(BRAIN) — Zwift has announced significant staff layoffs and a "pause" to its much-anticipated hardware development program.
California Worker Adjustment and Retraining Notification (WARN) records show that Zwift let go 63 workers at its facility in Long Beach, effective July 11. The company may also have let workers go in other states.
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 layoffs at Wahoo and Peloton, Zwift has now decided 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 organization of the business. We are grateful for the contributions of all those impacted and have done our very best to support them."
The news 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.
Zwift spokesperson 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."
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. 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."
The plans to develop its own hardware range were announced pre-pandemic in 2019. The indoor training sector grew during the COVID-19 pandemic as countless riders hopped on Zwift, and turbo trainers were in high demand.
As the world went into lockdown turbo trainers were among the hottest commodities. Manufacturers couldn't keep up with demand, 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.
