Nike Closing Down FuelBand Business Line

2014-04-20_19-41-51

Nike will shut down its FuelBand business unit, according to CNET who reports that 55 of the 70 person FuelBand team has been laid off or internally transferred to new divisions, and that plans to unveil an upgraded version of the activity tracker, or any other physical products in the digital fitness space, have been cancelled.

Nike entered the activity tracker market early and had success with its FuelBand and Nike+ product lines. The wrist-worn trackers are popular with fitness enthusiasts that want a deeper understanding of their health metrics. However, activity trackers were never widely embraced by mainstream consumers, and the future of the tracker market looks grim because freeware smartphone apps are now beginning to accurately replicate their core functions. Apple’s newest iPhone includes a dedicated M7 processor developed specifically to let third-party apps track user activity more accurately. Samsung’s Galaxy smartphones include an S-Health app which also captures and tracks activity throughout the day.

Though most modern activity trackers measure more than steps taken and calories burned, this dataset is largely considered the core metric of an activity tracker, and so competing against increasingly mature apps that offer the same data for free is going to have a significant effect on overall device sales. The situation is analogous to the introduction of free GPS apps like Google Maps and Waze, and the correlated drop in GPS sales thereafter.

Further complicating the activity tracker market is the uncertainty that the impending arrival of the smartwatch market segment represents. Pebble, Samsung, and a few others, including Sony, already have smart watches on the market. Sony’s own smartwatch, which was one of the first to market, has thus far seen a lukewarm reception, and does not include any activity tracking functionality. The Apple’s iWatch is, if rumors prove true, shaping up to be the end-all-be-all activity tracking smart watch, monitoring not only steps taken, but sleep patterns, and even blood pressure and blood glucose levels.  

With pressure bearing down from multiple directions, Sony may simply see this as an opportune time to exit the digital health hardware game and focus on its growing Nike+ software platform. The dismantling of FuelBand comes just a week after Nike announced the launch of Fuel Labs, a San Francisco-based accelerator program that will fund and develop startups looking to integrate with the Nike+ platform, suggesting that Nike sees a software-based future for itself in digital health.


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