GoPro Inc. has a smartphone problem.
The action-camera maker burst onto the scene a decade ago with small, light cameras that surfers, skiers and other extreme-sports athletes could take anywhere.
Now GoPro is trying to expand into the mainstream. But the trouble is most people already have smartphones that are nearly as small and light as GoPro's devices and come with cameras just as good.
Last year, GoPro bungled its attempt to reach mainstream customers by setting the price too high on its first everyman camera and not resolving kinks that make it difficult to use. It is now trying again, urging other companies to integrate GoPro cameras into products from cars to baby bouncers.
The stakes are high: GoPro expects its sales this year could fall by as much as 17% after rising to $1.62 billion last year, its first decline since it started selling its flagship product in 2010. GoPro could swing to a $167 million loss this year after reporting $36 mi llion in profit last year, according to S&P Global Market Intelligence analysis.
"The vision for GoPro was never just to be in extreme sports," says GoPro President Tony Bates. "There are only so many base jumpers in the world."
GoPro's challenge illustrates the problem independent hardware makers face when competing against do-it-all smartphones from companies such as Apple Inc. and Samsung Electronics Corp. Fitness trackers Fitbit Inc. and AliphCom Inc.'s Jawbone have lost market share to the Apple Watch, which integrates with iPhones. An older generation of cameras that only took photos seem quaint in comparison to smartphones that can do many other things including take photos and videos.
"Is the person who was going to buy a GoPro to take pictures of their baby going to, now that they can use their iPhone? Probably not," says Charles Anderson, senior research analyst with Dougherty & Co. "Smartphones have caught up with the video quality that GoPro cameras had."
When GoPro started selling its first camera system in 2004, cellphone cameras also were beginning to hit the market, but they weren't very good.
GoPro's sales took off in 2010 with its first big hit, the HD Hero, which packaged high-definition filming in a palm-sized waterproof device, perfect for users from surfers to skiers. It became a best seller, capturing roughly 70% of the U.S. video-camera market, according to market-research firm NPD Group Inc. The company says it has sold more than 20 million cameras.
In the ensuing years, the quality of smartphone cameras significantly improved. Samsung introduced a water-resistant smartphone in 2014. Apple integrated 4K high-resolution video, using a higher density of pixels, into its iPhones beginning in September, like other smartphone makers.
Having saturated the adrenaline market, GoPro turned to more sedate consumers. Last July, GoPro launched the Hero4 Session, a stripped-down ice cube-sized camera with two buttons.
The camera didn't sell well. GoPro priced it at $399, the same price as its Hero4 Silver, a more advanced camera with a touch screen, analysts say. During the next five months, GoPro slashed the Session's price in half, first to $299 in September, then to $199 in December, costing $40 million in lost revenue, according to a company filing.
Chief Executive Nick Woodman went on home-shopping network QVC Inc. in December to boost the Session's sluggish sales. He pitched the camera at its new price and threw in a tripod and other accessories free.
During the 20-minute segment, GoPro sold about 5,000 units, according to company spokesman Jeff Brown. GoPro sold more cameras on QVC than it had during the three days of the Black Friday shopping period, he noted.
Some of GoPro's poor sales can be attributed to its complex video uploading and sharing options. GoPro users must upload their videos to computers and then watch the footage to edit and share them—several more steps than what smartphone users need. To address this, GoPro last month acquired two video-editing software companies.
Earlier this month , GoPro launched a developer program to reach more consumers. Companies such as BMW AG and Fisher-Price, part of Mattel Inc., signed on to be able to integrate GoPro's hardware and software in their products, such as Fisher-Price jumperoos with plastic casing that can hold a camera to capture baby's first bounces.
It also has a consumer drone in the works, which it is struggling to bring to market by June. GoPro's drone will be less advanced than other consumer drones already available, according to people who worked on the device.
GoPro's Mr. Brown declined to comment.
GoPro is still courting its niche. Earlier this month, it unveiled a six-camera rig to shoot virtual-reality video. The next version of its flagship camera, the Hero5, is expected to debut later this year.
GoPro's core clientele could represent sales of 4 million cameras a year, says Mr. Anderson, the analyst. "They could probably build a very profitable company around it," he said. "It would probably be a very unexciting public company, like Canon CAJ 1.07 % or Nikon. NINOY -1.01 % "
Write to Georgia Wells at Georgia.Wells@wsj.com and Jack Nicas at jack.nicas@wsj.com
Source: GoPro's Tech Problem: Smartphones
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