More details have leaked about GoPro Inc’s (NASDAQ:GPRO) holiday product lineup, including a possible event date at the end of September. Expected to make an appearance are the HERO6 Black action camera, and the Karma drone with updated capabilities to better compete with DJI.
Having the new products available for the holiday quarter is obviously a big deal for the company, but what may be even more important for long-term prospects of GPRO stock is a report that the HERO6 will be the first new GoPro camera to be powered by a custom processor.
Report: HERO6 Gets Custom Silicon
Up until now, GoPro cameras have been powered by processors from Ambarella Inc (NASDAQ:AMBA). Ambarella specializes in chips that incorporate HD and Ultra HD image processing and compression. While GoPro has historically been one of its key customers, the company’s chips are found in a variety of action cameras, drones, security cameras and dash-cams.
According to The Verge, the HERO6 will see the debut of a new, custom designed “GP1”processor. Why is this move important?
GPRO built a leadership position in the action camera market despite using an image processor that is commercially available to any of its competitors. It has had to build features and capabilities of any new GoPro camera around the silicon that Ambarella has available at the time. That’s a similar relationship to the smartphone world where most Android smartphone manufacturers use the same chips made by Qualcomm, Inc. (NASDAQ:QCOM). That means those smartphones all have basically the same performance and key hardware-based features.
If reports of the GP1 are true, it means GPRO is taking the Apple Inc. (NASDAQ:AAPL) route. Instead of using the same chip as everyone else in its action cameras, the company is custom designing the silicon.
Like Apple, the combination of having full control over both the software and the hardware would give GoPro the ability to make the HERO6 even better than the competition. The company could decide to focus on battery life, for example, or to boost the speed of image processing. As well, the tight integration between processor, software and hardware means the HERO6 could be the slickest action camera on the market when it arrives.
Long-term, the HERO6 may well be more important to GPRO stock for its new direction in control over all aspects of design, than for the holiday sales the flagship action camera is expected to generate.
New Update for Karma Drone?
It doesn’t look like a follow-up to last year’s Karma drone is in the works for 2017, but The Verge’s source says leaked firmware points to a significant software update for the Karma. The GoPro drone should get a “follow me” mode, where the Karma will automatically follow a user, recording video of their activity as it flies. This would make the Karma even more competitive with market-leader DJI, whose drones already have this capability.
The feature is also likely to appeal to GPRO’s activity-driven customer base, effectively offering the option of using the Karma drone as an aerial action camera.
GPRO Event: Sept. 28 Launch Date
Finally, the report in The Verge included hints from Canada — including HERO6 cameras already set up and ready to go in retail display cases — suggesting Sept. 28 is the big day and $499 is the price. Given that the date is little over a week away, it seems logical that the company will announce the new GoPro camera and the Karma update on that same day.
So, mark Sept. 28 on your calendar. If the predictions are correct, we should see the HERO6 Black, see a demo of the Karma drone’s new feature and perhaps most importantly of all, get confirmation that GoPro is moving to custom processors for its cameras. Expect GPRO stock to get a boost from the HERO6 and Karma (and don’t forget the Fusion VR camera) in anticipation of holiday sales, but don’t underestimate the potential long-term implications of the company moving away from mass production chips to its own custom designed silicon.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.