Peloton Is Teasing a New Category for Fall 2027. Lululemon Already Learned the Hard Way.
Peloton plans to launch hardware in a new category in fall 2027, powered by its Peloton IQ AI coaching. Lululemon's US$500 million Mirror bet and Canada's subscription fatigue show how hard that sell can be.
C-Tribe Editorial
Six years ago, a Vancouver company decided the future of fitness was a mirror on your wall. Lululemon paid US$500 million for it. Three years later, it stopped selling the thing and handed its workout classes to Peloton.
Now Peloton says its own next big swing is coming in fall 2027. On Thursday's earnings call, CEO Peter Stern said the company plans "to launch hardware in a new category" next fall, as part of a push to pair new equipment with its AI coaching software. Before anyone pre-orders, the Lululemon story is worth a closer look.
What did Peloton actually announce?
Less than the hype suggests, and that matters.
According to the earnings call transcript, Stern said Peloton is "turning our attention to launching products in new categories beyond Bike and Tread," and that the fall 2027 launch would "meaningfully expand" the company's addressable market. He did not say what the product is.
The AI piece is Peloton IQ, which Stern calls the company's "AI-powered operating system." It builds personalized plans, tracks movement with computer vision and now adjusts treadmill workouts in real time with a feature called IQ Pace Targets. Stern said more than 1 million monthly active users engaged with Peloton IQ in September.
His pitch for why that is defensible was surprisingly candid. "You could go in right now to Claude or to ChatGPT and give it a bunch of information about yourself and ask it to personalize a workout," he said. The difference, he argued, is that Peloton can change the workout on the machine itself, "a unique capability using AI that only Peloton can bring to our members."
Is Peloton healthy enough to pull this off?
Healthier than it has been in years.
Peloton's first quarter results showed revenue of US$559 million, up 2% and its third straight quarter of year-over-year growth. It posted net income of US$96 million and paid down another US$280 million of debt after the quarter closed.
The weak spot is the core subscription base. Paid connected fitness subscriptions fell 9% from a year earlier to 2.475 million, and the company expects another 9% decline next quarter. Full-year revenue guidance of US$2.30 billion to US$2.40 billion implies a 4% drop at the midpoint. Peloton is growing revenue by charging more and selling more equipment while its member count shrinks. A new category is how it hopes to reverse that.
What did Lululemon learn from Mirror?
That connected fitness hardware is brutally hard, even for a brand people love.
Lululemon announced in June 2020 that it would acquire Mirror for US$500 million, calling it a way to bring "personalized in-home sweat" to its customers. It was peak pandemic, and home workouts looked like the future.
The bet unravelled fast. Lululemon's annual report for 2022 recorded a US$407.9 million impairment on the business, by then renamed Lululemon Studio. Its next annual report says it stopped selling the Mirror and new digital subscriptions in December 2023, stopped making its own classes and signed Peloton as the exclusive content provider for existing Studio members. Lululemon became Peloton's primary apparel provider in the same deal.
The lesson is that great software and a cult brand still need people to keep paying every month long after the novelty fades. Lululemon walked away from hardware and kept the apparel. Peloton appears to be betting the opposite way, that the subscription sticks best when the hardware is in your home.
Will Canadians pay for AI coaching?
This is the real question, and the early signals are mixed.
Subscription fatigue is real here. An Angus Reid Institute poll of 1,806 Canadians, reported by The Canadian Press on Thursday, found 37% had cancelled at least one streaming service in the past six months, up from 32%. Two thirds of those who cancelled said it was too expensive.
Streaming is not fitness, but the household budget is the same. Every monthly charge now gets audited. A connected fitness membership has to beat Netflix, Crave and Spotify for a spot on the list.
Peloton does seem to want a bigger Canadian footprint. Stern said the company launched a number of Fitness Factory locations, its "first Canada-specific retail partner." And its revamped treadmill lineup includes the foldable Tread Flex, which CNBC reported starts at US$2,195 and was designed to address price and space, the two biggest barriers in condo-heavy cities like Toronto and Vancouver.
The strongest argument for Peloton is retention. Stern said monthly churn was 1.7% in the quarter, and he pointed to new integrations with Whoop and Google Gemini alongside Apple, Garmin and Fitbit. If the AI coach plugs into the watch you already wear, it gets harder to cancel.
So should you care about fall 2027?
If you are a wellness founder, yes. Peloton is telling investors that the money is in turning hardware plus data into a daily habit that spans fitness, recovery and health, a market Stern describes as the "multitrillion-dollar global wellness economy." That is the same space countless Canadian startups and coaches are chasing with apps alone.
If you are a consumer, wait and see. Lululemon's Mirror proved that a beautiful device and a famous logo do not guarantee anyone keeps paying in year three. Peloton has a year to show its mystery product is something people will still use when the next subscription audit comes around.
