Published On: Thu, Sep 20th, 2018

The Hero 7 is GoPro’s shot at a comeback

One of the only ways to get really good at doing something extreme is to find, and become comfortable with, the limits of that action. To become a world-class snowboarder who hucks corkscrew 1080s 20 feet above a half-pipe made of ice, for example, you’ll inevitably slam into some of that ice along the way.

GoPro started 2018 on the floor of that proverbial half-pipe, bruised and bloody. The company’s stock had flatlined, it had just finished its second year in a row operating at a loss, and GoPro admitted defeat in the drone market by pulling the Karma quadcopter off store shelves. CEO Nick Woodman announced a new round of layoffs — the fourth in the last few years — and started talking publicly about the possibility of an acquisition. He even reportedly hired JPMorgan to suss out the possibility. To top it all off, GoPro’s newest camera, the Hero 6, didn’t sell well enough to help the company meet its own grim prediction for the 2017 holiday season.

Just nine months later, though, there’s a renewed current of optimism running through GoPro’s leadership. The ill-fated Karma drone, the layoffs, and last year’s culling of the company’s bloated camera lineup were all necessary moves, they say, to get GoPro to the exact point it finds itself at now. With any luck, they’ll wind up like those failed half-pipe attempts, and become swiftly forgotten when the company stomps one of its best tricks in years: the new lineup of Hero 7 cameras.

Woodman has spent the last year telling Wall Street, the press, and just about anyone else who will listen that GoPro’s 2018 product announcement would be all about giving customers a Cold Stone Creamery-like choice between three options: “good, better, best.”

That promise materialized in the form of three new cameras that were announced Thursday: the Hero 7 White, Hero 7 Silver, and Hero 7 Black. The cameras are priced at $199, $299, and $399, respectively, and they offer differing levels of performance. And while GoPro has sold some of its best cameras at these price points in years past, the company sometimes had to offer discounts in order to do so. The new lineup was built to be sold at these prices — which is crucial to getting the company to turn a profit again, Woodman told The Verge during a recent interview in his office at GoPro’s headquarters in San Mateo, California.

The Hero 7 Black is the most familiar of the bunch, as it nearly exactly copies the all-black, waterproof, rubbery design of its predecessors (the Hero 5 and Hero 6 Black). It’s the second camera to use GoPro’s custom GP1 processor, which the company first used last year in the Hero 6 Black after splitting with longstanding supplier Ambarella. The extra year spent working with the processor — plus an unspecified extra dash of RAM — has led to a number of new features in the Hero 7 Black, including live-streaming, a slick in-camera time-lapse feature, a Google Pixel-like smart HDR photo mode, and the headliner: a remarkable in-camera digital stabilization algorithm.

The two other cameras, White and Silver, are not as powerful, but they do feature a more refined version of the Hero 5 / Hero 6 design. They almost make the Hero 7 Black look like a near-final prototype; their rounded edges are more round, and their lens bumps are less severe. There’s still a touchscreen on the back of each of these cameras, but GoPro dropped the small LCD display on the front that typically shows information about shooting modes, battery life, and available memory card space.

GoPro’s Hero 7 lineup.

Photo: GoPro

Internally, they’re powered by a less capable processor — GoPro won’t say who made it just yet — and therefore they have more limited capabilities. The Hero 7 Silver shoots 4K footage, but it doesn’t have super slow-motion capability, for example, while the Hero 7 White’s video resolution tops out at 1080p.

These three (plus the far more niche 360-degree Fusion) are the only cameras GoPro will sell for the foreseeable future and overall, Woodman says, the company is even thinking about simplifying its universe of accessories as well, all in an effort to cut bloated operating costs and reduce customer confusion.

That could even mean abandoning the Karma Grip, the handheld stabilizer accessory that was announced alongside GoPro’s drone in 2016. The Grip was originally positioned as part of the Karma drone ecosystem, a way to get the same cinematic, smooth footage on the ground that the company promised could be captured in the air. GoPro has since sold it separately, promising that it makes “the ordinary look extraordinary.”

But while all this was happening, GoPro’s also been developing sophisticated digital image stabilization technology and integrating it into the company’s cameras. The newest version is called Hypersmooth, and it’s a dramatic evolution. Footage shot on the Hero 7 Black using Hypersmooth has an ethereal quality to it, and even handheld shots — using no mounts or accessories — look like they were captured with the help of some sort of stabilization equipment. I’ve found this to be true whether I was just walking down the street, or chasing my dog around the park. Take the time to mount the Hero 7 Black to a bike or a helmet, and the benefits are even greater.

Hypersmooth is available in almost all shooting modes, and where it’s not, the camera will back off to Hero 6 Black levels of stabilization, which is still impressive considering there aren’t any moving parts inside, which is how bigger cameras often compensate for shake. The feature even cuts down on rolling shutter, a tougher problem to solve, and one that plagued the best GoPros of years past in high-vibration situations.

For these reasons, Woodman argues Hypersmooth is a huge leap forward.

“To slay that beast is a really big deal,” he says from behind his desk, wearing sandals, a graphic T-shirt, and blue jeans held up by a GoPro belt buckle. Maxing out frame rates and resolutions helps many users, he admits, but truly smooth footage is something everyone benefits from. “From the moment we produced the first HD Hero [camera], we’ve been trying to do this because we recognized that it’s what’s next after enabling these [wide-angle] perspectives” in the first place, he adds. “This is the biggest launch we’ve had since 2012 when we launched the Hero 3 cameras.”

GoPro’s so sure about the value of Hypersmooth that it’s actively promoting in marketing materials the fact that the camera essentially obsolesces the $299 Karma Grip. It’s not often you see a company add a function to one product that puts another in danger, but Woodman says it was an obvious choice.

“There are still limited use cases for a gimbal, and so it makes sense for us to still be selling and supporting Karma Grip,” Woodman said. “But we’re going to pay very close attention to how sales are moving forward because if our engineering development effort is better served, and if our consumers are better served, by us redirecting development efforts into more and more in-camera capability, then that’s what we will do.”

A rally to profitability could open the door back up for more products down the line, according to Woodman. If the number of discontinued products to come out of the company over the last few years are any indication, there’s certainly no shortage of ideas at GoPro. The problem then, he says, was really the execution.

One of the people leading the effort to make things more coherent is its vice president of design, Danny Coster, who was hired away from Apple’s industrial design team in 2016. GoPro declined to make Coster available for an interview, but Pablo Lema, the company’s vice president of product and user experience, says Coster’s influence is really beginning to show up now — thanks to the nature of years-long product design cycles — with the Hero 7 White and Silver.

“What he brings to us is a gravitas of the nuances of the product design,” Lema says. “In the past, we would have taken for granted things like radiuses, and how it feels in the hand, and it’s really good to have his sort of immeasurable experience coming into how we actually end up designing the products.”

Such reverence for Coster isn’t hard to come by at GoPro, where he’s become treated like the company’s own Jony Ive — down to the fact that GoPro declined to make him available for an interview. (In his two years with GoPro, he’s mostly only appeared in a few corporately-produced videos.) But Lema’s point rings true, especially with the Hero 7 Silver and White cameras. The two cameras look and feel just different enough — and more importantly, new enough — that it wouldn’t be surprising if customers who aren’t price sensitive pick one over the Hero 7 Black. They’re a more clear idea of the future of GoPro design.

There will be trade-offs, but White and Silver present more budget-minded buyers with two solid options. On paper, the Hero 7 Silver compares favorably to Hero 6 Black, with built-in GPS, wide dynamic range photos, and the ability to shoot up to 4K resolution video at 30 frames per second. Both the Silver and the Hero 7 White are waterproof out of the box, have voice control, and can automatically back footage up to GoPro’s cloud service over Wi-Fi. They don’t have Hypersmooth, but they do have Hero 6 Black-level stabilization.

But the Hero 7 Black is the flagship. It’s the camera that athletes, pros, and prosumers will buy, which means it will also be the most visible. And Woodman can’t contain his excitement about Hypersmooth. “[It] sets a new bar, not just for GoPro image quality, but for the entire digital imaging industry,” he says. “I feel comfortable saying this is the single biggest advancement for GoPro since high definition.”

The foundation for many of the Hero 7 Black’s new features — Hypersmooth among them — is the GP1, the company’s custom processor.

Switching to the GP1 marked a departure for GoPro, which had previously relied on Ambarella processors to power its cameras. The GP1 was designed by GoPro and manufactured by a company called Socionext, and while the company attributed some of Hero 6 Black’s headlining features to the custom processor, Woodman says far more of the chip’s potential is being realized on the Hero 7 Black.

That means faster performance throughout the camera, but also new features like an in-camera time-lapse feature called “time warp” that leverages the Hypersmooth stabilization to create a video that has the look and feel of footage shot with Instagram’s Hyperlapse app. There’s a new, smarter HDR photo mode as well that automatically adjusts settings based on what type of scene the camera is being pointed at, much like what’s available on Google’s Pixel phones or Apple’s new iPhones.

But where the GP1’s real value lies, according to Woodman, is in what it means for the company’s business. “Thanks to us owning more of the entire stack … we can move, invent, and innovate faster than we could when we were more reliant on a third-party supplier for our processor,” he says.

The problem with relying on another company for a component as crucial as the processor was multifaceted, he says. First, since a company like Ambarella makes chips that many companies use, there’s only so much incentive to customize a chip to fit the specific needs of any one customer. Second, if GoPro was able to sway Ambarella to include certain ideas or breakthroughs, those would now be available to any competitor who wanted to buy the chip.

“Others benefited from our development, and there wasn’t a lot we could do to change that or restrict access to some of our innovation,” he says. “If some of the things that we wanted to do just didn’t fit into the roadmap of what our supplier wanted, we couldn’t do them, or we certainly couldn’t do them as quickly, whereas now because we own the stack, when we decide we want to go do something and our teams align on it, it’s getting done and is getting done much more quickly.”

Following in the footsteps of the company’s big software push over the last few years, which relied heavily on a few strategic acquisitions, the GP1’s development has been led by a small team GoPro acquired from imaging science company DxO.

“They’re the team that’s speccing out what we want in the next generation chip, so we can really have control of our destiny. If we invent some way of doing better image processing, we can now get that into our cameras without sharing it to the rest of the world,” GoPro’s CTO, Sandor Barna, says.

“What they have is a beautiful balance. They know the types of products we want to make, and [have] just a raw image science intelligence that is photons and pixels and algorithms,” Lema adds.

When Woodman talks about the GP1 chip, his trademark excitement is met — maybe even exceeded — by an obvious sense of relief. There are many reasons he’s proud of the company he’s built, and he can talk for hours about each. But it’s clear that he feels GoPro’s custom processor has bought the company some all-important breathing room.

“Hardware is the platform on which software dances its magical dance, right? We’ve got to have the processing power to then enable our software engineers to invent the future through their algorithm development,” he says.

Another key if you want to master an extreme sport is simply to figure out what you’re not good at. And this is something GoPro’s leadership admits the company has learned the hard way. Listening to them talk about what’s next, it’s clear that the focus is not only on making the right products, but finding the right customers to click “buy.”

“Nick and I, we debate this all the time, which is there’s always a soupçon of something that a customer doesn’t know what they want, and we’ve got to bring that to them,” Lema says. “But you can’t just do that because you’ll misfire.”

That was one of the hardest learned lessons at GoPro, Lema says, with the Karma drone being one of the biggest misfires. First teased in 2015, the Karma was delayed, then announced, then almost immediately recalled — news that was announced on the night of the 2016 presidential election. The drone went back on sale a few months later, but when it did, GoPro had a hard time shedding comparisons to (and taking any market share from) Chinese drone maker DJI’s rapidly evolving lineup.

Lema, who GoPro hired away from 3D Robotics (basically the only other US-based competitor to DJI at the time) to start the Karma project, says that killing the company’s drone division was “unfortunately the right business decision.”

Woodman has said that the Karma was discontinued in large part because the margins on the product were too thin, though Lema says GoPro could have turned enough of a profit on the drone. But he admits that probably wouldn’t have happened until the third version. “And since we were starting to see things that we wanted to fix in our core camera business, funding that big of an initiative” was too hard, he says. It was especially a shame because the second version of Karma was “going to be very, very cool,” he says. “And [DJI’s] Mavic 2 is very, very similar.”

The Hero Session — a tiny cube of a camera released in 2015 — was another misfire that, again, had a lot to do with the company misreading the market.

GoPro touted the Session’s small stature and one-button design as evidence that it was focusing on making its cameras both easier to use and less obtrusive, two common complaints with earlier products. But sales of the original Session, as well as its successor, never took off. GoPro had to cut the price of the first Session by $200, and the product didn’t see a refresh when the Hero 6 Black came around.

While it seemed like an easy camera to use to the people at GoPro, Barna says it instead wound up being “simple in a way that an expert user would appreciate.”

“Give that camera to an entry-level person who has no experience with GoPro, half the people don’t even realize it’s a camera,” he says.

“You’ve got to really be honest with yourself that, if someone’s telling you that something is wrong in their engagement with your product experience, that is true,” Lema says. “You should listen to it. And the onus on us is to develop that into a better experience.”

Misfires like these are on the way out though, according to Woodman.

“We started to realize that we were building our version of GoPro, and not the customer’s version,” he says. To fix that, GoPro has spent the last two years focusing more on listening to customers while also charting a path to new ones (especially in overseas markets). The company’s built up an internal consumer insights team that’s collecting and studying data, and it now has an infrastructure in place that sheds light on how people actually use — and just as importantly, how they don’t use — GoPro cameras.

This new feedback loop led to things like the pricing structure of the Hero 7 and the design of the lower-tier options. It also informed the increasingly simplified user interface, as well as new features like “short clips,” where a user can specify ahead of time that they only want to shoot 15- or 30-second videos which are easier to share to Instagram or other social media.

“Before we would have done a Super Bowl ad and said like ‘everyone should buy this camera, it’s for everyone, it’s a GoPro, it’s super easy to use.’ But you’ve got to be careful,” Lema says. “We’ve got to make sure that we’re giving the right experience to a person who is going to shell out an important amount of money to buy a device from us.”

Through all its troubles, one thing has not changed for GoPro: it still sells lots and lots of cameras. At the company’s lowest points over the last few years, it still sold well over 4 million GoPros to people around the world. It’s already on track to get back over 5 million this year, Woodman says, and a really successful Hero 7 launch and holiday season could push that number even higher.

But GoPro has had one profitable quarter dating back nearly three years, and Wall Street is not happy. It’s tempting to think that only athletes or customers or employees care about the success of GoPro. But it’s been a publicly traded company for four years now, and so there’s a constant pressure to please shareholders. Those shareholders want the value of their GoPro stock to increase, but since 2015 it’s almost exclusively done the opposite.

“They’ve really cracked their credibility over the last few years, so expectations have been pretty low,” Wedbush Securities analyst Alicia Reese says. “They’ve been around long enough, they should be producing a profit. That’s what investors are looking for.”

Yuuji Anderson, an analyst for Morgan Stanley, recently said he’s “skeptical” that GoPro can include enough functional improvements in its new cameras to not only meet demand, but to hit the growth it needs to restore confidence in the company’s business. That sentiment is widely shared — most analysts currently rate the company’s stock a “hold” or “sell.”

This turbulent relationship is one reason why there was so much buzz about a potential acquisition in the first half of 2018 — including reports that Chinese consumer tech company Xiaomi was interested in buying.

On the eve of the Hero 7 launch, though, Woodman makes it sound like any chance at a sale has been tabled.

“When I made that statement months ago, I felt that as a founder, I needed to make it clear that I wasn’t holding the company back and wasn’t steadfast against the notion. That if there was an opportunity to scale our audience by aligning with a company that helped us achieve our goals, I’d be open to considering it,” he says. “But our focus of the year has been, and continues to be, returning our business to profitability.”

Woodman’s role as founder and CEO means a big decision like selling the company is totally subject to his whims because he authors so much control, Reese says.

“It is his baby,” she says. “I think maybe after a few years of the company just being really difficult to run he might have felt like he was running out of steam. But things are picking up again, and if things go as planned in the back half [of 2018] I think he won’t have the desire to sell the company.”

Despite GoPro’s struggles, there’s one truly enviable thing about the position it’s in: it essentially has no direct competition. The company’s biggest competitor in the space was Sony, but the Japanese electronics giant hasn’t put out an action camera in years. Far cheaper options that seem to compete on paper — like Xiaomi’s own Yi lineup — have not been able to put a dent in GoPro’s market share dominance.

The company’s biggest threat, competition-wise, may have always been the rapid evolution of smartphone cameras. But even as those have gotten better, and the phones themselves have become waterproof, there are still plenty of situations where you’d rather let a GoPro take the hit.

Woodman admits the company acted “frightened” over the last few years as it scrambled to understand what it was getting wrong, and that it “retreated a little bit” as a result of all this. But like that snowboarder at the bottom of the half-pipe, Woodman believes GoPro has finally figured out what it’s done wrong. It’s found the limits. Now it’s time to pick itself back up, climb the hill, and try again. If GoPro still needs a hero, its new cameras — and especially its new flagship — may be just the trick.

“It’s far and away the best GoPros we’ve ever made, at far and away the most important time in the company’s history,” he says. “The world loves to tear you down when you’re on top. But fortunately, the world also loves a comeback story.”

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