Apple's new watch update is the missing piece of the puzzle the Apple Watch needed, and Fitbit should be worried

The watchOS 6 update will certainly put the Apple Watch on a more level playing field with Fitbit when it comes to how it performs as a fitness tracker. But even so, there are three important ways in which Fitbit's watches and trackers still outshine Apple's: sleep tracking, battery life, and pricing.

The Apple Watch still doesn't offer native sleep tracking, although it does support third-party apps that do so. (That might not be the case for too long, as Apple is said to be working on sleep tracking for the Apple Watch).

Fitbit, meanwhile, offers fairly comprehensive sleep tracking that can tell wearers how much time they've spent in deep, light, and REM sleep and presents that information in a graph. You can also see the average amount of sleep you get over the course of a week, and the app provides tidbits of information about how lack of sleep can negatively impact your health.

The battery life on devices like the Fitbit Versa can also last for multiple days, whereas I'm typically happy to get two days out of the Apple Watch Series 4. Long battery life is a necessity for sleep tracking — after all, how would you be able to log your sleep if you have to charge your device over night?

Plus, Fitbit's smartwatches are noticeably cheaper than Apple's. The standard Fitbit Versa starts at $180, whereas the Apple Watch Series 4 starts at $399. That makes Fitbit's smartwatch less than half as expensive as Apple's.

All told, Apple's watchOS 6 update is another sign that it's getting increasingly difficult for Fitbit to differentiate its products from the Apple Watch and other rival wearables.

Fitbit has been making an effort to diversify its revenue stream beyond consumer products with premium services such as the one it plans to launch later this year and its enterprise health program called Fitbit Health Solutions. That program grew 70% year-over-year and generated $30.5 million in revenue in the company's first fiscal quarter, accounting for a small but growing chunk of the company's overall revenue of $272 million.

But smartwatches and trackers still account for most of Fitbit's revenue, and based on Apple's increased focus on health, it doesn't sound like the company plans to slow down anytime soon. After all, CEO Tim Cook has even said when speaking with CNBC that Apple's "greatest contribution to mankind" will be about health.