What's going on with the Garmin paid subscription?

Garmin recently announced a new subscription service, and it is making the headlines for all of the wrong reasons. The service is an optional add-on to Garmin’s companion app: Garmin Connect. This app serves the purpose of allowing the user to upload and view their activities which they recorded on their Garmin devices. The new add-on service is called Garmin Connect Plus, and it expands the capabilities of the app, allowing for more analysis and generative insights for the user's activities and fitness data. The response to this announcement was about as negative as it gets. Most of the complaints revolved around the cost of the subscription ($6.99/month or $69/year); the additional features are all things very low-cost to Garmin. The effect of this is leaving Garmin’s customers feeling like they are being taken advantage of. This is because, historically, the assumption is that part of what you are purchasing when buying a Garmin device is the ability to view and analyze the data, and now it feels like the new subscription is putting some of this behind a paywall just as a money grab.

It is not totally surprising that Garmin is exploring a subscription business model to find more revenue from its fitness categories. Subscription-based business models have found some recent success in the fitness tech segment—both Strava and Peloton have been high-profile successes. The subscription business model has some real advantages which make them appealing to companies. Firstly, the constant revenue stream can help companies forecast their finances better, and secondly, the revenue from subscriptions can help supplement some of the cost of the product to lower the upfront buy-in cost. However, despite the appeal of this business model and the success stories, it is not always possible to pivot to asking your customers for a recurring payment.

There are a few, but important, requirements which need to be met before customers will be ready to pay up on a regular basis. Primarily, there must be something included in the subscription that can’t be found anywhere else. Secondly, these offerings have to be of value to the customer.

Looking at Strava as an example, they excel at meeting both of these requirements, especially providing something that they can uniquely provide. Strava’s biggest strength is the network of users that they have, and the data that these users provide. This vast amount of proprietary data that they have collected allows them to offer some uniquely useful things to their users. Users are willing to pay for things like route recommendations and segment leaderboards/stats because this is something that these users simply cannot find anywhere else. This is compounded by the fact that even if another platform could figure out how to provide features like this, Strava’s users will still stay with Strava because leaving the platform would mean leaving their friends and followers behind.

On the other hand, Peloton also meets both of the requirements I outlined above; however, they excel at the second one: providing something that is valuable to the users. In Peloton's case, I see their biggest strength is in the quality of the product that they provide. Their classes are high-quality and have a high production value. This is the reason why people are willing to pay a subscription—users experience enough value from the product to justify the price.

After looking at these two examples of success stories, it seems obvious to me that the value proposition of Garmin’s Connect Plus subscription is much weaker. Some of the features that are included in the subscription are just additional breakdowns of activities, most of which can be found for free with a third-party platform like TrainingPeaks. Then, the other features are pretty lackluster and just are not that valuable to the end user.

This is an unprecedented time for Garmin to be experimenting with other business models. As time goes on, many competitors are closing the gap between what Garmin products offer and what other brands can offer. For a long time, Garmin enjoyed some comfort from their technology being ahead of the competition. However, now the fitness wearable segment is much more competitive, with lots of competing products. More and more athletes are moving away from Garmin and moving to competitors like Wahoo, Coros, Apple, and others. This subscription is risky for Garmin to implement. The features that are included in the subscription are all relatively simple. This means that Garmin is at risk of one of their competitors developing and including the same features for free, making their products even less competitive.

Despite growing in recent years, I believe Garmin has been unhappy with their fitness category. They have faced problems with pricing, positioning, and protecting margins for their devices. Lots of these issues come from failing to clear out the old, last-gen inventory before releasing the new products. This leaves the last-gen products being heavily discounted and cannibalizes sales for the new product. I can understand why Garmin is wanting to get an additional revenue stream in their fitness segment from a subscription product. However, it is not always the best idea to try to copy other success stories in order to make up for your shortcomings. Instead, if I was Garmin, I would be focusing on the fundamental issues and cleaning up the product line and supply chain in order to make the product positioning more compelling and easier to understand before experimenting with a subscription model.