(Cybertech) – GoPro has today revealed plans to exit the drone market and make major restructuring changes to its business after a fourth quarter with weak sales and high operating expenses in 2017.
The company has suffered similar financial problems in recent years with disastrous fourth-quarter earnings in 2015, and a difficult initial launch of the Karma drone in 2016.
GoPro has revealed that despite getting Karma to a good market position in 2017 for its price bracket, the competitive challenges and recent “hostile” regulatory changes in Europe and the United States have reduced sales. These problems have made “the aerial market untenable” and forced the company to exit the market after selling off the last of the Karma inventory. The company has promised to continue support and service for current Karma customers, but has no plans to manufacture new models in future.
Lower than expected sales of the GoPro HERO5 Black camera have also not helped the situation and even the price of the newer HERO6 Black camera has had to be lowered to assist with sales. A price promise strategy helped improve sales during the holiday period but cost the company dearly with another $80 million in expenses attributed to price protection across all the cameras and the Karma drone.
As a result, as well as abandoning the drone market, GoPro is now being forced to make further job cuts to reduces costs. These changes will see the company with fewer 1,000 employees worldwide in the coming months. This is the fourth time the company has taken such action since 2016.
Despite these changes, CEO Nicholas Woodman has said that “GoPro is committed to turning our business around in 2018,” and “will continue to innovate with several new products aimed at new and existing customers.”
Writing by Adrian Willings.