Nike FuelBand layoffs: a pivot in wearables?
CNET reported Friday that Nike had laid off 70-80% of the team responsible for designing its FuelBand fitness tracker — 55 people in Hong Kong and at Nike headquarters in Beaverton, Ore.
"As a fast-paced, global business we continually align resources with business priorities," Nike spokesman Brian Strong told CNET in an email sent before the story ran. "As our Digital Sport priorities evolve, we expect to make changes within the team, and there will be a small number of layoffs. We do not comment on individual employment matters."
The reported layoffs would point toward a different strategy at Nike
when it comes to wearables.
Strong told CNET that Nike would continue to sell the current generation of its FuelBand SE and would continue with plans to launch versions in a range of new colors. He didn’t address suggestions from CNET sources that the company had already killed a slimmer version of FuelBand that was supposed to ship in the fall.
The FuelBand team is part of the 200-person Nike Digital Sport division that was responsible for industrial design, mechanical, and electrical hardware engineering of the FuelBand, Nike+ sportwatch, and other fitness-oriented wearables.
The layoffs would be part of an overall cutback in the hardware-producing side of Nike’s digital sports effort, which includes software development for the possibly defunct fitness trackers and Nike Digital Tech, which is responsible for web design and web applications for NikeFuel, the social networking site Nike set up as an online base to collect, post, and compare performance statistics gathered by customers using its FuelBand, SportWatch, and iOS-based running- and basketball-tracking applications.
The layoffs did not affect Nike Digital Tech, according to CNET.
Nike confirmed to Re/code that it would make a "small number" of layoffs, but it denied that it is shutting down its hardware design efforts. Nike would not respond by phone to questions from EE Times, and it has not yet responded to requests sent via email.
The company has not stopped development or marketing efforts for its wearables. During an April 10 event, it announced the launch of a third-party developer recruitment center, the Nike+Fuel Lab. At that event, Nike touted its relationships with fitness app companies, including RunKeeper, Strave, and MyFitnessPal, and said users of all those apps would be able to use NikeFuel to measure their own performance.
The Nike+Fuel Lab website presents NikeFuel as "a single, universal way to measure movement." This implies Nike would be responsible for the hardware tracking the movement, as well as the software crunching statistics related to it. Most of the site focuses on the role of other fitness app developers, much as an IT equipment vendor would focus on independent software vendors as part of its promotion of IT hardware.
FuelBand made Nike a leader in fitness tracking, which IDC predicts will make up the bulk of the nonmedical wearables market through 2018. But comparatively slow software development kept it from using the steady flow of performance data from customers as a way to lock them into a Nike universe.
Nike’s run-tracking app does have an Android version, but not the apps that connect with it, like the FuelBand SE. In an October TheNextWeb post, Paul Sawers called that a "glaring omission in Nike’s technological armory" that made its wristband irrelevant to the 80% of potential customers who use Android, rather than iOS.
However, Stefan Olander, vice president of Digital Sport for Nike, told Sawers that so many Android devices run old versions of the operating system that there is no way to be sure a Nike wristband using the low-energy Bluetooth LE would work with whatever smartphone a Nike customer happened to have. "Right now, we don’t believe the effort is worth the return for Bluetooth LE," Olander said. "And we want to do it really, really well for iOS."
The Huffington Post said the first version of Nike’s FuelBand "changed the game" for fitness devices when it shipped two-and-a-half years ago. But users were disappointed that the FuelBand SE (unveiled in mid-October) didn’t get a heart rate monitor, Android support, or a host of other features many had eagerly awaited.
The Fitbit Force bracelet, announced days before the FuelBand SE’s debut, could track sleep, steps per day, distance covered, calories burned, floors climbed, and active minutes. It came with a list price of $129, compared to $149 for the FuelBand SE.
Last year, FuelBand held a 10% share of the smartphone-enabled fitness tracker market, versus 68% for Fitbit and 19% for Jawbone Up, NPD Group reported in January.
However, the market for $150 fitness trackers may be too small to hold Nike’s attention. A February Nielsen survey of 471 American adults found that 70% are aware of wearable computing devices, but only 15% actually own one. Among the 15% who own a wearable device, 61% own a fitness tracker. And even though 62% of those who own a fitness tracker use it "often," only 28% said the device was worth the price they paid for it.
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