After a third round of layoffs, Peloton is now considering redesigning its bikes so users can assemble them independently. CEO Barry McCarthy is also considering a plan to allow subscribers to the Peloton app to view workouts on third-party fitness equipment. McCarthy told Bloomberg that Peloton has been working on redesigning the bike “for a while,” and on top of that, he said he hoped that Peloton’s long-awaited rower might be available this holiday season. Debut sometime. He also confirmed that the company isn’t giving up on Tread Plus entirely.
All with comments McCarthy made in May during the company’s third-quarter 2022 earnings. At the time, he floated the idea of potentially changing the hardware design so that in the future, Peloton devices could be designed to arrive in customers’ homes as one piece. Currently, Peloton’s treadmills and bikes are delivered in batches of white gloves and built for you by a staff member. The service used to be free, but Peloton started charging an additional $250 to $350 in late January.
The move is part of Peloton’s ongoing restructuring plan to reduce costs and improve cash flow for the company. On Friday, Peloton announced it would cut more than 500 jobs related to last-mile delivery and product distribution. The company also noted that it is raising the cost of Bike Plus and Tread while closing retail stores in 2023. Allowing customers to assemble their own equipment means the company can simply ship the equipment via FedEx — a move by rowing rival Hydrow’s recent launch of the slimmer, smaller Hydrow Wave rowing machine.
Since taking the end of February, McCarthy hasn’t shied away from sharing novel ideas on how to turn around Peloton’s shaky finances. Money saved from Friday’s cost-cutting measures will reportedly be redirected to Peloton’s R&D and marketing efforts. That includes marketing Peloton’s standalone app, which McCarthy believes has historically received little promotion. This fits in with other plans the CEO revealed to Bloomberg, including potentially allowing Peloton users to stream classes on third-party fitness equipment. McCarthy also noted that the company may adjust the app’s subscription strategy to a “freemium” model, where certain features aren’t locked behind a paywall.
This strategy is similar to what Apple currently does for its Fitness Plus service and does not require Use Apple-branded fitness equipment. Instead, people can stream Fitness Plus classes on their own equipment while using rowing machines, treadmills and bikes at their local gym. The main difference is that Apple still requires users to have at least an Apple Watch and an iPhone to access Fitness Plus.
:no_upscale()/cdn.vox-cdn.com/uploads/chorus_asset/file/21857346/peloton_tread_lifestyle_01_1571874451.jpg)
But, while McCarthy seems keen to move to service, the hardware still seems to have role in Peloton’s business. For example, the company is gearing up to launch rowing machines this holiday season. Before it was confirmed earlier this year at Peloton’s annual comeback event for subscribers, rowers were probably the worst-kept secret in connected fitness.
Tread Plus was recalled after multiple injuries, but Peloton hasn’t given up on relaunching the product.
Image: Peloton )
Even more surprising, McCarthy hinted that the company wanted to relaunch Tread Plus, which was recalled last year after several injuries and the death of a small child. While both its Tread and Tread Plus machines were recalled, the Tread was later approved for sale by the end of 2021. However, Tread Plus is still not in circulation. In the third quarter, the company also noted higher-than-expected returns on high-end treadmills, costing the company $18 million. According to McCarthy, the relaunch of Tread Plus is entirely contingent on government approval of the sale. It’s possible that while Peloton hasn’t given up hope for the Tread Plus, it’s not something it’s pinning its hopes on either. Part of the $800 price increase on the “affordable” Tread on Friday was to position it as a premium device and boost Peloton’s “premium” image.
Another interesting tidbit is that Peloton may be gearing up for expansion Its One Peloton Club rental pilot. The plan bundles the cost of bikes and lessons into a monthly fee of $89. The pilot has been successful for the company so far, and McCarthy said in May that the program has “mass market appeal” as 53 percent of signups come from households earning less than $100,000. Peloton Expects Fourth Quarter 2022 Earnings Report We’ll probably learn more about which plans stick by then on the conference call later this month, on August 25th. So far, Peloton’s restructuring has gotten off to a slow start, and Wall Street investors in general seem skeptical.
