About 15 percent of the GoPro´s workforce is going to be cutback, the company announced this Wednesday.
The main reason for this action is the series of drone crashes of their expected Karma device in the past days. Karma was delayed on its release, and after the crashes, the company was forced to recall the 2,500 units sold in 16 days. For the company, this launch was going to represent a big hit on the market and a way to improve their profits considerably, but of course, things didn’t come out as planned.
The machines presented the problem of not being able to maintain the power when flying at medium heights. Because of this, and as it can be seen on Youtube, there is footage of drones diving onto a beach full of people.
Despite there are no reports of injured people, the company is receiving lawsuits over possible misleading about Karma features when selling the drone. Also, another accusation is that GoPro took too long to notice the buyers of the power failure that the devices were presenting.
How could GoPro start improving?
Even if Karma´s technical problems are fixed, the new edition is not going to be available for Christmas shopping, which represents a problem for the company.
Alongside the major cutback of 15 percent of the workforce, GoPro is shutting down their entertainment section. This represents an operating cost reduce of $650 million for next year´s budget, which will make 2017 more profitable.
The entertainment GoPro segment had a lot of plans regarding their objective of becoming a media company. GoPro made some major hirings like HBO executive Bill McCullough and also linked itself with Virgin America and Xbox Live. However, those last partnerships never translated into something significant.
The GoPro’s Hero5 did have pretty good reviews at the time of the release, especially regarding the inclusion of voice control and water resistance. However, among the tech world, there is a general doubt of if this device can convince buyers to acquire the upgrades that the company offers.
Also, the competitive market is expanding and the improvement of smartphones cameras day after day makes everything more difficult to Hero5.
However, GoPro´s official had assured that “the consumer demand for its products remains solid”.
“With each year that goes by, there’s more and more compelling consumer entertainment products in the marketplace. There are questions of long-term demand for the Hero 5. Does it expand beyond GoPro’s core customer? We also don’t know what their long-term product road map is,” said Nick McKay, an analyst at Wedbush Securities Inc.
The GoPro President and former Skype executive, Anthony Bates, is set to leave the position in the last quarter of 2016, after 3 years in the company.