The rough ride for GoPro Inc (NASDAQ: GPRO) continued on Thursday after the company reported earnings that fell short of its own guidance and that of Wall Street. But GoPro's line of cameras, highlighted by the Hero 5 Black, continued to be popular with customers. In fact, shipments of 2.28 million units was nearly a quarterly record, behind only Q4 2014, which recorded 2.39 million units.
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What's still lacking in GoPro's portfolio is seamless mobile download, editing, and sharing of photos and videos, something the company has improved but still hasn't quite cracked. But if the fourth-quarter conference call is any indication, mobile will be high on the list of improvements to make in 2017.
Getting Karma flying has been a challenge, but GoPro will need to make images taken from the drone easy to edit and share as well. Image source: GoPro.
Making GoPro a mobile platform
GoPro was built as a camera company, but its devices have always been built with a computer in mind as the offload device. When SD cards were used to store content, a computer was necessary to download it, and even in the world of micro SD cards, it's often easier to download content to a computer than have a special dongle for a smartphone.
The Hero 5 lineup of cameras took a step toward a more smartphone-centric model for GoPro with the option to purchase GoPro Plus, which would upload content to the cloud when a camera is plugged in. That's a step in the right direction, but it requires a known internet connection and a place to plug in, it's expensive, and high-resolution images and videos can be converted to lower quality to save space. With so many restrictions, it's still difficult to go from capturing GoPro content to sharing it, which is precisely the problem.
Management promised to "make the smartphone central to the GoPro experience" in 2017, which makes sense given where consumers are sharing and viewing content. But getting the experience right may be easier said than done.
The ski lift test
The challenge facing GoPro is getting content from a camera to a smartphone seamlessly so it can be edited and shared in real time. I like to consider this the ski lift test. If content can't be downloaded, edited, and shared on a ski lift, it's not a good enough solution for consumers. That's a high bar to hit, but it's where GoPro needs to be to increase adoption.
The challenge has always been a balance between the functions in GoPro cameras and battery life. A wireless connection to a smartphone is great, but if your battery is dead after a short period of time, or the transfer takes too long, what's the point?
When GoPro cameras first added wireless connectivity it was a nice addition, but it drained battery life quickly, making it severely compromising to use. And downloading content wirelessly is still a tedious task. This is a problem GoPro needs to solve, whether it's an easy cable connection to smartphones or a better wireless setup. At least management knows this is a major factor holding the company back.
Mobile software needs to take a step forward, too
For this strategy to work, the Capture and Quick apps need to see further improvements in 2017 as well. First of all, they should be one app, simplifying the editing process. Second, it needs to be easier to organize files and share them in an intuitive way on multiple apps. GoPro isn't going to be the one housing content long term, so finding a way to make sharing content easy with other platforms will be key.
If GoPro can continue its improvement of cameras and software to a level where someone can take a video on a ski run and download, edit, and share that video on the way back up the mountain, it would be a good indicator that GoPro has succeeded in making mobile sharing easier. GoPro says it's going to be more mobile-centric, which would be a good step forward. Now it needs to show it can execute that plan.
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Travis Hoium owns shares of GoPro. The Motley Fool owns shares of and recommends GoPro. The Motley Fool has the following options: short January 2019 $12 calls on GoPro and long January 2019 $12 puts on GoPro. The Motley Fool has a disclosure policy.