Nike cuts 80% of employees from Digital Sports Division; rumored to include Fuelband hardware team. Many speculate on fitness tracker’s future. Competitors continue to establish a market for devices.
Things have been less than stellar for the Nike Fuelband. The $150 second-generation Nike+ Fuelband SE, which tracks users’ movement and intensity of workouts, counts steps, tells time, and provides real-time progress, hasn’t been garnering as much attention as the company would have liked. Although Nike hasn’t directly reported on any sales numbers, issues have become apparent with the recent news that Nike has laid off about 80% of their hardware team in the Digital Sports Division, which specializes in hardware design, manufacturing, engineering, and software interface design. A newer iteration of the Fuelband, reportedly slimmer in design and set to launch as early as this fall, was canned, adding to the rumors of dwindling sales.
End of Fuelband?
These reports lead to many speculating that Nike will stop selling the Fuelband SE and possibly even scrap the whole wristband line. Marketing the device will become considerably harder once long-established tech bigwigs, such as Apple, start releasing their own rumored wearable devices with fitness functionality, decreasing Nike’s chances at success.
There is also the question of whether or not the current market for wearable fitness devices is practical. Despite the recent release of numerous devices, there doesn’t seem to be as much of a demand for them. Since health statistics greatly vary for every user, it’s hard to peg the average user. Also, these devices can only draw so many numbers from your upper-arm, wrist, etc. Therefore, the FuelBand might just be too costly to continue with risky hardware manufacturing. Nike could just stick with releasing their own software, which is considerably cheaper to produce and creates less of a risk in marketing and sales than hardware.
Nike: Fuelband Isn’t Going Anywhere; Hardware’s Future?
Even with all the speculation on Nike’s escape route, the company promises that the FuelBand is here to stay, despite confirming a small number of layoffs in the Digital Sports Division. However, the layoffs might just be the first step in a long-term plan to slowly run down the inventory, silently killing the device. Nike could also still be debating the fate of the device. As of right now, there could be plenty of uncertainty, especially with the added lack of support from engineers. They haven’t even been able to roll out an Android app for the device.
But, there could also be big plans in works. The layoffs could just mean the beginning of major changes to the Fuelband. Nike could be planning on hiring a new team of developers. Plus, Nike has already dedicated a lot of time and money on the Fuelband line so it would be a waste to just drop the device and all the data that has been collected.
Nike recently opened the Nike+ Fuel Lab in San Francisco, which is a dedicated space for creating tech partnerships and research/development of emerging technologies. There’s even speculation that Nike could be planning a partnership with Apple, since Apple’s own Tim Cook has sat on Nike’s board for almost a decade.
Possible Future in Software
Even with all the dedication put into the Fuelband, Nike could just decide to cut their losses and focus more on the software aspect of digital health and fitness. With the potential challenge of competing with future big-name entries, Nike might be thinking on a smaller scale.
Other examples of hardware trouble might have been a warning sign for Nike. Recently, the startup Fitbit had to recall Force, a wireless activity-tracking wristband. There were thousands of reported cases of allergic reactions caused by the materials in the wristbands. This recall revealed some startling statistics and unimpressive sales numbers. Fitbit accounted for 67% of wearable activity device sales last year, according to NPD Group, which means that Fuelband has less than half of the market share, which is divided more between several other startups. From the data collected by NPD on the overall popularity of health trackers, only 28% of consumers said they would buy a device. In the overall category of wearable devices, only 52% of consumers were familiar with the technology, and among those aware, only 1-in-3 consumers said they are likely to buy one.
However, wearable tech could still be trying to establish itself in the market. These devices, only a few years old, are still in their infancy. As with any hardware, it can take a while for it to catch on. Even with the unsure future in wearable tech, Nike could still to push forward with their Fuel software. They could even focus on elaborate, dedicated apps through iOS or Android. They would just have to worry about competing with already established health/fitness software applications.
Nike also has its own establishment through its partnership with TechStars, a company that seeds funding to startups. They could choose to use this partnership and their new R&D unit to research new ways of integrating their current software in their own sports gear, or take advantage of new developments and advancements. With Nike’s wide variety of hardware available, the options are endless. They could reestablish themselves in digital hardware and be the first to roll out something truly unique. Since Nike has had experience with developing the Fuelband, it would become easier for Nike a develop a strategy for new hardware integration.
Nike could go a few routes with coordinating hardware and software. They could decide on vertical integration and develop both the hardware and software to interact with each other. They could also partner with other companies, which is where that Nike-Apple relationship would come into play. Finally, they could decide to go the Facebook route, and outright purchase a startup to work in-house with Nike. There are plenty of established startups, such as Fitbit. Using one of those established, popular sources could be a great way to collect data from their already growing user base.
Even if Nike decides to just completely give up on the Fuelband, digital health devices will continue to grow in the worldwide market. Since more than half of U.S. consumers are aware of such technology, it will only be a matter before the overall wearable tech market becomes self-sustaining.
In the meantime, interest in this market will cause startups to continue with experiments and taking chances with this particular tech. The end of the Fuelband wouldn’t, by any means, harm the digital fitness market. In fact, NPD reports that digital fitness has grown to over $330 million.
Several alternatives to the Fuelband will continue make waves in the marketplace. Many of the wearable fitness devices offer much of the same, such as the monitoring of calories, steps, distance, and sleep stats. Many can also be linked wirelessly to their respective apps to update statistics and develop new fitness goals.
First, we have the wristbands that are similar in style to the Nike+ Fuelband, such as the previously mentioned Fitbit. Even though Fitbit suffered from the recall of the Force, they still have the excellent Flex for $100. With a minimalist design design, the Fitbit Flex a good for users looking for a bit of simplicity. There is also the Jawbone UP24 ($150), which users can sync with their iOS or Android device, as well as third-party apps like MyFitnessPal. The UP24 can also be programmed with reminders and alarms. The device also has a seven-day battery life. The Garmin Vivofit ($130) is a waterproof device that can also be paired with a separate heart-rate monitor. The Polar Loop ($100) is also waterproof and can sync your heart rate.
For a simpler design, we have the MisFit Shrine ($120), which is a tiny cylinder that can be worn on your wrist or clipped to your clothing. The color of the light on the device indicates your progress can be updated with iOS/Android app by simply placing the device on your smartphone. Battery life is about 4 months. The Bowflex Boast wristband ($50) also features a simple design, much like the Shrine, the Boost indicates progress through a light and can be updated with the iPhone app.
If you’re not quite into wristbands, BodyMedia has the Fit Link ($119), which attaches to your upper arm. You can upload activity and sync with their own online food journal/calorie tracker. First 6 months are free. After that, there is a $7/month membership fee. The Striiv Play ($70) acts as a pedometer, which can be synced with the iOS app for customized challenges or with MyFitnessPal. Finally, the Withings Pulse ($100) is a device that can be clipped to your clothes (or strapped to wrist while you sleep). The device is complete with a finger heart rate monitor on the back and a battery that has a charge of two weeks.