GoPro is finally shaking off the pain of quitting the drone business

GoPro had a good start in 2019 after generating $ 243 million in revenue, an increase of 20 percent in its first quarter of last year. While the camera company posted a loss of $ 24 million, that's below the loss of $ 76 million that GoPro suffered to start 2018. The company had enough confidence after posting these results on Thursday that it raised its guidance to investors for 2019 and said that its first annual benefit will be 2015, which was the first full year of sales for the popular Hero 4 camera line.

A big reason for the company's recent success (GoPro he also recently obtained his first quarterly benefit in more than a year is the Hero 7 Black, which has had the best start for one of the company's cameras.Another reason is that GoPro has finally recovered (financially, at least) from the decision of January 2018 to close the Karma quadcopter and exit completely from the drone business, which is also good, since, based on a series of leaks and recent rumors, DJI is ready to move into the GoPro space by launching a direct competitor to Hero 7 Black.

GoPro did not mention Karma by name in his letter to shareholders on Thursday or stop by during a subsequent call with analysts. But it was said in the letter that "excluding our airline business, [quarterly] revenues would have increased 27% year-on-year". Reading between the lines, GoPro recognizes that Karma brought some money, but that additional increase in revenue. Ultimately, it was not worth the operating costs and R & D expenses that it required. Karma was a great reason why the loss in the first quarter of last year was much greater. Returning the focus to the cameras has helped GoPro reach a more sustainable base.

There are other signs of the GoPro post-drone reactivation in the numbers published this week. The company's gross margin for the quarter was 33 percent, compared to 22 percent in the first quarter of 2018. It is likely that part of that increase is due to the fact that GoPro is no longer selling Karma, that CEO Nick Woodman has repeatedly said he simply was not. He is not making a lot of money to the company while he was on store shelves.

By refocusing on its higher margin camera business (and building a better internal customer research team), GoPro has not only been able to increase the amount of money it receives with each sale, but it has also improved in leading to customers to the first-class camera that sells, the Hero $ Black $ 399. About 85 percent of the 842,000 cameras that GoPro sent in the last quarter were the Hero 7 Black, and the camera accounted for 90 percent of Revenue from the company's products.

At the end of the quarter, Hero 7 Black was the best-selling digital camera in the United States by unit volume, and the company says the amount of revenue it generated (year after year compared to the first quarter of 2018) grew in all regions where it currently sells cameras. GoPro has had a lot of control over the action camera market for years, even before its only real direct competition, Sony, stopped being manufactured. But since Hero 7 Black has been so successful, the grip is now stronger than ever.

It's a good time because here comes the DJI. The Chinese company has been slowly submerging its toe into other categories beyond the quadrocopters in recent years, starting with handheld camera stabilizers such as the DJI Osmo and the new Osmo Pocket. But now it is supposedly about to launch a direct competitor of Hero 7 Black called "Osmo Action".

All we have so far are some leaks and scattered rumors, but if there is any truth to them, Osmo's action seems to be a pound for pound alternative to Hero 7 Black. The packaging of a retail leak shows that the camera will probably be waterproof outside the box. The information in a Chinese site implies that it will match the GoPro flagship in most specifications. It seems that it has a front selfie screen, which would be a clear differentiator.

Osmo Action seems to have the same shape and size as Hero 7 Black, which means it could fit in GoPro frames . It is an intelligent shortcut that would allow DJI to take advantage of the vast accessories ecosystem of the California company without having to build one of its own.

It's impossible to say how cameras compare to each other, and many things can go wrong with a new product in a new category. But if this is really what DJI is about to announce at their next week's event, it will perfectly serve as the inverse of what happened with the GoPro Karma drone. With Karma, GoPro tried to enter a market that was essentially dominated by DJI. Now, DJI will do the same: it will block a market that GoPro created and possesses in depth.

Woodman was recently receptive to the idea of ​​increased competition. In his opinion, some of GoPro's non-Karma errors (refusing to lower the price of old cameras, saturating the lineup) were partly the result of having no competitors.

"A competitor would help us understand the dynamics of our market, our business, sensitivity to prices, the challenge has been, frankly, that in many cases the only information we had access to was ours," he said. Investors a year ago.

As he told me at CES 2018: "AT & T has Verizon, Ford has Chevy, BMW has Mercedes." Now, it seems that GoPro will have DJI – again. This time, at least, he will start the fight without the financial baggage of a drones business in difficulties.

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