A Pedal a Day Keeps Apple at Bay
Do you know anyone who actively uses Apple's Fitness program? How about Peloton? I bet the numbers are much higher for the latter versus the former. Apple came to the fitness genre too late in the game, after upstarts had already staked their claims with stationary bikes, holographic mirrors, and smart home weight gyms. Even bundling their fitness offerings with their other subscription services hasn't really helped Apple move the needle.
Peloton quickly became the workout du jour when COVID hit, and both its sales and stock price rose astronomically. But sales have slowed as of late due to market saturation and with new consumers blanching at the idea of paying a premium for the equipment along with a monthly subscription fee. (As of this writing, Peloton stock is down significantly, and they've paused manufacturing products due to a glut of inventory.)
Both Apple and Peloton appeal to premium consumers. They offer plug-and-play capabilities, hip branding, and at-home entertainment experiences that translate to different channels. They are, for lack of a better term, perfect for each other.
Apple needs Peloton to satisfy their fitness hole. An acquisition of the company would bring superstar trainers like Cody Rigsby, Ally Love, and Alex Toussant under the Apple umbrella. Plus, having bikes and treadmills in people's houses helps Apple's claws dig in deeper to the home-entertainment ecosystem they've been building for the past two decades. Peloton's current "screens" are powered by Android, and one can bet Apple would love to have each of those screens be an iPad running their iOS software.
On Peloton's side, they need an in-flux of cash. They need a technological partner that can help them stabilize the business-side of things, and they need a retail partner who can absorb the overhead cost of having showrooms. Peloton is shuttering their retail spaces, and it's not a huge leap for Apple to bring Peloton's bikes and treads into their stores.
With Peloton's valuation cap hovering somewhere around $10 billion, it isn't out of the realm to think that a company with as deep of pockets as Apple has could easily snatch up the fitness brand - just look at Microsoft's Activision/Blizzard purchase earlier this week. My guess is that Apple is waiting to see how low the valuation will drop before taking a bite. On Peloton's side, they may be considering restructuring along with acquisitions of their own to help stem the flow.
It'll be an interesting few weeks to see what Peloton's next move is, and whether Apple decides to play in those waters. Now, if you'll excuse me, I have a 30 minute David Bowie ride to take while I diligently look at my iPhone for missed emails.
