
859
4,336
12,804
17,795
109,157
18,774
33,171
Cash Flows from Investing Activities
Change in restricted cash
–
2,310
(2,310)
(30,566)
(26,495)
(7,524)
(230,935)
–
–
Sales of marketable securities
58,011
–
–
Maturities of marketable securities
44,500
–
–
Acquisitions, net of cash acquired
(11,037)
–
–
(170,027)
(24,185)
(9,834)
Purchase of property and equipment
Purchase of marketable securities
Net cash used in investing activities
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Fitbit
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(in $ thousands)
2015
2014
2013
505,275
–
–
160,000
163,000
2,830
(294,503)
(41,346)
(596)
(748)
(2,575)
(45)
(5,089)
–
–
–
–
42,811
4,018
97
205
32,100
13
38
–
75
–
401,053
119,264
45,243
340,183
113,853
68,580
37
45
–
Cash and cash equivalents at beginning of period
195,626
81,728
13,148
Cash and cash equivalents at end of period
535,846
195,626
81,728
1,157
835
999
150,923
34,616
12,930
124,492
–
–
15,774
–
–
56,578
–
–
10,534
2,492
1,904
–
–
170
1,080
–
–
13,317
–
–
(7,704)
–
–
Cash Flows from Financing Activities
Proceeds from public offerings, net of underwriting
discount and commissions
Proceeds from issuance of debt and revolving
credit facility
Repayment of debt
Payment of issuance costs
Payment of offering costs
Proceeds from issuance of redeemable convertible
preferred stock, net of issuance costs
Proceeds from exercise of stock options
Excess of tax benefit from stock-based compensation
Proceeds from exercise of redeemable convertible
preferred stock warrants
Net cash provided by financing activities
Net increase in cash and cash equivalents
Effect of exchange rate on cash and cash equivalents
Supplemental Disclosure
Cash paid for interest
Cash paid for income taxes
Supplemental Disclosure of Non-Cash Investing
and Financing Activity
Conversion of redeemable convertible preferred stock
into Class B common stock
Reclassification of redeemable convertible preferred
stock warrant liability to additional paid in capital
Issuance of redeemable convertible preferred stock
upon net exercise of redeemable convertible preferred
stock warrants
Purchase of property and equipment included in
accounts payable
Issuance of redeemable convertible preferred stock
warrants in connection with debt financing
Deferred offering costs included in accounts payable
and accruals
Issuance of common stock in connection with acquisitions
Contingent consideration related to acquisitions
Source:
Fitbit Inc., December 31, 2015, Form 10-K,
https://www.sec.gov/Archives/edgar/data/1447599/000144759916000018/fitbit1231201510k.htm, accessed
December 2016.
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27.6 million diagnosed
in the U.S.
28 million diagnosed
in the U.S.
An estimated 24 million
diagnosed in the U.S.
An estimated 10 million
diagnosed in the U.S.
An estimated 24 million
diagnosed in the U.S.
Type-2
Diabetes
Chronic
obstructive
pulmonary
disease (COPD)
Essential
Tremor (ET)
Asthma
Prevalence
Prevalence higher in
females, children, and nonHispanic blacks. Family
history of asthma, viral
respiratory infections, and
allergies increases risk.
Risk increases with age. Half
of cases are caused by a
known genetic mutation.
Risk increases with age.
Prevalence is higher in
Southern and Appalachian
states.
Prevalence is higher among
Native Americans, nonHispanic blacks, and
Hispanics. Prevalence is also
higher in Southern U.S. Risk
increases with age
Leading cause of death in the
U.S. for African-Americans,
Hispanics, and non-Hispanic
whites. Prevalence is higher
in Southern states. Risk
increases with age.
Demographics of Patient
Chronic Diseases and Other Conditions
Heart Disease
Disease/
Condition
Exhibit 4
Smoking; Overweight
and Obesity
No known behavioral risk
factors
Smoking
Overweight and obesity; Lack
of physical activity; High
caloric intake
Smoking; Overweight and
obesity; Lack of physical
activity; High caloric intake;
Excessive alcohol
consumption
Behavioral Risk Factors
Total direct and indirect costs
from asthma in the U.S.:
$106.1 billion; Average
annual individual
expenditure: $3,259
Very little information
available
Total direct and indirect costs
from diabetes in U.S.: $32.1
billion (projected to hit $49
billion by 2020); Average
annual individual
expenditure: $6,000
Total direct and indirect costs
from diabetes in U.S.: $245
billion; Average annual
individual expenditure:
$7,900
Total direct and indirect costs
from heart disease in U.S.:
$316.6 billion
Average Medical Costs
-18-
Asthma control medications include
anti-inflammatory corticosteroids
that are inhaled, as well as oral
medicine to relieve symptoms,
among others.
Few proven medications. Some
patients use adrenergic blockers,
but 60% experience no relief from
medication.
Patients may be prescribed
medicine to relax the bronchial
tubes, medicine to reduce
inflammation in the airways, and/or
antibiotics to treat associated viral
or bacterial infections.
Depending on disease stage,
patients may be prescribed a
number of medications, including
insulin therapies, medicine to lower
blood sugar, and/or medicine to
regulate kidney function.
Depending on the type of heart
disease, patients may be prescribed
a number of medications, including:
1) blood thinners, 2) medicine to
prevent blood clots, 3) medicine to
improve blood flow, and 4) medicine
to lower blood pressure, among
others.
Medications Prescribed(if any)
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Older adults and pregnant
women are more susceptible
to back pain; Genetic
predisposition increases risk.
Women and older adults are
at higher risk; Genetic
predisposition also plays a
role.
Demographics of Patient
Overweight and obesity; Lack
of physical activity
Overweight and obesity
Behavioral Risk Factors
Estimated direct and indirect
costs from back pain in the
U.S.: $100 billion (2006
estimate)
Total direct and indirect costs
from arthritis in the U.S.:
$128 billion; Average annual
individual expenditure:
$1,752
Average Medical Costs
Depending on severity, patients
may be prescribed medicine to
relieve pain and inflammation, as
well as anticonvulsants and topical
creams.
Treatment may include drugs to
relieve pain and inflammation, and
prevent deformity of the joint.
Medications Prescribed(if any)
-19-
“Statistics About Diabetes,” American Diabetes Association, http://www.diabetes.org/diabetes-basics/statistics/; “Age, Race, Gender, & Family History,” American
Diabetes Association, http://www.diabetes.org/are-you-at-risk/lower-your-risk/nonmodifiables.html; “Risk Factors,” International Diabetes Federation,
http://www.idf.org/worlddiabetesday/toolkit/gp/risk-factors; “Diabetes Report Card 2014,” Centers for Disease Control and Prevention, 2015,
http://www.cdc.gov/diabetes/pdfs/library/diabetesreportcard2014.pdf;
“The
Cost
of
Diabetes,”
American
Diabetes
Association,
http://www.diabetes.org/advocacy/news-events/cost-of-diabetes.html; “Type 2 Diabetes Treatment,” Mayo Clinic, http://www.mayoclinic.org/diseases-conditions/type2-diabetes/diagnosis-treatment/treatment/txc-20169988;
“Heart
Disease,”
Centers
for
Disease
Control
and
Prevention,
July
15,
2016,
http://www.cdc.gov/nchs/fastats/heart-disease.htm; “Heart Disease Facts,” Centers for Disease Control and Prevention, August 10, 2015,
http://www.cdc.gov/heartdisease/facts.htm; “Costs & Consequences,” Department of Health and Human Services, http://millionhearts.hhs.gov/learn-prevent/cost“Cardiac
Medications,”
American
Heart
Association,
consequences.html;
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Fitbit
Exhibit 5
Source:
Willingness to Pay Out-of-Pocket for Telemedicine
Leslie Korenda, Claire Boozer Cruse, Greg Reh, “Will patients and caregivers embrace technology-enabled health care?
Findings from the Deloitte 2016 Survey of US Health Care Consumers,” Deloitte University Press, August 30, 2016,
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20
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Fitbit
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Endnotes
1 James Park, CEO and Co-Founder, https://www.crunchbase.com/person/james-park#/entity, accessed May 2016.
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5 Fitbit Form 10-K, 2020, http://d18rn0p25nwr6d.cloudfront.net/CIK-0001447599/a8b5d236-bb56-4a1e-9b04-04ffd5e5ee83.pdf,
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21
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This document is authorized for use only by Tianyi Xu in MKTG 4501-Spring 2021-CONRAN taught by MARY CONRAN, Temple University from Jan 2021 to May 2021.

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