GoPro’s (NASDAQ:GPRO) stock plummeted in early January after the action camera maker reduced its fourth quarter sales forecast, lowered the price of its flagship Hero 6 Black camera, and exited the drone business. The death of GoPro’s drone business was particularly devastating since it was seemingly the company’s best chance to pivot away from the saturated action camera market.
It was also surprising. GoPro claimed during last quarter’s conference call that the Karma was the second best selling drone in the US priced above $1,000, and that it controlled 24% of that market. CEO Nick Woodman also called the Karma “a terrific platform” and declared that GoPro would further its capabilities with “next-generation drone offerings.”
However, those optimistic announcements came in early November, before the holiday shopping season started. Now it seems like desperate Black Friday deals — which bundled the Hero 6 Black and Karma together for $999 (a $200 discount) — still couldn’t attract enough buyers. So how did things go so wrong for the Karma? Let’s take a look at the top four reasons.
1. Entering the market too late
The drone market was already dominated by Chinese company DJI Innovations, which launched its first line of Phantom drones in 2013. The earlier Phantom drones included mounts for GoPro cameras, but DJI started installing its own cameras — which could be remotely controlled — starting with the Phantom 2 Vision+ in 2014.
GoPro realized that move would cut it out of the lucrative drone market. In 2014, it tried to convince DJI to develop a GoPro-branded drone, but those talks fizzled out. It then partnered with DJI’s smaller rival 3D Robotics, but 3DR couldn’t deliver the drone on time. GoPro finally took over the entire development process in mid-2015, shortly after DJI launched the Phantom 3 and put 3DR out of business.