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Garmin Acquires Tacx: Detailed analysis and what it means to you

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In what is unquestionably the biggest sports tech news of the year, Garmin announced today the acquisition of Tacx – the privately held Dutch company that makes trainers, water bottles, and tools. This news no doubt will have people turning their heads for quite some time, and will have even bigger ramifications across the indoor training industry.

The reasons behind the acquisition haven’t been detailed by Garmin. However, their press release does hint at some of the areas that Garmin might focus on (such as the Tacx indoor training platform) – but on the whole it’s mostly just generic corporate acquisition PR fluff outlining the purpose of each company.

There’s no financials included in the press release, though I suspect that’ll likely become clear down the road through various required public financial disclosures/statements.

I did get a bit more clarity from Garmin after the announcement on three key things:

A) Branding: Garmin says that things will remain Tacx branding, when asked: “Tacx is a highly respected name in the indoor trainer industry, and we intend to keep this brand for the foreseeable future.”

 

B) Manufacturing: Garmin says that they’ll continue all existing manufacturing in the Netherlands (where all Tacx manufacturing currently resides). However, they didn’t specify if that’d be expanded. The existing Tacx trainer and bottle manufacturing is generally regarded as the most advanced in the entire indoor trainer industry. But at the same time, Garmin’s unique position owning their own manufacturing facility in Taiwan (not contracting it out like everyone else) gives them significant manufacturing power others don’t have. Further, Tacx is nearing completion on a significantly larger facility nearby their current home. Together, having manufacturing in both Taiwan and Europe could be massive for Garmin.

 

C) Support: Garmin says they’ll also retain existing Tacx support and distribution elements, but haven’t fully clarified how those might expand.

So that settles some elements right away. But it doesn’t clarify who this impacts the most. So let’s get right into that.

The Losers:

It might be too strong to call them losers, but this category of people certainly aren’t winners here. And since this isn’t a little league awards banquet, I’m gonna call it like it is:

Wahoo: Without question #1 on the list is Wahoo. Easily the biggest competitor to Tacx, and a growing competitor to Garmin, Wahoo stands to lose the most here. If there’s anything in this acquisition for Garmin, it’s being able to give Wahoo the finger. And trust me, that’s something Garmin seems to take pleasure in. Garmin’s distribution (e.g. how many retailers/stores/distributors/etc) is second to none in the sports tech world. Nobody has better distribution, not even Apple or Fitbit. Wahoo has good distribution, but it’s always been somewhat selective and Apple-like premium in who they partner with. This will dramatically increase the channels folks can get Tacx trainers through. It’ll also significantly increase the amount of money Tacx has to work with to hire developers and others to compete with Wahoo.

However, keep in mind that Wahoo is hardly poor here. Last summer they were given significant cash to work with as part of a significant stake taken by Norwest Equity Partners, which has a fund size of $1.6 billion. From discussions I’ve had, it sounds like they’ve mostly got a blank check at this point to make projects happen and accelerate the business. So while Garmin unquestionably has a bigger checkbook, I don’t think they have a meaningfully bigger checkbook when it comes to needing additional funds. Wahoo’s biggest issue is being able to hire quality talent quickly enough, not more money.

Zwift: Ahh, you thought I was going to say another trainer company? Nope. Zwift is the second biggest loser here – and that might surprise you. As much as we as consumers love riding on Zwift, the greater cycling industry is incredibly fearful of Zwift. Most believe Zwift is gaining too much power and given their Silicon Valley VC funding, have near limitless cash to burn on anything they want. While trainer companies like Tacx and Wahoo have made tremendous money from Zwift’s growth over the past few years, they’re also fearful of the inevitable day that Zwift starts making their own hardware. Given Zwift controls the platform, they could easily allow for features on Zwift only hardware – shutting out competition overnight. Just this morning Zwift announced that some 119,076 unique users raced in the Tour de Zwift this past month. That doesn’t tell us the total number of paid users, but it gets us in the general ballpark and establishes a floor – my guess would be in the 180-200K overall range.

Companies like Garmin have expressed concern about Zwift deciding to one day expand beyond trainers and bikes. And for good reason. Zwift bought Milestone (a sensor pod company) back last summer in order to expand more in running (albeit, indoor running).

Sure, it’d be easy to dismiss these concerns – but they’re echoed by every company I talk to in the sports tech space. And companies like Garmin don’t just think about their competition today, but rather looking out 2-5 years. And viewed in that lens, Zwift could absolutely become Garmin’s most important competitor.

CycleOps: This will likely hurt CycleOps the most out of the remaining trainer brands. The company has been struggling in the last two years to introduce meaningful new products, and this is just another nail in that box. Back of the napkin product comparison says that Garmin now competes with every category of product that CycleOps/PowerTap make. Power meters, trainers, sensors, and indoor bikes. The only category they don’t compete with is Saris and their rack business.

Elite: The Italian trainer company has had some solid products in the past few years, notably the Elite Direto. But this year, with the Wahoo KICKR CORE and to a lesser degree the Tacx Flux 2 and Flux S, Elite is struggling a little bit to compete from a price standpoint. Not significantly, but enough that Elite will likely need to look at alternative manufacturing locales to compete strongly going into the 2019-2020 trainer season. The Garmin acquisition will only add fuel to that situation. It’s nowhere near dire, but with Tacx being Elite’s biggest European competitor, this will unquestionably hurt Elite.

Others: There are of course others that’ll be impacted by this. For example, trainer company Kinetic will likely see a drop, and even Specialized will probably see long-term competition on the water bottle front. Today Tacx doesn’t’ do manufacturing of bottles in the US, whereas Specialized does (and inversely, Specialized doesn’t do manufacturing in Europe). I could see Tacx/Garmin look to easily break into the massive US athletic water bottle market, where Tacx has significant strengths.

The Winners:

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So, who are the winners here? Well, that list is unquestionably shorter. Certainly privately held Tacx is a winner, as they’re likely to be enjoying all that Amsterdam’s night scene has to offer this evening. Still, let’s give this a whirl:

Tacx Customers: I actually can’t think of many downsides here for Tacx customers. The first thing that often comes to mind in an acquisition is product support, and I see this being a big benefit for Tacx customers. While Garmin’s support centers are a mixed game depending on which region you’re in – even the worst regions are generally better than what Tacx can offer. Tacx has wholly centrally support in Europe, and then works with a distributor in your country to sort out returns/etc. It’s mostly cumbersome. Undoubtedly Garmin will work longer term to consolidate support for Tacx products into the existing fairly well-oiled machine that is in place for Garmin products. Again – I’m definitely not saying Garmin product support is awesome everywhere, but it’s better than what Tacx has by a long shot.

Additionally, for Tacx customers, I suspect we’ll see more rigor in project management schedules. While neither Garmin nor Tacx is known for their quality assurance (software in Garmin’s case, hardware in Tacx case), Garmin does manage to have very strong project management internally. It’s exceedingly rare for a Garmin product to miss a timeframe or date, where it’s more or less the norm for a Tacx product to be late. On the flip side, Tacx firmware does tend to be quite good – so perhaps the two companies can share lessons learned there.

Garmin Customers: I don’t see any downsides for existing Garmin customers here at all. There will likely be better integration between Garmin head units and indoor training products in the future, which is a step above the generic and mostly non-existent integration today. I could actually see Garmin spending a bit of time to implement better trainer & bike computer integration. Though admittedly, I’m not sure what that’ll entail since for the most part people want to use tablets, phones, and computers to control their trainers. Still, I can’t see anything but upside for existing Garmin customers.

Zwift Customers Part 1: Oddly enough, I think this will be a good thing for Zwift customers as well. You see, as noted above this will undoubtedly keep Zwift in check. Which in turn means that when the day comes where Zwift announces their own trainers, there’s more competitive pressure by the likes of Wahoo, Garmin, and maybe others to ensure a level playing field. A monopoly is never good in the indoor industry.

Zwift Customers Part 2: Akin to the Zwift hardware customer argument, I wouldn’t be surprised to see Garmin make a go at competing with Zwift using elements of the existing Tacx training platform. Garmin has been sniffing around indoor trainer apps for a while, and they could decide to rebrand/rebadge the Tacx suite and make a meaningful run at Zwift directly. This would benefit consumers by likely seeing more functionality from Zwift given competitive pressure, while concurrently seeing price increases stall or even reverse. Garmin could easily decide to offer the platform at no cost, thereby putting enormous pressure on Zwift at a time when Zwift more than ever needs to prove a path to profitability. From a consumer standpoint though, increased competition between companies almost always leads to more features at a lower price.

Final Thoughts:

As I said at the beginning, this is unquestionably the biggest sports tech news in 2019 to date – and I suspect will end up being the biggest sports tech news of the year. As outlined, the ramifications are far wider than one might initially realize. And even more so since nothing will happen overnight.

With massive distribution and sales networks to get up to speed, it’ll likely be some time before consumers (or retailers) see the meaningful change in either company’s products or services. But I wouldn’t be surprised if by next winter we’re already seeing the impacts of the change. Heck, maybe we’ll even see the Tacx bike by then too.

With that – thanks for reading!

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240 Comments

  1. Todd Norbury

    Wont be much fun if Zwift do start locking other trainers out. 🙁

    • theboxers

      We’ve seen a similar issue with bkool and their trainer/software integration. While the software works with most, if not all, smart trainers. The various bkool trainers have an advantage in the way they work with the bkool software.

      This is most obviously seen in group rides/races. The bkool trainers seem to be able to hold speed better, in the software, than non bkool trainers. The result is that to stay as a group the non bkool trainer users must put out significantly more power and in a smoother manner than bkool trainers.

      The result is people who have gone to other companies for a new trainer have eventually left bkool’s software and moved to other platforms that seem to offer a more level playing field. It happened with a group I ‘ride’ with. As the trainers got upgraded the riders moved away from bsim to other platforms due to the non bkool penalty. A group ride/race that would get 15-25 or more, twice a week, now is only getting 3-5 regularly. However, when bkool’s trainers are also used on the new platform they seem to still offer a slight advantage. But not as much as on their own platform.

      Any move down this route will end up alienating the users and they’ll start looking for somewhere else to put their money.

    • EV

      Yeah, the BKOOL bike doesn’t work with Zwift, which seems like an incredibly stupid strategy since they are automatically cutting off access to the biggest potential user base. Zwift could create a bike that only works with Zwift and probably do ok since they have the user base now, but doing the reverse like bkool is a good way to not sell many bikes.

  2. Anonymouse

    Wow! Do you expect Garmin to cut prices as Tacx seems a bit high as compared to Wahoo?

    As for Zwift and features only for its hardware, that seems like a very dangerous course consider the installed user base of non-Zwift-branded trainers. Am I missing something?

    • slyx1978

      not really. Garmin prices arent low either

    • Anonymouse

      Yes, but they can afford to match Wahoo rather than lose many sales rather than make a few hundred bucks extra (at most) on those sales they make.

    • agzand

      If they start manufacturing in a country with cheaper labor they will drop prices. Otherwise Tacx is already maxed out in Netherlands, so no price cuts.

    • LOUIS-ABNER PHILIPPE

      the prices in europe are actually very competitive. but once you try buying them in north america , price goes wayyyy up

    • Correct, and prices aren’t just dependent on labor (but also taxes). Tacx actually has super low labor levels, since so much of their production line is automated. The labor costs for Tacx isn’t what drives the cost of their trainers.

  3. Good job for Garmin HQ.

  4. stuart

    I would love them to be able to reduce the price of the Magnum Smart because of this

    Barely related issues but a man can dream………I can also dream of being able to stay upright if I was on one

  5. Michael Prytherch

    Ummm… 2 companies that don’t understand usable software, what could go wrong, such as latest 820 GPS software update that now means it tells me I am off course 100 times a ride for 1 second, then magically finds the course again, I find Tacx support to be excellent, although having to get stuff from Holland is a pain, but they sort stuff with no arguments unlike Garmin who are like dealing with a big massive corporation… oh thats what they are

    • Eric H.

      My first thought, as well. The quality of Garmin software is so-so at best. I hope. This doesn’t affect Tacx software products.

    • Kris

      I fear the Garmin Software Updates! My 820 was so buggy I sold it and bought a Wahoo, never looked back.

      But the support of Garmin was ok, a little more effort to cut through the standard bullshit you could also find in the FAQ. But after you got through the bullshit they replaced my faulty product fast.

      Tacx support was awesome! Fast and where I thought they would replace a single part (maintenance), they just replaced the whole trainer.

      I hope they keep the Tacx product name, most people I know uses it as a verb.

  6. marcus

    I would argue that Trainer Road has to make a strategic decision pretty soon. Both Wahoo and Garmin with the acquisition of Tacx have a hardware/software offering that is compelling, if TR does not want to get into the hardware business they will face similar challenges as ZWIFT.

    • David

      I can’t help but think, regretfully, that you’re right. I’m a little surprised DCR didn’t include mention of TR as potentially challenged by this. Maybe their relative size and laser focus kept them off the list.

      They’ve been very firm on their “We’re a software company and our one goal is to make you faster”. How long was it before they offered kit? Even then, someone else manages it almost entirely. Given that, I really do not see them getting into the hardware business, and as a dedicated fan and user of TR, I’d hate to see this hurt them.

    • Steve

      TR operates very differently than Zwift and has not taken any VC money, and as such, doesn’t need to provide a big bang return to investors.

      Hardware is a low margin business compared to software.

      TR doing their own hardware would be a massive strategic mistake.

    • I don’t see TR being impacted immediately. In some sense I think they might be a slight winner here, as it keeps Zwift in check.

      Whereas they might be a slight loser if Garmin decides to pump money in the Tacx app and make it a legit competitor.

      TR’s bigger issue is simply speed to market on new features that people can remember. They’re doing cool stuff – but they’ve got a mini-version of the challenge Strava has: Can you ask 5 random users what new features the company gave you in the last 12 months?

      While I can mostly answer that for TR, I’d suspect most users might struggle.

    • Carl

      I think the TrainerRoad calendar was a pretty significant feature, which included a lot of small features that really improve my experience. It was enough for my needs to drop TrainingPeaks, and I will drop at least one Strava Summitt soon. And it may seem small, but the ability to lengthen warmup or cool down time is nice. For one thing, I can add some tempo, or endurance time to the end of a Vo2 workout.
      And there’s the forum, which I don’t really care about, and isn’t really core to the experience, but adds value for others.

    • amadeus303

      Just out of curiosity, what do you use the TR calendar for that made TP redundant for you? For me, it’s not even a comparison…the only thing I enjoy about the TR calendar is being able to plan my TR workouts as far in advance as I desire. It doesn’t give me any other meaningful analytics outside of cycling.

      As for Strava, I’ve never found the utility in it…or at least how it does anything different/better than TP. I suppose if one wants to advertise their training to others or enjoys kudos, it might make a difference.

    • Carl

      Training Peaks just has way more than I need anymore. I don’t race anymore, I may do fondos or gravel ‘races’, but I just don’t need all that analysis. I think it was overkill when I raced, because I didn’t understand how to utilize much of the analysis it provided. I’ll get the 30k ft. overview from TrainerRoad, Strava gets a little bit more granular and I’ll use Golden Cheetah if I really need the deep dive.
      I’m sure most serious racers will get more out of keeping Training Peaks than I do at this time. For me, at this point, I’d rather save the money.

    • LOUIS-ABNER PHILIPPE

      Honestly, it’s kind of a weird spot TR has put themselves into. It’s basically a no frills, get better and stronger approach.

      It’s kinda like the kettlebell of indoor cycling.

      Whereas zwift is trying to be crossfit

  7. MagnaCarter

    Be fascinating to see if Garmin can bring any sense of pace to the Tacx software roadmap…. its an OK product, but running about 2 years behind the rest of the industry….add in Garmin’s Spotify knowledge, plus their emerging banking/payment/NFC skills and suddenly the trainer software market and gamification/eSports gets really really interesting!

  8. Shan

    Wow good move, Garmin. Maybe we’ll have more competitive prices on these trainers.

    Hopefully Zwift doesn’t lock other trainers out whenever they do come out with their own. What I do see as a more likely scenario is Zwift having more premium features for those who do purchase their trainers (special events, locations, etc.).

  9. Bob

    Well, Taxin, or Garcx, or whatever monster they’re going to morph into, need to look not just at where thy are going, but where they’ve been, and how they got there.
    Both undoubtedly make some good things, but there are a lot of pretty frustrated people out there too.
    I’m not sure bigger corporations provide better customer service than small ones, but I am SO looking forward to be proven wrong.

  10. Lieven

    other losers: the lousy software development team at Tacx that will probably be replaced by better developers as there will be more money available.

  11. José

    “So while Garmin unquestionably has a bigger checkbox, I don’t think they have a meaningfully bigger checkbook when it comes to needing additional funds. Wahoo’s biggest issue is being able to hire fast quality talent enough, not more money.”

    Should “checkbox” be “checkbook” or was that intentional in that Wahoo can now check off more features?

  12. Maarten

    How would it impact strava?

    From a training log point of view, tacx has some app that logs and analysis, but doesn’t integrate very well.
    Connect has some overlap with strava but is missing the social part.

    Where I see overlap is in training metrics. A neo has some hidden features on pedalling analysis. Garmin can leverage metrics over all devices empowering connect to compete with strava metrics and analytics.

    Maybe I’m dreaming now, but a neo bike or the treadmill trainer where you can cycle on freely. That allows for so much data acquisition in a controlled environment…. leverage that with Garmin devices and connect…. very curious how that would play out for Strava?

  13. Dembo

    I just hope they’ll keep honoring their warranty claims and will keep sending out Fluxes to me (so far they lasted no more than six months).

    It might be good or it might be an unholy alliance of error prone hardware with buggy software. Let’s wait and see.

    • Reginald Brown

      Garmin USA is pretty good about warranty claims (Don’t know if you’re in the US), but I’ve warrantied things that really shouldn’t have been warrantied, and I was trying to pay them to repair, but they just warrantied it any way. And also had them warranty things that SHOULD be warrantied, without question.

    • Chris

      I’ve had the same experience with Garmin USA.

  14. Kajet

    “Given Zwift controls the platform, they could easily allow for features on Zwift only hardware – shutting out competition overnight.”.
    Are you sure Ray? That would certainly raise the blood pressure among Zwifters. Apple is the only company I know that has prevailed despite repeatedly pissing off its user base. Risky. And riskier in a subscription-based business, methinks.

    • Steve

      Zwift has missed the window of opportunity to lock out other hardware manufacturers. If they did it at any point from here on, they would destroy their own business.

    • It’s not hard at all. And there’s zero reason that Zwift wouldn’t do it, because there’d be zero reason for them to build trainers otherwise.

      It’d likely start off simple. They’d say that to access perhaps certain events you had to have a certain Zwift component. Then it’d likely escalate to some other non-critical thing – like perhaps firmware updates would automatically come through Zwift (logical, but many in the industry have been asking for that for years for other trainers).

      Then it’d shift to other features ala CLIMB type support where it’s not critical, but definitely a purchasing decision.

      To be abundantly clear – I don’t think Zwift will shut out access entirely to other trainers. Instead, they’ll offer bundled pricing and Zwift-only features that make it an easy choice for consumers.

    • James Jordan

      They could also just add it to their ‘racing’ requirements by using standardisation as way to reduce cheating etc.

    • chris benten

      Zwift will do it in a heartbeat if their trainer is any good. I left Zwift when price increased but I have yet to find anything that meets the “experience”. Bkool and Rouvy have great courses but the experience is not the same.

    • Rich

      Exactly.

      Zwift racing supported by Wahoo products being the only ‘certified’ racing hardware.

      You can still Zwift generally.
      You can still Zwift Race generally.

      But if you want to compete for recognised titles/cash prizes you have to have a certified trainer which happens to be Wahoo, hardware of choice for Zwift racing …

    • Yup, exactly (the general concept).

      However, I think folks here are vastly overestimating how much love actually exists between Wahoo and Zwift.

    • Rich

      Nothing like the merger of an incumbent and leading middle-sized manufacturer with a great brand reputation, to focus the mind of existing ‘rivals’ 😉

    • Alex

      Interesting on the cheating ! Ray has said said in the past cheating is one of Zwift’s big challenges for the future, one can imagine Zwift’s own hardware with for instance a scale built-in in pedals and some private protocol to ensure rider’s weight. And use that data to have “certified” races results

    • Rich

      Hardware, is hard though. With Zwift’s VC (and potential future rounds) funding – a logical step would be for Zwift to acquire Wahoo.

    • At this point I don’t think Zwift has the money to acquire Wahoo, short of them throwing a Hail Mary. Wahoo would (rightly) demand too much for Zwift’s current financial situation, and Wahoo’s private equity backers would know Wahoo’s 3-5 year plan and the returns from that.

    • Dan G

      Zwift will never go into hardware. Think about a rider sat atop a $999 trainer. Now think of that rider signed up to Zwift to, say, three years. 36 x $15. Which do you think has the better RoI?

    • Option C: Both

      Seriously. Zwift would likely do direct to consumer ala Peloton, which means they can take the 30% margins trainer companies typically have to pay out to retailers (+ distribution), plus take the subscription fee.

      I think it’s kinda funny that people keep thinking Zwift won’t get into hardware. They’ve:

      A) Already gotten into hardware with the footpod
      B) Already signed a licensing agreement for indoor bike hardware components
      C) Instantiated a store for selling hardware
      D) Have stated numerous times the advantage that Peloton has in terms of a single cohesive platform
      E) Have discussed their frustration with the indoor trainer industry not moving fast enough

      Not a single company in the indoor trainer space I’ve talked to (which is all of them) believes that Zwift won’t do hardware eventually. Not a single company. None.

  15. Tosin Akinmusuru

    Would Garmin leverage the Connect app to use it as a training platform like Wahoo uses with their app? And then does that mean that cycling teams that use Tacx will have to use Garmin power pedals?

  16. ReHMn

    Garmin product support sucks. Anything is better than Garmin Support…

    • Neo.e92

      I kinda agree to this. And the way they churn out watches? I stopped using garmin years ago. I try to support American companies but i personally don’t like how garmin do their business.

    • Lee

      I don’t know if they have a different support group in Canada, but for me Garmin support has been fantastic. They have gone what I consider above and beyond on a few occasions.

    • Agree, Garmin support is great in the US, just like Tacx support is great in the Netherlands. Switch the two? Nope-de-nope.

      (Trust me, I recently tried Garmin support in the Netherlands as a regular consumer, it wasn’t until about 7-10 days later that I finally got a response when I think they realized who I was.)

    • Tony

      Wait, I’m confused. In one line you say “Tacx support is great in the Netherlands”, but in the next line you say otherwise: ” tried Tacx support in the Netherlands as a regular consumer, it wasn’t until about 7-10 days later that I finally got a response”
      So, which one is it?

    • Reginald Brown

      Garmin support is OK in the US, depending on what you’re contacting them about. When it’s about bugs, they really give you a run around with excuses, turning it in to a battle for them to make a freaking bug report – which I’m not entirely convinced they even do. When it’s a warranty issue, they’re pretty good in my experience.

    • Sorry Tony – brain fart, fixed. Was supposed to say ‘tried Garmin support…’

    • ReHMn

      All started in 2009, bought my 310XT. Where users like me were able to find a good user’s manual? Nope, not at Garmin. At DCRainmaker.
      They killed the Classic version of Garmin Connect.
      Garmin Forum is a huge mess, no support there.
      With updates, Garmin disabled CSV export for 6 months and they ignored all claims reported to support.
      Still missing the Galileo GPS version in 920XT.
      Eliminated the option contacting the help desk via phone. While others have phone numbers among contact details, Garmin has none.
      With updates, disabled the “Keep me logged in” for years.
      Disabled usernames, replaced by coded email addresses.
      Disabled map-based search for activities.

      …and the list goes on…

      Do you know which company has the best support? FirstBeat. Noone can beat FirstBeat, their response is fast, excellent ticketing system and polite agents.
      My experience is sourcing from one issue, which was never answered by Garmin, so I went directly to them…

      It is not clear to me, why folks are comparing Garmin with Strava???

      Gamin is an archive for individual activities.
      Strava is a competition and comparison based common platform on segments, climbs with an option to view flybies, report each other.

    • Eli

      The second paragraph was from when he visited the mirror universe link to en.wikipedia.org
      (They didn’t recognize him cause they were used to him having a beard there) :-p

    • Molly G

      Canada support is handled by Garmin USA.

    • ReHmn

      Mirror universe is called Cloud nowadays… 😉

  17. Neo.e92

    My question is directed to Tacx: why?

    I understand Garmin’s rationale with this decision but for Tacx? In my personal opinion (pls highlight that), having been using Wahoo products since their inception and just lately converted to Tacx because of the boolahoo Wahoo made with their latest trainer, i think Tacx is the topdog in terms of premium trainers. And they were able to achieve this because they were dependent from noone except the customer. I’m even a recent convert to TDA from Zwift.

    So why?

    • Robert

      Family-owned business. There aren’t 500 exit scenarios for the owners, unless someone else in the family wants to take it over (and even then).

    • Dolan Halbrook

      An offer with a sufficient number of zeros, most likely.

    • Neo.e92

      That’s a good point. But knowing how most euro companies (especially family owned ones) take care their employees (aside from their customer), Tacx could have tied itself with another euro company instead of Garmin. I can’t name one, but anybody except Garmin.

      I have no beef with Garmin but i think this is a loss for Tacx believers.

  18. John John

    Nice move! Garmin acquires a well known indoor trainer company. The next move must be to upgrade and open Tacx app to everyone. They already earn money with hardware, if they offer a free app similar to Zwift or Trainer Road, they will kill them because they only do software.

    Why doesn’t any indoor trainer manufacturer buy Zwift or Trainer Road? I think it’s a obvious move.

    • MagnaCarter

      because, no doubt, the Zwift valuation would be way beyond what any trainer manufacturer would sensibly be able to afford….

    • Correct, Zwift’s valuation is well beyond what anyone can afford these days. Which, is honestly quickly becoming a legit problem for Zwift. It’s the same problem Strava had.

      The goal of VC funded startups is to either be bought or IPO. It’s as simple as that. But Zwift is now too big to be bought by any potential suitors. They really only have two options:

      A) Apple
      B) Some random Chinese company that does it for fun

      Seriously, that’s it. And I don’t think Apple is a good fit. Apple’s a better fit to buy Peloton, but I think that’s still a poor fit from a product standpoint. Apple deals in small products, Peloton is gigantic products that are cumbersome to move around and don’t scale to Apple’s needs.

    • Robert

      Hence IPO is the most likely option.

    • That’s a tough pitch these days.

    • Larry

      re: Apple buying Zwift…

      And past history would tell us Zwift would stop working on non-Apple platforms. Wouldn’t that be precious.

    • MagnaCarter

      Or, as DCR implies, they find a way of monetising it, that pours cash back into the business a la Facebook, and then IPO might be more realistic?…. haven’t looked at the Zwift VCs though to see whether they are early or late stage funds, and that will probably be the biggest factor in their next move… Perhaps a major sports brand or gaming brand buying in, and making a serious play for the eSports market?…. its about time eSports moved beyond shoot em ups, and its now a big enough market to support some SERIOUS money being thrown around.

    • So Zwift is out. Why doesn’t Garmin buy Trainer Road or Rouvy? I think that’s an obvious move!

    • No, there is now a 3rd option: “Private IPO to Private Equity.” See link to bothsidesofthetable.com

      The landscape is no longer the same as in 1990-2010. Today, later-stage startups get acquired by large PE firms – think Vista Equity Partners – who think nothing of writing a $1B check. PE firm then assembles a portfolio of complementary companies (for a few hundred $million each), and creates a behemoth. Then, IPO or sell the behemoth to an even larger brand for major gain.

      This type of PE firm makes much higher returns than VC these days, and virtually never, ever, fails at the task.

    • DaveW

      This came to mind for me as well. As a Tacx Neo rider, I recently chose to go with Tacx’s subscription cloud training platform – primarily because of the real road courses. (This is more motivational to me than the gaming aspects of Zwift) My hope is that with Garmin’s mountain of geo data and ability to apply it, Gamin/Tacx’s virtual and real-world training could get significantly more sophisticated and vast in this area. On the other side, I’d also like to combine this with structured workouts – which Tacx also does, but from what I’ve seen of it and Trainer Road, Trainer Road feels more accessible, better supported if not more sophisticated as well. So, with this union of two complementary innovative product companies, it feels like the addition of an progressive training/coaching software company (with strong CX design foundations) to the mix would potentially be very powerful.

  19. Tim

    What I find interesting is that Zwift seems to focus on an audience of ‘indoor training enthousiasts’ by making indoor training fun and accessible, whereas both Tacx and Garmin take the ‘industry’ approach and seem to primarily care about building hardware in the cycling space (indoor trainers and cycling head units). They clearly don’t get UX at all, especially Garmin. Look at their apps, websites and customer service. They don’t care about the end-user. All they care about are features nobody really cares about (except us DC folks and professional athletes). In the end, people just want to get a job done, which, in this case, is ‘enjoying life through sports’. GarminTacx might win the professional athlete market, but they are very likely going to lose the battle with Zwift in the long run, despite all the money and distribution power they *currently* rely one. Zwift has managed to build up a fanbase of thousands if not millions enthousiasts in a very short period of time. They will be able to dominate and dictate the mass market, because direct to consumer distribution power is much more worth than the traditional retail distribution power. If Zwift decides to start a software+hardware subscription plan (like Peloton does), they can reach their entire user base at once, at zero acquisition costs (!). At that point, It’s going to be hard for GarminTacx – unless they can offer a good alternative – which I highly doubt given the lack of any noticeable well-executed user experiences from both Garmin and Tacx, over the past years.

  20. Josh

    Water bottles?

    Are Tacx water bottles particularly good?

    I like my Neo 2, and I have a Garmin Edge 1030. I’m looking forward to seeing what this means!

    • Yeah, they are. Basically if you’re getting a sports water bottle in Europe it’s either Tacx or Elite. And in the US, it’s Specialized. Every pro cycling team out there is sponsored by one of the two European companies.

    • Reginald Brown

      Really? Specialized outsells Camelbak? Or do they make Podiums?

    • Neil Jones

      Now I know where I’ve been going wrong all these years

    • I’m not sure if they outsell CamelBak, depends probably on how you divide up the categories.

    • Eli

      Outselling isn’t the same thing as being better for the end user. (in the sense of given two water bottles and no worried about price which would you pick) Camelbak is more expensive and aren’t really available to customize so they don’t sell as well

    • Dolan Halbrook

      Their bottle cages are quite good too. I have a couple of the Ciro cages and they’re cheap, light, and bombproof.

    • Bill O'Hara

      I am a Fan of elite bottle cages. They are reasonable in value considerations. Some of the best bottle retention and form factors are found in Elite cages.

      I never buy specialized bottles.

      Is there a chart showing bottle sales ?

    • Dan G

      It never occurred to me that my ‘Elite’ bottle cages were the same Elite as the trainers! I thought it was naff Chinese branding.

      I haven’t paid for a water bottle for twenty years, doesn’t everyone get them as freebies?

    • Josh

      I’ll give a Tacx water bottle a shot next time I’m buying. 🙂 Perhaps they will be better than the Camelbaks that tend to get gunked up.

    • Peter L

      Yeap.. we do cages, bottles, trainers…trainers are made in italy…
      http://www.elite-it.com

  21. Tony

    I suspect the reasons behind this acquisition has much less to do with Wahoo, Zwift, Cyclops, etc and everything to do with the “unicorn” called Peloton. That’s the market Garmin has been watching and per yesterday’s WSJ,

    “Peloton Interactive Inc. is interviewing banks this week for roles on an initial public offering, taking a critical step toward an IPO this year, according to people familiar with the matter. … Peloton is expected to seek a valuation in excess of the roughly $4 billion estimate last year after a fund-raising round led by venture-capital firm TCV, some of the people said. That valuation was a sharp jump from the $1.25 billion level at which the company raised capital in 2017. … Peloton is expected to generate more than $700 million in revenue in the fiscal year ending February, according to a person familiar with the matter. That was a target that Peloton’s CEO outlined last summer in the WSJ interview.”

    That $4B valuation is about 1/3 Garmin’s current market cap.

    • Neo.e92

      Nice comment. This could be the driving force that made Garmin do it.

      Wonder how much Garmin gave to Tacx Inc in exchange for this.

    • I agree, and there’s definitely significant interest from Garmin on the Peloton side.

    • Neil Jones

      So, is there any likelihood that Garmin’s acquisition is behind the delays to the Neo Bike? If they are looking at positioning themselves against Peloton, then this product is going to be the one they do it with. So was part of the deal that Tacx re-design it to meet new requirements issued by Garmin? Maybe the secrecy surrounding the acquisition might explain Tacx’s lack of meaningful communication about the delays… or am I being over-charitable?

    • Robert

      The thing is, Zwift is the closest of anyone to being able to compete against Peloton. You don’t need hardware that much, what you need is a community connected on a common platform; and that’s what Zwift has (and neither Garmin nor Tacx do).

    • Nathan

      You do need hardware. The barrier to entry for Zwift is a major pain point for their growth. Peloton’s one purchase you plug in and ride is huge. Purchasing, assembling, and troubleshooting a Zwift setup will keep them at a fraction of the size of Peloton.

    • Tony G

      IMHO, all the comments about Zwift are off target. Allow me to put a finer point on my prior comment: We (the readers of Ray’s blog and the customers of Wahoo, Zwift, etc) are not the Garmin/Tacx target market. We are a blip within a much larger fitness market. The target market is the fitness enthusiast at the spin studio.

      MARKET & MARKET SIZE
      Indoor Bikes… According to ResearchAndMarkets.com, the global exercise bike market reached a value of US$ 476 Million in 2017. Growing to US$ 585 Million by 2023, exhibiting a CAGR of 3.5% during 2018-2023.

      I don’t have the numbers, but the spin studio fitness market is much larger than this market. If fact, I’m sure it is much bigger than the outdoor bike market too given that Trek, one of the big three, is only ~$1B in sales. (If anyone is a member of AFS, perhaps you can share the relevant fitness studio numbers… link to member.afsfitness.com.)

      Peloton is not in the indoor bike market/trainer market, they compete for the dollars spent at spin fitness studios. Yes, you must buy their bike; however, the big money is in the recurring subscription, as every company in every industry has learned. This is why XaaS has been the watchword for the last 10 years.

      In less than seven years competing in this market, Peloton has already reached $700M in sales by targeting the fitness studio indoor spin class market.

      CUSTOMER TYPE
      If you’ve ever taken a spin class then you know they are not us! 😉 And more importantly, they don’t want to be us.

      A few years ago, I helped the JCCSF evaluate three spin bike vendors, specifically the power meter function, and then co-designed a power-based spin class with one of their instructors. Because spin enthusiast value different aspects of indoor cycling than we do, I expected only a moderate degree of interest. After a year, the class was discontinued and none of the ~15 other instructors bothered (or needed) to learn how to train with power. Because they knew most spin enthusiasts attend for the camaraderie led by them.

      Peloton knows this. Garmin has figured this out and will not be replicating a Zwift experience but a spin studio experience.

      We are not the target market. To see the the target market and the spin studio experience, just go to this one page: link to onepeloton.com.

      PS: I don’t own a Peloton but I can say their customers are rabid proponents of the company. I do like their shirts. And three times in the past three months while wearing a Peloton shirt Peloton customers have approached me vigorously extolling the virtues of the spin workouts and asking for my favorite instructor. They were all disappointed when they learned I just liked the shirts and was not a member of their tribe.

    • It’s true – there’s definitely interest within Garmin about Peloton. And everything you outlined for the most part is true. Good stuff.

      But here’s the thing: Garmin sucks at being cool. And Peloton is all about the cool factor. Don’t get me wrong, I think Peloton’s product is incredible. It’s outstanding, and if I could buy one – I would (I can’t, seriously, I can’t buy one in Amsterdam, only the US and UK). But I don’t think Garmin has it in their DNA to make a Peloton competitor. Tacx certainly doesn’t either.

    • Robert

      The value of Peloton and Zwift is based on their user base and its potential growth; the value of Garmin and Tacx is based on their revenue. That alone tells you they swim in a different lake.

    • GREY Si

      Spot on… No garmin ads with their watches used in the penthouse of your nyc apartment looking over the water. Peleton has this high-end chic image that garmin would cringe at. Can’t wear a Fenix 5x and be cool though I try hard at work

    • Jacob

      Do pèleton people ride outdoors ?

    • Neo.e92

      Tacx becoming a-la-Peloton in behalf of Garmin. That’s not cool….

    • Tony G

      Robert, perhaps I misunderstood but I’d have to disagree with you. I think all four companies are valued on the same terms (profit potential over time) and that they swim in the same lake, just different parts. And that was my point… I believe Garmin is intent on moving into the deep end where there is a larger and faster growing customer segment, i.e., more swimmers.

      Grey and Ray, your points are spot on but I didn’t mean to imply this move into a different market sub-segment would be easy. You and others have pointed out at least three big hurdles they must overcome: reputation/positioning, culture, S/W quality. All are difficult but none are insurmountable.

      From my experience, the Garmin name is (luckily) not well known in my presumed target market (spin class enthusiasts) but whatever its position in the minds of customers I agree it does not radiate “cool.” In a similar manner Toyota did not bring to mind the feeling of luxury. However, last year Lexus sales were about $20B. Positioning, done right, is an art form outlined best by the classic, “Positioning: The Battle for Your Mind” (link to adage.com.) In Garmin’s case, they should follow Toyota’s example by creating a separate company.

      Maybe I’m wrong and Garmin is not going after Peloton and Garmin/Tacx builds a Zwift competitor. But it is myopic to buy an enabling company to target a small market with a CAGR of 3.5% when an adjacent market (the spin studio market) is so much larger, growing so much faster and the evidence (Peloton revenues) is so obvious.

    • Phil S

      Ray your spot on regarding Tacx, I don’t think there is another company in the cycling industry that have such a high % of active club/racing cyclists working for it. Spin training can be lucrative for sure but this is a completely different industry…also for Garmin. Tacx on the other hand do have the basis of a viable alternative to being tied to VR terrains. Competition is good for everyone

    • Rich

      I like this train of thought a lot.

      Though it’s also not an insignificant amount of money to start, land and scale an altogether new brand (and as you mention Tony G, an art form (or luck, as we call it)).

      I don’t believe Garmin/Tacx need to tackle Peloton’s customer base head-on, there’s a lot to be said for moving into existing gym space, and bringing it all together under one eco-system (obv. Peloton is targeted at premium customers in the privacy of their own home).

      Imagine a world where you subscribe to a ‘class’, and you can enjoy this class either with your own hardware at home and join one of many existing spin classes or at a regular spin class at a gym, and have ‘virtual’ people join in.

      Though would also require Garmin/Tacx to take significant market share from incumbent spin hardware manufactures.

      Either way, this allows Garmin to explore multiple options – and is a smart move for sure.

    • usr

      “Garmin sucks at being cool” is so true compared to the likes of Peloton or Zwift. Even Wahoo tramples them in that regard.

      But their surprising success in the whole f”itness watches subverting the smartwatch field” thing hints at a new form of cool discovered by Garmin, “casual but not toylike” perhaps. This could be something to build on, and if Garmin wants some of that Peloton pie they have to ignore all the existing Zwift, Edge, Vector, Neo audience anyways. Their watches however, they are already a for in the door of that market.

    • Aaron

      New verticals are hard. Well… it’s not a perfect example, but Garmin is not infalliable…

      link to en.wikipedia.org

    • Michael

      ” I don’t think Garmin has it in their DNA to make a Peloton competitor. Tacx certainly doesn’t either.”

      Then what is the purpose of the Tacx Neo Smart Bike?

    • To be a Wattbike and beyond competitor. Peloton isn’t just a bike, it’s a cohesive and vertically integrated platform from display to app to service.

      The Tacx bike is…well…just a bike. An awesome one in theory, but nobody intends it to be a Peloton competitor. Different target market right now.

    • EV

      It could be though. Garmin could easily add online spin classes to their offerings and boom, Neo bike can be used by the riders and the spinners in the house. Or you could just subscribe to peloton’s service and use the neo instead of peloton’s stylish piece of plastic.

    • Digital Fury

      Indeed, looking at their web site and what I can read on the Internet, Peloton is targeting the fitness bunnies and especially women. Who like to congregate, pull 50w for an hour spinning and focus more on the social aspects. Like following and having thousands of followers, because it makes them feel good.

  22. Leslie Tennant

    Good commentary!

  23. bryan griffith

    I assume this does not come as a total surprise to you. Can you share some insight (vaguely if you need to) about how long someone in your position might have known this was in the pipeline? Days? Weeks? Months?

  24. Boris

    Holy moly. R.I.P Tacx. 🙁

  25. James Eaton

    Not that Nate and the rest of the TR crew likely want/need to sell – but wouldn’t it really make sense now for Garmin to buy TrainerRoad and integrate it in to ramp up competition with Zwift over the long term? Or maybe Xert?

    • MagnaCarter

      The big move IMHO is into eSports, rather than training specialisms…. not sure that TR would be very attractive to Garmin…. more likely to buy a decent games workshop with access to expertise in running eSports events…. make your platform the mainstream product for international eSports competition, and you’ve suddenly made Peleton’s valuation look rather tiny….

  26. David Manley

    You say that Tacx customers are winners here. Outside of Europe I’d tend to agree but I’d say for those customers in Europe the personal touch you get with Tacx support is likely to disappear.

    I’d certainly class myself as a loser in this scenario.

  27. no

    Am I the only one unaware of such a lucrative water bottle market?

    • Nathan

      Huge markup on items that cost pennies to make. I worked for a large bike shop for a decade and we made a crazy amount of money on kickstands. No joke. Our cost on them was less than a dollar and you could sell them for $10-20. We sold them nonstop. Bottles are a similar proposition.

  28. Scott Gall

    I’m a cheap so the use of discount codes is a concern for me. Garmin never seems to allow the use of discount codes. Also, VIP members at Clever are able to get a cash discount when purchasing a Tracx trainer.

    • That’s correct, Garmin will undoubtedly enforce MAP at some point (Minimum Advertised Price), in the US.

    • Neo.e92

      Darn

      I know almost half a dozen of buddies who are waiting for the next clevertraining sale to snatch up the neo 2 coz some of them got burned by the the kickr 2018 noise “scandal”. They will surely get pissed once the news sink in.

      Lost to the customer already, i will say.

    • CT Sale?

      Any idea when that will be? (I know Ray likely can’t comment on this.) Likely going Wahoo, but regardless, I want to get a smart trainer whenever I can next get a good deal.

    • Historically speaking it’s been late-April/early May for the spring sale. I don’t know when it’ll be this year.

    • Mitsu

      You can buy a NEO1 RIGHT NOW on Wiggle or Chain Reaction for $949, tax free.

    • I was thinking of doing this but in the US and believe it does t have a compatible cord. Anyone know if you can source one from tacx or third party cheaply. They are selling used in my area for $900 so $950 new is a good deal

  29. CC

    I thought the wise long term play was a merger between Zwift & Strava with one subscription to cover all your indoor & outdoor training needs while keeping the social aspect. Now I’m looking to add a hardware company to that mix to complete the eco-system. Hmm.

  30. Richard

    Lots of comments about TrainerRoad, I hope they don’t disappear because of this merger, as their software is significantly better than the Tacx platform.

    I could see this group buying TrainerRoad expertise or taking them over to get a better foothold in the software sector. They could also acquire one of the other software developers to achieve the same aim.

    What about Bkool?

  31. Yonah

    Ray – I wonder if you have any insight into how Peloton may be effected by this. They recently introduced a standalone iPad app for workouts independent of their bike/treadmill. Do you forsee that they might partner with a Garmin or Wahoo to offer a more cusomized solution? Or that they take their hardware expertise and offer a trainer solution for their customers? (latter probably more likely than the former).

    I am not a bike rider and don’t own a trainer, but as some of the other commenters suggest, I think that the Gamification/Social virtual training market is interesting, and I’m curious to see how it grows.

    • Robert

      The main target of Peloton (and Zwift) is to do to your local gym what video streaming did to your local movie rental place: make it obsolete for you to leave your home. Peloton started by selling hardware to enable their content (an ok solution for their initial target audience), and once they built a strong community of users and a solid brand, they could afford to open up to a wider audience; you may call this the Tesla model if you want. Zwift went the other way (content and app first, no hardware). But both aim the same way: connected, in-home training, which eventually can be rolled in gyms as well.

      Garmin + Tacx have a long way to go if they want to hit the same target; more probably, they will end up as equipment suppliers to the chosen few who will succeed at overhauling the local gym market.

  32. Fabio

    I suppose zwift will stop to increase their price now 😀

  33. Carl

    How important Garmin’s fitness business, compared to the pure navigation, especially in aviation, side of the company?
    I always assumed the aviation products were the company’s true bread and butter, maybe naively. Does the volume of fitness overcome the higher price points of aviation equipment? Is the fitness industry a way for Garmin to make oodles of money off of extensive R&D required in aviation?

    • Robert

      Q3 2018 revenue: 24% fitness, 26% outdoor, 20% automotive, 18% aviation and 12% marine; operating income: 19% fitness, 40% outdoor (!), 8% auto (!!), 26% aviation, and 7% marine. Fitness is under pressure from all the competition in that segment, auto is shrinking, aviation and outdoor are the cash cows. The distribution is pretty similar to that of Q3 2017, with auto shrinking the largest difference.

    • Gotta be careful there though with ‘Fitness’. Remember that the Fenix series actually falls under Outdoor – and thus it allows Garmin to ‘hide’ fitness-related revenue there and even things out a bit.

      One should really always combine Outdoor and Fitness revenue when evaluating Garmin’s sports related stuff. Heck, the VIRB lineup now falls under automotive too!

    • Robert

      Exact. The 10-K “Business” section is where they describe their segments in detail. You learn things such as golf = outdoor, cameras = auto, Connect IQ = fitness. And some of the products reported in other places have aviation versions that are reported under aviation (VIRB, D2-series pilot watches).

  34. Digital Fury

    Wow! Tacx software was already quite buggy and lacking, now it will be “strengthened” by Garmin’s team of interns’ incapable of issuing a firmware without crippling bugs and class action type defects on its hardware.

    What can possibly go wrong? :-/

    • Neo.e92

      This is what i was afraid of.

      Tacx has improved a lot compared the last time. Have been using Neo2 and TDA (after being with Wahoo and Zwift) and their stuff has improved a lot.

      Now being folded with Garmin’s way of business?

      I think it’s a loss for the customer for me. Specially for those in the DCR type of crowd.

  35. JB

    Strange nobody mentioned Virtugo or Road Gran Tours. They’re small, for somebody as Garmin easily bought, they allready have a solid base, they just lack people/funding. Take RGT, it would match perfectly, with already the real road movies Tacx/Garmin was doing before.
    If I were the RGT CEO, I would be on the phone now with Garmin!!! Garmin-Tacx-RGT and you have your Zwift competition, just put people and funding at RGT and integrate the whole lineup of products and software… world domination 😉

  36. Big news indeed! Don’t you think this could be a precursor for Garmin (and its competitors) entering the Peloton market? Peloton is valued at $4B and presents some interesting growth opportunities for $13B Garmin. Seems like there’s a ton of activity around virtual and brick & mortar subscription-based training.

  37. AJ Witt

    The whole market is ripe for acquisition and simplification. Currently there are so many gotchas with setting up a reliable smart trainer configuration for Zwift (or any other training app) that it must limit the market. I’d liken the user experience at present to be the difference between building your own Linux PC or going to the Apple store for the latest Macbook Pro. The end result is the same, and underneath the hood it’s the same, but it’s a monumental pain to get all this stuff working together. You’d hope that Garmin would be able to influence the market to nail that user experience, or equally for Zwift to take the walled-garden “It just works” approach that Apple take.

  38. Dolan Halbrook

    Right now with fairly open smart trainer standards (ANT FE-C, BT smart), and companies that support these standards (Zwift, TR, etc) it seems like we’re in a golden age of interoperability between hardware and software. It seems that any potential slamming of that door would be really shortsighted on Garmin’s part, and would definitely hurt consumers. I really hope this isn’t the beginning of the end of that era. As much as I like TTS4 and TDA, I prefer an open ecosystem that includes all the software choices.

  39. Nick

    Well, my Tacx Vortex died 2 days ago (so is no longer ‘smart’). Of course, this is now 4 months out of warranty (planned obselecene anyone?) Hopefully Garmin can help them out with product QA. Wait, what am I saying, I have to return a Garmin watch once a year on average…

  40. tizzledk

    Perfect blend for me ….Trainer Road & Zwift…one can dream…but wow this acquisition could be big…..I have the Wahoo Bolt , Elite trainer (Elite is in trouble), about to abandon Training Peaks me thinks and just use the TR calendar…..Garmin please don’t buy TR..did you hear that Garmin…..just…..don’t…..I guess a shakeout is coming over the next year or two….ok stream of consciousness over!! :)))))))

  41. Juri

    I am surprised you think that zwift only has 180-200k subscribers if 120k alone raced the tour the zwift.

    I for example use zwift 2-3 times a week and i didn’t even think about racing that event since it didn’t fit in my training schedule and i am pretty sure that there are a lot more people like me just registered and doing their thing. (not even taking about all the people that probably pay the subscription without even using the platform anymore)

    • Perhaps they have slightly more, but I think that’s a safe bet. The 120k number wasn’t all Stages of the tour. But just one. Also not clear if you had to complete an entire stage.

      I could see a scenario of up to 250k max paid though.

    • Robert

      The only other public stats I can find are the “500k people have taken a Zwift ride” dating back to Feb 2018, and the max concurrent sessions (13k in Jan 2019). This is consistent with a subscriber base in the 100-300k range today. It’s certainly more than 100k, and certainly less than 500k.

    • Mark McKillop

      Ray if its 250K that is monthly revenues of $3.75m USD, annual revenues $45m USD assuming 15USD per month. I wonder how that tracks to the capital sunk so far to reach this point and their growth expectations. I think the peak user number has increased by about 80% or so year on year, which might imply 450K paid users in 12 months and $85m annual revenues. Looking a bit small compared to Peleton.

    • No way it’s 450K paid at this point. Everything I’ve seen points to the 180-200 as likely, with maybe up to 250K max.

      That said, they wanted to be at a million users by now – that’s what they were pitching to VC’s some two years ago.

  42. Jesper

    How do you see this impacting the pro tour teams, like Sky, Astana, Lotto Sudal etc??

    Most of them use Wahoo or Tacx for trainers. Do you see Garmin force them to use Vector and Edge as well, to be allowed to use Neo?? A “take it all or leave it” deal? If so, some might actually switch to the Wahoo, to keep e.g. the SRM PM.
    On the other hand, a good chunk already use EDGE (might not even be sponsored), so some might be “forced” to switch to Neo/Flux, to keep their Edge???

    Or is that not how the Pro tour sponz politics work at all??

    • No impact to pro teams.

      Pro teams tend to piece-meal out sponsorship deals, and Garmin has kinda shifted back to a bit of a gift bundle approach. ‘Here’s a pile of our non-power meter products, go forth and use them’.

  43. Todd Norbury

    I would love to hear Miller’s take on Peloton. 😀

  44. David Tucker

    Wow, this is HUGE news. As someone who is heavily invested in the Garmin ecosystem, owns a Tacx Vortex (love it) and has Zwift, I feel like I’m in a really good place right now. Something I would love to see:

    Right now, I have a really hard time using Zwift’s training programs because they basically depend on you using Zwift for the training. I think it would be awesome if Garmin had their own training platform that would allow me to do training anywhere. Need to do an interval workout today? Well, if it’s raining hop on the trainer and do it but if it’s nice out, head outdoors. Same training session, just different location. If I want to do that with Zwift, it’s a bit more cumbersome.

    I wouldn’t just drop Zwift though. I enjoy the social aspect of the program and I can’t imagine Garmin would catch up to that any time soon.

  45. Erick Meier

    everything is good for the sport,… i personally use a flux with its own tacx training software…. and also use garmin fénix when riding a non Smart trainer, and outdoor wahoo element bolt for riding and milestone pod por indoor running and run dinamics for outdoor running…. the key question is from my point of view not related to tacx, garmin, milestone, wahoo, zwift or any other Brand other than looking into the future and see how all this devices, apps, softwares , tools Will integrate with trainingpeaks!!! the key factor of success is trainingpeaks here …. lets see which company Will go after TP

  46. Davie

    I use tacx desktop app. Since it came with my neo. It has some awesome features including workout visuals and it’s simply amazing films but its development pace is glacial. Its crying out for better investment. It also would benefit from some films NOT in Europe.

    • Phil

      The plan is/was to get high quality films outside the EU as soon as there was a budget to do so, we are waiting on some smaller new flight friendly camera gear

  47. David

    As others have said. Two companies with huge software issues getting together. What will be the product of that. Love my Garmin units. Love my tacx trianer. Hate the software of both.

  48. Meredith Mednick

    If there is any hope that this will make Tacx have better customer service then I’m happy! Current state CS is awful…

  49. Alexis Borges

    Despite Tacx being in Europe, I’ve always read how responsive their customer support is even for North America. Can’t say the same for Garmin.

    Also, past experience updating my Edge’s firmware means I’ll be extra careful before even thinking of updating my Neo’s firmware from now on..

  50. I agree Zwift stands to lose a lot here but I’m more fearful of Zwift getting destroyed by Garmin than I am of Zwift becoming too powerful.

    Zwift’s endgame, IMO, was “a Zwift button on every piece of cardio equipment,” just like the “NETFLIX” button on every smart TV remote. That’s a good thing for everyone – you could “Zwift anywhere” – your gym or hotel treadmill, elliptical, or rowing machine.

    Garmin has a history of making business decisions that are good for them but bad for consumer choice. Example: how to rolled back support for gym-equipment connectivity to their sport watches. Are they going to support rowing, running, elliptical etc on their own platform? We’ll see.

  51. BricksMa

    Any Tacx employees trying to leave after this?? Haha looks like Wahoo is growing pretty quick, lots of open jobs.

    link to wahoofitness.com

  52. Chris

    Great article as always, but the only thing I disagree with is the bit about support. Garmin’s support is abysmal. Have a cursory glance at the wasteland of unanswered questions that is their support forum, or try emailing them sometime. The only thing they are “good” at is offering to swap out units for factory refurbs – firmware bugs, long-standing issues with even the most current units are all but ignored entirely.

    Garmin doesn’t care one lick about consumer fitness electronics, their bread and butter is high end fishing/nautical units. They’ve been churning out dud after dud for the last 10 years now and while their units look great on paper, I’m 100% convinced that nobody who works for Garmin actually uses one.

    • Tim

      The Garmin Index Smart scale, anyone? Wifi connection issues, multiple profiles are nor recognized, readings of only the first profile are saved on their own Garmin Connect platform. Garmin forums are full with complaints for this product. They offer no support, no solution and cynically are still selling this thing at top prices. No more Garmin for me. I own a Tacx Neo, but with this news, can’t wait for Zwift to come out with their own trainers. On the Tacx side, am I the only one who is frustrated about the discontinuing of the Tacx tts software? I recently bought 100’s of euros worth of Tacx movies, for a now obsolete platform. They too toy with their customers.

  53. Kevin Nolan

    I had an amazing experience with Garmin service. Last May I reached out to them by email and told them my altimeter and stair counter were not working on my FR 935. This was one week after the one year warrantee ran out. The CSR was able to determine that the malfunction actually started 2 weeks earlier, while the unit was still under warrantee. Garmin replaced the watch at no cost to me. This will give me a positive Garmin bias for many years.

  54. Tom W

    Zwift and Wahoo should merge… And use it each other to upbrand.

  55. Jose H Rojas

    Wahoo is hardly a loser. I think this is a reactivate move from Garmin, wahoo is stealing market share from them and they need to do something. I have been a very loyal Garmin customer for a long time, but definitely Garmin’s software problems have driven me closer to switching to wahoo.

  56. redRover

    Is water bottle manufacturing that big of a thing?

    I suppose somebody has to be #1 in water bottles, and look at what Yeti has done with $30 coffee mugs, but it still seems amazing that you can build a biggish business around that.

  57. Stephen Huntress

    This makes total sense. As a Tacx Neo user who has used rides downloaded from my Garmin as the dataset for indoor training, I can see how some of the Tacx IP is a good fit. Can you say indoor-outdoor data integration. The film algorithm alone. Well done Garmin. Let s see take Virb film combine GPS data and create your own indoor training modules. Share them. Create a community. Garmin gets a monthly fee. Will they by buy Cycliq next? Nordic Track? Tunturi? Stages?

  58. Zwift supports junior athletes till their 16 with free accounts. I hope this does not affect their business in anyway as I like to see them being more successful in years to come and not having to charge younger atlethes to survive.

    • That’s pretty cool, didn’t know that!

    • tizzledk

      What do you think about Training Peaks now…..TR has moved in on with their calendar feature, Garmin has Connect….what are your thoughts?

    • At present, TP is still positioned well because of multi-device/platform type integrations. They play with almost everyone. Whereas TrainerRoad is a bit more limited in how and what can upload to them automatically.

      That said, as I’ve noted before – TP continues to act like CycleOps/PowerTap/Strava in terms of lack of new anything that people can put their finger on. As such, they put themselves in the undesirable position of some other shiny new object coming along and taking their cake.

    • Dave

      Given time, Xert will. Pace of innovation there is outstanding.

  59. Tony "Aleman"

    What do you think will happen to the supposed Neo / Kickr Climb integration?

    I’ve been hanging back from making a commitment to either the Kickr or the Neo, as I really want to use the Climb, but the latest QC issue with the Kickr / Core has held me back. Currently here in the UK I can get a Neo (1) at £150 Quid cheaper than a Kickr (Due to Wahoos Minimum Selling Price cartel!!), which with the possibility of a backwards compatible adaptor and firmware upgrade meant the climb would be usable. … Always assuming Garmin don’t completely balls up the firmware side of Tacx

    • I have a feeling that previously promised integration might have already been in trouble, but not from the Tacx side – rather, the Wahoo side. Sounds like they’ve reneged on that offer a bit to others who have made the request to Wahoo. Unclear if they’ll end up doing the same to Tacx. But if that falls apart it’d be wholly on Wahoo – not Tacx.

    • Tony "Aleman"

      Wow, didn’t know that.At £829 today though the Neo is an absolute steal, so much so, that I’ve just ordered one! 😀 I guess if the integration does fall though, with Garmins backing we might just see a Neo Climb … can only hope.

  60. Suleimana

    So does this move finally explain what the secret new and upcoming features of the Neo2 might be? Will we see the first integration of Garmin and Tacx tech here? Some new Firstbeat-Tacx Metrics maybe?

    • Digital Fury

      The Firstbeat stuff is already available in Garmin’s high-end Edge units.

      Besides, as both a Tacx (Neo) and Garmin customer, I would like to be reassured that Garmin’s firmware coders will *not* be allowed to come anywhere close to a Neo and its codebase. Any Garmin firmware “upgrade” brings as many problems as it alleges to fix. Latest example with v7, which completely screwed up my Edge 1030, so I had to hard reset it and install/configure again. :-(((

  61. AndyS

    You did not discuss the Elephant in the room that being Strava. Garmin and Strava definitely don’t play nice. If you’re going to have a trainer, then a social, virtual-interface platform alternative has to be in the plan.

    Garmin sucks even more at social than at software. Thus, they have to be eyeballing acquiring one of Strava’s competitors.

    What’s your thoughts?

    • Actually, Strava and Garmin get along great these days. Really great. Garmin holds the string in the relationship and gets preferential access to virtually all features (see: Strava Live Segments, Beacon Integration, among others). Strava meanwhile gets the financial benefit from siding with a company that drives something like 95% of the cycling device upload market.

      Seriously, the two get along great. Really great.

      Garmin has absolutely zero desire to acquire Strava (or their competitors). Right now they get everything they want for free – the benefits of Strava integration, while also getting usually 6+ month exclusivity agreements on new features.

    • AndyS

      Then explain to me why Strava’s swim support and any support of Garmin analytical data (above heart rate) is non-existent. The swim support is particularly BAD (no heart rate). Are these issues simply on Strava? But, I digress…

      Otherwise, all of the points you make about how they get along are points of a business advisory dance or detent. They’re both in each other’s rice bowls for training analytics with Garmin having the hardware upper hand. Strava is in a software box with only one product and being an independent software house dedicated to one product is non-sustainable.

    • “Then explain to me why Strava’s swim support and any support of Garmin analytical data (above heart rate) is non-existent. The swim support is particularly BAD (no heart rate). Are these issues simply on Strava?”

      Because that would require Strava to actually add a feature. Any feature. And we know that hasn’t happened. 😉

      Strava actually has more than one product:

      A) Premium memberships (err…Summit)
      B) Advertising agreements with companies in-feed (like Sufferfest, etc…
      C) Advertising/commercial agreements with companies for challenges and related
      D) Strava’s government data program
      E) Sales of Strava stickers/water bottles. 🙂
      F) Licensing fees for Strava Live Segments to hardware companies

      There’s probably more I’m not remembering, but that’s the starting point.

      But, seriously – the two companies get along great, and in having this discussion every few months with Garmin, they will outright say that acquiring Strava would be the stupidest thing they could do (on so many levels).

    • Because – again – Garmin is a HW company, and software is a necessary evil.

  62. usr

    Why is everybody assuming that Zwift wants to be in the hardware game, to the point of excluding others from their platform?

    When you can continually get 15[$€] per month per user just for keeping some servers running, the narrow margins of hardware are about as appealing as a career change to burger flipping would be to a Wall Street broker.

    Zwift doing hardware is a possibility, one that is a real risk to existing trainer manufacturers, but if that ever happens it won’t be because Zwift wants to steal the cookie jar from Tacx/Elite/Wahoo, it will be to keep the cookie factory they already have humming along on high utilization. The only reason for Zwift to enter the hardware game would be to accelerate new hardware features they want to exist that would increase the appeal out their platform.

    I could maybe see them acquiring Wahoo if Wahoo’s investors start looking for an exit before Zwift runs out of money. Particularly when/if Zwift acknowledges the reality that all their customers will forever prefer the great outdoors over the pain cave and starts working on features that integrate their video game with outside training (e.g. training plans that adapt to weather). Wahoo would be the perfect match because unlike the other trainer makers they are not just a cycling company but also general fitness/running, which is exactly what the silicon valley VC behemoths (Zwift, Strava) are looking for. Cycling is a geeky niche with a few million customers tops worldwide, whereas running is almost universal in a certain age bracket. Cycling is a valuable market because cyclists spend so much per head, but only running has the growth potential that can justify investments of the magnitude seen in Strava or Zwift. Cycling is useful to that type of investment as an entry into fitness (we cyclists are always eager to spend on new things!), but it’s not the end game. Cycling is to running and large scale investors like Belgium is to France and 20th century German warmongers, if this rather morbid comparison can be excused.

    • CJ

      > “Why is everybody assuming that Zwift wants to be in the hardware game, to the point of excluding others from their platform?”

      *** *** ***

      I agree with you 100% – Zwift does NOT want to be in the hardware game anymore than Netflix does. Zwift wants to have a “Zwift button” on all hardware just like Netflix has a button on every TV remote.

      The only reason Zwift acquired RunPod was because RunPod wasn’t doing well on its own and was creating “friction” to people attempting to run in Zwift.

    • “Why is everybody assuming that Zwift wants to be in the hardware game…”

      Because they licensed components to build a smart bike, the contract is already signed an in effect: link to dcrainmaker.com

      “…to the point of excluding others from their platform?”

      Combine that with this statement they provided me two weeks ago in regards to an upcoming post I have on Zwift and esports.

      “Across 2019, Zwift will be working with hardware manufacturers to mitigate this from 2020. It is very likely that hardware restrictions for racing will tighten up in 2020, but Zwift needs to acknowledge that hardware manufacturers need time to respond to this feedback as trainers are developed, in the most part, for training – not racing.”

      It’d be trivial to say: “Here’s the restrictions required for Zwift racing”, and then notice only a single product meets those restrictions.

    • Mitsu

      I’d think Zwift’s VC Board members may have as teeeeeeeny tiny objection if Zwift starts excluding competing trainers from the platform.

      Overall an interesting (and timely) writeup, DCR. I’d also think culture of the Tacx team was a much better fit for the Garmin group in Kansas.

      Suppose I agree if anybody doesn’t love this, it’s Wahoo. And of course Norwest. That “blank check” so far has produced a perma-delayed running watch and a new trainer with at least 3 different recallable problems.

      Only question not addressed — do the phantom “TBD” software features in NEO2 include TBD integration with the Garmin platform??

    • “do the phantom “TBD” software features in NEO2 include TBD integration with the Garmin platform?”

      I don’t know, but I honestly doubt it. I suspect these are more trainer-level features akin to what we saw with the isokinetic modes. If you figure that Tacx had the hardware for the NEO2 basically locked sometime last spring/summer, they would have had ideas in the pipeline well before then (even if not implemented). I suspect that’s before Garmin got involved.

    • Olkn

      It will be much easier for Zwift to be get paid for license to get Zwift Racing Certifiied – same as Strave Live Segments – than to enter the Hardware game themselves.

      I guess they will get involved in some co-development to push innovations that they can benefit from – while staying away from the hardware based risks.

    • Scott

      I know us hardcore cyclist give the Peloton a side eye glare, but it’s been very successful. Do you think Zwift wants to make a Peloton like bike for serious cyclist/ racers ?

  63. Ray Saliba

    Hope Garmin will reverse Tacx ‘s decision to stop support for TTS4 . I run with both TDA and TTS4 both have thier advatages . Please reconsider .

    • Phil

      TTS4 is now legacy there are not the developers to keep it up to date even if there was a case to keep it going. The problem Tacx have is offering a alternative to this userbase that are probably more in the older cyclist category, that don’t really want to move to windows 10. I know Tacx are busy on solutions that would help in this regard.

  64. Caiman

    I don’t think I like this buyout, as I would like to see tacx being an independent co. I just bought a neo 2 and think it is a very innovative product. I think they were doing great and will do better than others. I like garmin as I have been pleased with their products and service but this merger is a sad news from my point of view.

  65. Caiman

    I just canceled my zwift subs after 2 years of heavy usage. It is not about money as I can afford it but between rouvy and my garmin edge I can do all I need so I decided to bail. Zwifts game play like is cool but it gets old after a while. Also, I see the reason why they want some hardware control for racing as there are ways to cheat which is not a fair game. I will come back to zwift if they allow riding a custom course like rouvy does.

  66. Olkn

    Watch out: Next move of Garmin will the Rouvy acquision to compete with Zwift. Tacx is just step one.

    • David E.

      Ummm, Rouvy is a CycleOps platform. Doubt it’s for sale to Garmin/Tacx.

    • Caiman

      No, Rouvy is no longer a CycleOps platform. That is the reason why it is now called Rouvy. Rouvy works with most if not all trainers. My Neo 2 runs seamlessly in Rouvy. I think Rouvy would have a good chance to butt head with Zwift, as it is well established and it does things that Zwift cannot do. With augmented reality added recently, I think Rouvy is on its way to be a more Zwift like but should be better with some further improvements.

    • David E.

      Rouvy works with all trainers, but it is owned and developed by CycleOps. Just look at its website. They’re not selling it to Garmin.

    • okrunner

      Why would they do that? Tacx software is already better than Rouvy, having used both. Rouvy pretty much sucks. Tacx software has been in the game waaaayyy longer.

    • carlos

      Where do you see this? They are and were a Czech business that Cycleops partnered with.

  67. Nice analysis. However, I have two responses:
    1) I would be surprised to see Zwift making hardware. Valuation multiples for SaaS / game companies depend on having huge margins (90%+). Adding hardware to the product line could actually reduce valuation due to investors not liking the complexity of hardware vs. the profitability of software. (However, c.f. Peleton.)

    2) Garmin remains vulnerable to smart competitors. From the outside, it has always seemed to me like Garmin operates as a culture where hardware & manufacturing engineers are the stars, and software developers are a necessary evil. It has always done “just enough” software development sell its hardware – and that software just seems second-rate given its size. I believe this to be the advantage Wahoo exploited, having always appeared to prioritize software much more highly, and Zwift is an all-software company. I believe this to be a competitive advantage for those companies until / unless Garmin does a Microsoft-at-the-beginning-of-the-Internet battleship-level course correction. (I also still believe. that Wahoo should open source the software for Elemnt, the way it considered back in its early days. Competing via business model competition is even more effective than competing via product features.)

    • Josh

      I don’t think that’s true at all about Garmin’s software. They added feature after feature to the Edge 1000 during its lifespan. That’s not the sign of a company that does “just enough” software development. Just enough would have been the base feature set that it launched with.

      The only recurring problem I ever had with my Edge 1000 was getting it to sync over wifi. Bluetooth almost never failed, but wifi was an issue. Other than that, my Edge 1000 was rock solid. I ended up getting an Edge 1030 late last year, and I’ve been very happy with that computer too.

  68. Joe Blough

    Rather than develop their own trainer from scratch, wouldn’t it be easier for Zwift to go out and buy/merge with an existing trainer company like Wahoo or Cyclops and build on what they have?

  69. Interesting turn of events. I’d have to agree that CycleOps is potentially the “biggest loser” in all this. I do like my Hammer but I’ve lost confidence in the company’s ability to provide top tier support, innovate and compete. By the way, I sent you an e-mail via the web form, Ray, with some thoughts about what I’d ask CycleOps’ new product manager. Hope you got it. Aloha.

  70. Grafton

    I am very interested in the potential impact and growth opportunities for Tacx’s training video library. The videos are such a refreshing break from Zwift and integrate well with their smart trainers. Considering Garmin has complete hardware integration between head units and bicycle-mounted sports cameras, could they build on Tacx’s library and compete directly with the crowdsourced cycling video apps on the basis of higher quality? I go with videos over Zwift any day of the week, and would be really disappointed if they went the way of the dodo.

    • Phil

      I would expect some integration with their Vivo camera, that’s kind of obvious. You then have something akin to Kinomaps. Not really any threat to Zwift. It’s probably quite expensive to host 1000s if video files. I think the age of higher quality video could be over.

    • Tony "Aleman"

      Bkool allow you to do this, but the software for editing and uploading is poor, as is the quality of the video stream when running it in a stream.

      BigRingVR is a much better platform with great 1080p videos of some classic routes, and more being added. The good news is that you can shoot your own video and replay it as long as you have the TCX file … just not share it

    • EV

      Judging by the success of Zwift vs previously existing video ride services, I’m guessing your preference is in the minority. I do video rides on hotel bikes when I travel and find the experience almost as boring as using an old dumb trainer. Clearly the social aspect of riding and racing is a big factor in Zwift’s success, and I don’t see any of the video services coming any where’s near their growth and usage. Instead of videos, the future is going to be about vast augmented reality worlds, where you could do real rides just about anywhere but with the full social functionality of something like Zwift. Or imagine TdF riders live on stage courses in Zwift, with anyone in the world able to try and keep up live. Think Pokémon Go type AR mixed with training. Videos are not going to be a factor in any of this.

    • Robert

      That’s what Rouvy tries to offer – real videos with VR riders. I suspect the future will include a mix of real people in real places (Peloton), virtual people in virtual places (Zwift) and virtual people in real places (Rouvy). Note the common point here – lots of people together.

    • EV

      Yeah, that’s one approach, but I don’t think the video format makes sense. Will never give you the full 3D feel, multiple view angles, and interactivity that 3D environments can give you. I just think the whole video thing will die eventually in favor of faithful replicas in 3D. I wouldn’t spend another penny on videos if I was an investor.

    • Phil

      I think if your dreaming that 3D side views is what every cyclist dreams of, the truth is everyone is very different & there is a market for a good choice. I think the options will grow in different directions & that can only be a great thing for the consumer.

    • Grafton

      You certainly have a right to your opinion. Personally, after trying the Zwift NYC map for the first time recently, that sounds less like bicycling and more like a sweaty acid trip in Tokyo.

    • Grafton

      Never mind that last one. Sheesh, this comment style is prehistoric.

    • EV

      Sure, I could be wrong, and video rides will grow in popularity. Given that they’ve been around for years though, and that Zwift zoomed right past them, and continues to do so, I just don’t see it. It’s not about side views. It’s about navigating and allowing full featured movement in 3D space. Video will never do that. I’d put money on the video services going nowhere.

    • Phil

      EV, VR is really a complete nightmare for some of us. Riding about looking at the imagination of some teenage developers. For sure it’s popular as is living in city’s & eating fast food especially when you pump millions into marketing it, but there will always be a market for those that love to ride real roads or also run in real forests etc. You can’t re-educate all cyclists to look at cycling in such a empty way. Remember Coke actually tastes quite horrible but with enough marketing we all drink it. It will be the same with this.

    • EV

      Totally understand that the video format is preferred for some, but so far the numbers show clearly that VR is dramatically more successful. I think the power of interacting, racing, and the whole social nature of Zwift is behind its success, with graphics just a sideshow. I barely even register what’s going on with the scenery when I’m in a race or group ride, and I suspect that’s what happens with many riders once they use Zwift for a while. Every time I ride a video ride on a hotel bike I’m reminded why Zwift is so much more fun. Doesn’t mean video won’t appeal to many such as you, but so far, the numbers for VR are clearly much larger.

    • Phil

      Right so we all agree that VR graphics is just a side show….that riding real roads is what cyclists really want & that it’s the social interaction combined with marketing that is the driver of Zwift.. from that you can start to imagine the future

    • Phil

      What you did in hotels is not the grade perfect stabilised cinema camera filmed simulation that Tacx sell, you can feel every single grade change you see & if you have a Tacx Neo you can feel both the 20%+ grades & the shake of the cobblestones of the Koppenberg…it just needs some social & perhaps some marketing as you obviously have not seen it.

    • EV

      True, I have not seen it. Just add “some social” is indeed my point. Whether it’s VR or video, it’s the social that drives growth. I just don’t think you can ever have a fully functional social/racing experience with video. Just the wrong technology. It’s not a trivial matter to match Zwift on the social front, and there is the matter of stickiness from people building up points, levels, social connections, race histories, etc. that makes switching tougher the longer you’re in a community. Hence Facebook and google+.

    • Phil

      Adding social to what is in effect almost a secret Tacx ride simulation software is actually not an impossibility. Now mass marketing which is what Zwift was built on if you consider Zwift was not the first to do VR with a massive multiplayer back end is something both Tacx & Garmin can do really really well if they deem the time is right to do so. As Ray said there is a definite obvious need for a viable alternative to riding what to many riders looks like a game that’s designed specifically for primary school children ;-). You can never force everyone back into primary school….some of us want tarmac,cobbles, real sheep & the billions of things that you see in the real world….& some riders to chase down!

    • Phil

      Actually, Ray did not say what I just said about the primary school software lol, but he did say the 1st part of my sentence that there is a need for a good alternative to a Zwift monopoly. That competition is good for the consumer as to compete it will have to be good & it will need to offer something different.

  71. GH

    As someone who follows these types of transactions professionally, i have a pretty good idea of the winners and losers.

    Losers: Garmin, Tacx

    Winners: Sellers of Tacx corp (presumably they got a price they like). Wahoo. Most other competitors.

    Here’s how I see it – integrating similar companies in similar geographies with similar businesses is hard. Integrating two different companies on different continents with different languages and products is incredibly difficult, even for companies with an expertise in acquisitions (which Garmin does not).

    They best thing Garmin can do is keep the companies separate, but even then they will have to deal with employee turnover at Tacx. As far as I can tell, they have no track record of integrating acquisitions of any size. Zero! and it it hard work!

    I predict several very challenging years for Garmin as they try to digest this acquisition. I doubt Tacx will ever be much more than they are today. DCR – I hear you on the manufacturing side of things, but I just don’t think that manufacturing is the challenge for these companies, in this market. Maybe I’m wrong, but it seems like the design talent that produces these ideas is the most important thing.

    • Totally agree that acquisitions are hard – particularly international ones – and that Garmin does not seem to have any corporate skill in it (c.f. Cisco).

      They can *hire* some skill; if they want this to succeed, they ought to.

    • hdb

      GH says: “As someone who follows these types of transactions professionally, i have a pretty good idea of the winners and losers.

      Losers: Garmin, Tacx

      Winners: Sellers of Tacx corp (presumably they got a price they like). Wahoo. Most other competitors.

      Here’s how I see it – integrating similar companies in similar geographies with similar businesses is hard. Integrating two different companies on different continents with different languages and products is incredibly difficult, even for companies with an expertise in acquisitions (which Garmin does not).”

      This is my thought as well – look at the (long) list of Intel acquisitions that were quickly consigned to the dustbin of history. Yes, the relative scales of the companies involved in those deals were different but I agree with @GH that trying to coordinate the spatially and culturally separate organisations here may be far more difficult than anticipated. If they don’t do any integration and continue to run as independent entities, then what was the rationale from Garmin’s POV?

    • Robert

      Crunchbase shows Garmin did 10 transactions in the last 4 years (excluding Tacx). So while most of your comments are valid (integration is hard), the statement that Garmin has zero track record isn’t.

      Indeed, manufacturing isn’t the challenge – product strategy, distribution and support are. On the strategy side, Tacx needs help: their trainer lineup is all over the place (way too many products, making manufacturing, distribution and support that much more difficult), their software/app strategy is all over the place (they severely missed the jump from closed-system apps to open ones), and their non-trainer hardware offering is just baffling to me (tools? pulleys? repair stands? bottles?), but maybe it’s really lucrative and I have no clue myself.

    • Robert

      Yeah, that Intel comment is right on the money. WindRiver, anyone?

    • Jay Batson

      I humbly stand corrected regarding acquisition count.

      It does not necessarily follow that the company is good at integrating acquired companies, though I have no data (and should have thus shut my trap).

    • As noted by Robert, this is hardly Garmin’s first acquisition. They do about 1 fitness-specific acquisition per year, and then acquisitions in other spaces too – marine, aviation, etc… Many smaller, but some quite substantial. Also, international ones too.

      Having worked in M&A for a number of years, I totally get that it’s hard. But it’s also super cookie-cutter if you do a lot of them (which was the case for the company I worked for). Once you get the hang of it after a few, it’s fairly straight forward. Sure, each one brings unique aspects and challenges…but honestly – Tacx isn’t one of those ones.

      I think people forget how close-knit this industry is. It’s not big, and everyone knows everyone – heck, they even meet annual up in Canada in October for a week, plus at sidebar events in a variety of places. Even more so, Garmin understands Tacx’s products from a technical side better than anyone.

      About the only element that’s a bit wonky in this for Garmin will be the bottles and tools piece, but honestly I expect they’ll just let Tacx keep on spitting out bottles as-is since it’s a money machine.

      Finally – as for international management – fun tidbit for you: Garmin’s cycling division is actually run by a guy in the UK at their campus there. Just a short hop away. I could even see a scenario where he gets relo’d over to Amsterdam for a while as well.

  72. Fred

    Well, for me I was Garmin….but i’ve Changed to Wahoo. After the disaster of my vector 3s, said to myself: enough is enough.

    • David E.

      Right, but I suspect there are others on here thinking, “Well, for me I was Wahoo…but I’ve changed to Tacx. After the disaster of my Kickr, said to myself: enough is enough.”

  73. okrunner

    Wow! My prediction is a Tacx/Garmin Apple TV app by Fall that syncs directly with Garmin Connect and uses your head unit as well! It could offer way more than Zwiift and alot more integration. Awesome! Did everyone miss the announcement of the Garmin Ant+/Bluetooth heart rate monitor recently? Alot of comments that are love/hate on Garmin or Tacx. Seems many are missing just how big this is. Ray certainly gets how big this is. Watch Zwift try to acquire Wahoo or Cyclops to keep up.

  74. fl33tStA

    Now the thing with “– Added internals for future features: None of which have been announced” on Neo 2 could be interesting, are this open things they will do with Garmin together?

  75. Scott Douglass

    I enjoy the biking reviews.

  76. Hans Battle

    The fear here actually should be the (relatively high) probability that Garmin will botch the integration of this acquisition. It’s boggled my mind for ages the extent to which Garmin cannot effectively integrate it’s own product families… let alone a Dutch speaking one across the pond.

    As someone who has advised cross-border M&A for most of my career – Garmin’s clumsiness is going to be a big factor here. You’ve mentioned areas of potential synergies, which look great on paper. But is Garmin’s management really that competent? The number of ways they can fumble this exceed the synergies in my view.

    Let’s keep our fingers crossed and hope for the best.

    • As noted before – they do about 1 sports/fitness acquisition a year, including outside the US. As for Tacx being Dutch speaking, that’s one of the few countries in the world where it frankly doesn’t matter. Everyone there speaks perfect English.

      The thing some are forgetting here is that frankly Garmin can simply take the revenue today and let Tacx run more or less as-is, and then pull in the piece as it deems fit into a larger product strategy. There are a long list of ways to do M&A, and I think many people are thinking that somehow means as of next month it’s going to be one cohesive company. When in fact, in many cases companies choose to let subs run as independent entities.