It hasn’t been a steady stream of good news to come out of the Consumer Electronics Show held early January in Las Vegas. Adventure photographers said goodbye to the GoPro flagship camera drone – the Karma.
In an emotional statement, GoPro’s CEO Nicholas Woodman announced a restructuring plan with long-reaching consequences for the company going forward into the fiscal year. The drastic course of action comes as a result of shrinking market expectations.
Woodman clarifies that the “mass consumer market for drones is not as big as everybody thought it was going to be,” and the drone project does not meet the projected return on investment.
Troubled Launch and High Price Points
Karma had a rough start on the American markets as initial performance issues upon its release in late 2016 necessitated a recall, which forced GoPro to miss out on the 2016 holiday season. On top, there is also the added competition from the current drone market leader, Chinese firm DJI and its top sellers – Spark and Mavic Pro.
Upon relaunch, Karma sales only picked up after a significant price drop that further put a financial strain on the action-camera maker. Although the drone units sold to consumers saw a tenfold jump in numbers, this discount strategy meant a big loss for GoPro. The fourth quarter gross margin is forecast to drop by more than 10% compared to the previous year.
What does this mean for GoPro?
Discontinuing the Karma drone project has led to the termination of over 250 workers – a fifth of its entire workforce. In a bid to further reduce further losses, CEO Nicholas Woodman has cut his salary to only $1.
Company shares have also dropped by 33 per cent – an all-time low for the brand. To mediate the effects, the company has brought in JP Morgan to assess the situation.
Where do we go from here?
Karma may not be taking to the skies anymore, but there’s light on the horizon. GoPro promises a new lineup of camera models for 2018 and you don’t have to wait for long before their first model – an entry-level camera – hits international markets.