Zwift has announced significant staff layoffs and a “pause” to its much-anticipated hardware development program.
The company had been working on its own range of smart bike and direct drive trainer offerings but the development had experienced delays and proved more complex than first anticipated, as discussed in the From the Top podcast, with a launch previously expected sometime this year.
However, following similar lay-offs at Wahoo and Peloton, Zwift has now taken the decision to lay off staff and halt the development of its hardware range.
Zwift released a statement in which it points to the impact of the current “macroeconomic environment” as the reason for the halt in the hardware development program. This is hardly surprising with supply chain issues, increased costs throughout every sector, and seemingly a decrease in demand for indoor trainers. Furthermore, the halt to the hardware plans means a knock-on effect throughout the company, including staff layoffs and restructuring.
“Given the current macroeconomic environment, we have decided to scale back our hardware offering, pausing plans to launch a smart bike,” Zwift’s statement read. “As a consequence, Zwift has implemented difficult, yet important changes to the organisation of the business. We are grateful for the contributions of all those impacted and have done our very best to support them”.
The news, first reported by DCrainmaker.com, suggests the majority of those layoffs are coming from the hardware development department, with other departments also affected. Zwift would not confirm how many employees were being let go.
The plans to develop its own hardware range were announced pre-pandemic in 2019. Needless to say, the indoor training sector was one of the big winners from the Covid-bump as countless riders hopped on Zwift and turbo trainer stock was as rare as hen’s teeth. A good time to be getting into the hardware market, or so it seemed. Fast forward two years and seemingly that Covid-bump was in fact a poisoned chalice for Zwift’s delayed hardware plans.
As the world went into lockdown turbo trainers were among the hottest commodities. Manufacturers couldn’t keep up with demand as we were all forced indoors and those without a trainer quickly invested while others upgraded existing hardware. That bubble has seemingly burst, though, and anyone who was going to buy a premium indoor trainer likely already has one by now.
It’s less than six months since Zwift teased its new smart bike and direct drive trainers in a customer survey on hardware purchasing, but it seems this is already too late. It makes sense that this past winter in the northern hemisphere might have been the last period of high demand for premium trainers for a while as Covid newcomers to indoor riding upgraded their initial entry-level purchases and more seasoned riders could finally access stock to upgrade their older rigs. Factor in this drop in demand and unfortunately Zwift’s decision to shelf the hardware plans makes sense. As much as many of us would have loved an IRL Tron bike, there just isn’t room for another high-end trainer in the market as demand dwindles and supply levels off.
Zwift’s Director of PR, Chris Snook, told CyclingTips: “We had scaled our business to support a significant expansion into hardware. The difficult but necessary decision to reduce the size of the business accounts for a loss of projected revenue that ultimately would have been driven by hardware.” In other words, the halt in hardware plans creates a subsequent drop off in anticipated revenue from the hardware sales and subsequently the unfortunate loss of many people’s jobs.
Zwift is calling this a “pause” rather than a halt, meaning however unlikely it seems, Zwift hasn’t ruled out one day returning to the hardware market. At best that day seems a few years away, and again, most Wattopia folk who want a premium trainer may already have one.
Everyday Zwifters needn’t fear, however. Snook pointed out that Zwift’s subscription numbers are still growing and the pause in hardware development means an increased focus on the core Zwift software experience. Snook renewed Zwift’s commitment to releasing new product features more frequently and concluded, “we believe that the changes we make now are going to best ensure we can continue to support that growth while protecting the healthy financial position of the company.”