Weight Watchers feels the weight of wearables

Tuesday, 18 Feb 2014 | 12:46 PM ET

The explosive growth in wearable weight-tracking devices threatens traditional weight loss companies such as Weight Watchers, say analysts.

The trend was highlighted by a poor earnings outlook that caused Weight Watchers to lose more than a quarter of its value Friday. The growth in wearables is a large part of why CEO Jim Chambers expects 2014 to be a "challenging year."

A Weight Watchers center in Culver City, Calif.
Jordan Strauss | WireImage | Getty Images
A Weight Watchers center in Culver City, Calif.

"If the company doesn't improve its entire technology platform—and that includes its own mobile apps, its online platform and its wearable technologies—it's going to be left in a difficult position," said R.J. Hottovy, global director and senior analyst at Morningstar. "Consumers have fully embraced the idea of using smartphones and wearables to manage weight loss programs, and the company has to embrace that."

(Read more: Wearable smart bands set for 350% growth in 2014)

The market for wearables growing quickly. More than 17 million wearable bands of all sorts will ship this year, according to Canalys. Fitness bands specifically will sell 8 million units this year, and will jump to 23 million by 2015, the consulting firm says.

Like any growing market, a surge in sales brings a wave of investment. Re/code, a technology news partner with CNBC, has reported that Jawbone is poised to complete a $250 million round of funding that could value the company at more than $3 billion.

Weight Watchers gets nailed
CNBC's Josh Lipton reports that technology such as free phone apps and wearables is cutting into Weight Watchers' business.

Nike, Fitbit and Jawbone are among the leading makers of smart fitness bands, which sell for between $100 to $200. That price will likely come down as smart bands get smarter and lighter, say analysts.

(Read more: The flabby business of shrinking waistlines)

"They'll continue to improve on not only telling you what you're eating and how you're exercising, but how you're doing physically at any point in time—and maybe alert if you're going to have a heart attack," said Rob Enderle, analyst with Enderle Group in San Jose, Calif.

Enderle foresees tremendous potential for wearables because of the devices' size and functionality.

(Watch: Disrupting fitness through your iPhone)

"They pretty much monitor everything you're doing ... so it gives you the feeling that you're in much more control of the weight loss that you're trying to achieve," Enderle said.

Companies like Weight Watchers will either figure out wearables quickly, or risk becoming obsolete, analysts say.

Hottovy at Morningstar said that [CEO Jim Chambers] has admitted that Weight Watchers missed the boat on the mobility trend, and I think they're very much playing catch-up."

By CNBC's Mark Berniker and Josh Lipton

  Price   Change %Change


Contact Technology


    Get the best of CNBC in your inbox

    › Learn More
  • Matt Hunter is the senior technology editor at CNBC.com.

  • Cadie Thompson is a tech reporter for the Enterprise Team for CNBC.com.

  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.

  • Jon Fortt is an on-air editor. He covers the companies, start-ups, and trends that are driving innovation in the industry.

  • Lipton is CNBC's technology correspondent, working from CNBC's Silicon Valley bureau.

  • Mark is CNBC's Silicon Valley/San Francisco Bureau Chief covering technology and digital media.