Peloton has made a lot of news over the past month, particularly with the announcement of the One Peloton Club. For the first time ever, customers (within a 30 mile radius of selected showrooms) have the opportunity to rent a Peloton Bike.
The Wall Street Journal was the first to report on this new program prior to it being officially announced. However, in addition to this new program, there was a host of other interesting information from their interview with new Peloton CEO Barry McCarthy that give insight on how he plans to run the company.
First, it looks as though McCarthy could be preparing to make a set of sweeping changes at Peloton:
He plans to reshape his executive team, consider manufacturing simpler bikes, and upend the company’s capital spending strategy. Rather than investing primarily in bikes, treadmills and other equipment, he said, Peloton will spend most of its money improving its digital interface and content options.
Since this interview, Peloton has announced the hiring of a new Chief Supply Officer.
This tracks with an apparent strategy shift that has Peloton potentially moving away from relying heavily on device sales for profits, and instead focusing on the monthly subscription fee. The Wall Street Journal reports:
Mr. McCarthy said it isn’t yet clear the role Peloton machines will play in the company’s future. He said roughly 80% of capital spending goes toward equipment, with the rest spent on software. That should be reversed, he said.
This would undoubtedly be a major shift for Peloton, but could make sense considering the challenges they’ve had recently with Bike, Bike+, and Tread sales. Earlier this year Peloton effectively increased the price of most devices by eliminating free shipping and delivery. They also temporarily paused production on new Bikes, Bikes+, and Treads to allow time for orders to catch up with what they already had in inventory. The Tread+ has not been available for purchase since last year’s recall, and there is no word on when it will be sold again.
However, we do know that Peloton is not abandoning their hardware business completely. Just last month The Financial Times reported that Peloton is actively testing the Peloton Rower (codenamed Caesar), which could be announced as early as during Homecoming in May. Peloton is also apparently developing a second strength device (the Peloton Guide is the first strength connected device and will be launched on April 5) that will directly compete with Tonal.
Yet, if Peloton isn’t spending as much money on their hallmark hardware, what will they be spending money on? McCarthy provided some hints to the Wall Street Journal:
Among potential offerings he thinks Peloton should look at developing: its own social-media platform, more seamless ways for members to interact and compete with each other during classes, and partnerships that could land Peloton classes on other devices, or allow outside content to stream on Peloton’s screens.
These items could all be very exciting to members, and there is no telling how quickly some of these features could roll out. In a previous interview with The New York Times, McCarthy has alluded to the idea that Peloton could one day become an open platform with the ability to be part of the “creator economy.”
Peloton has already started to lean into some of these new ideas in recent weeks. Peloton Lanebreak, which is a video game riders can play on the Bike, was launched last month (though development was started & completed just prior to McCarthy starting). Peloton also launched their first podcast called Fitness Flipped earlier this week.
Ultimately, it is clear that McCarthy has a lot of ideas about the future of Peloton, and he has maintained that members should be excited about that future.
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There are MANY other hardware manufacturers (like Keiser, Stages, Schwinn, etc…) that can do hardware BETTER than Peloton can. Peloton SHOULD be focused on the interface to their platform and working to ensure compatibility across a wide variety of devices (e.g. a certification program for those hardware manufacturers).
Zwift on the Peloton bike, yes please
Some of this is exciting. Some just seems a little desperate. I guess it’s hard to know which of these ideas will gain traction.