Nike has laid off the majority of its FuelBand hardware team—about 70 to 80 percent of the 70-member team—and has announced cessation of its wearable hardware manufacturing, according to a recent report by CNET. The move is an initial step in Nike’s plan to shift from building hardware towards increased focus on developing software.
Given the popularity of fitness companies’ wearable fitness trackers—such as Jawbone, Fitbit, Polar Loop, Bowflex Boost and Garmin Vivofit—it may seem surprising that Nike is abandoning FuelBand.
However, according to many experts, Nike’s decision is in line with where the fitness industry seems to be headed. Consumers generally have shown a preference for a single, multi-purpose tool over multiple, single-purpose tools. Not that long ago, for instance, consumers usually owned separate devices for playing music, taking photos, recording videos and providing driving directions. Then the smartphone came along.
The same trend is likely to occur with fitness trackers. For example, the array of wearable trackers on the market include Jawbone’s UP, which features sleep, movement and food tracking capabilities; Fitbit’s Flex, which tracks steps taken during the day, distance, calories burned and sleep quality at night; Polar Loop, which tracks general physical activity from walking and running to jumping; Bowflex Boost, which lets users set a daily goal for activity and sleep and follow their progress; Garmin Vivofit, which tracks activity level, assigns goals and marks milestones; and Nike’s FuelBand, which tracks everyday activity from morning workouts to a night out dancing with friends. Just as many wearable fitness trackers have similar features, many also require syncing up with mobile devices and computers in order to keep track of progress.
According to reports, Nike has recognized the potential benefits of integrating features of wearable fitness trackers into app development. The prediction is that consumers would prefer to track fitness and health goals using their smartphones instead of a fitness tracker and a smartphone. Other benefits of fitness apps over wearable trackers include better engagement—or the ability to help people make long-term behavioral changes—better consolidation—both in terms of consolidating individual data and sharing data among peers—and less hassle—since consumers won’t have to pay for, charge and sync up a separate device.
Nike has said it wants to be a forward-thinking, technologically-savvy competitor, and it hopes that by rebooting their approach, it will be able to more than [triple its current user base from 30 million to 100 million].
The most recent reports say that a part of Nike’s plan to boost efforts in software development will involve working with Apple, with whom it has a long relationship. Apple is one of Nike’s biggest outside partners, plus Apple CEO Tim Cook sits on Nike’s board.
Since 2006, Nike has worked with Apple to develop Nike+ Running and iOS apps such as Nike+ Training Club, Nike+ FuelBand and Nike+ Move. Next up could be an app that’s incorporated in an Apple “iWatch” smart watch that is said to be in the works. Details about the partnership remain vague, as Nike CEO Mark Parker in a recent CNBC interview declined to reveal whether a collaborative device will hit the market. Parker did say that the relationship between Nike and Apple will continue and that everyone at Nike is “very excited about what’s to come.” Based on Nike’s past patterns of introducing a new version of the iPhone in the months before the holiday shopping season, experts said that it would not be a surprise if Apple and Nike unveil a new product late this year.