On Friday the wearable technology industry was rocked by news that sportswear heavyweight Nike is canning its wearable fitness tracker FuelBand SE.
The company is laying off between 70% and 80% of its Digital Sport hardware team, which is behind the company’s wearable fitness offerings, and has cancelled updated versions of the FuelBand that had been planned for release later this year.
The news, which was first reported by CNET, has shaken the wearable technology industry. Sports has long been seen as the primary market for wearables, with many analysts predicting that other uses will become mainstream after the technology has become normal in fitness.
But with Nike – one of the major players in wearable technology – pulling out, some are seeing this as the end of an industry that has barely started. Others, however, think Nike has taken a look at where the industry is going to go and has made a strategic decision to reposition before the game changes.
With Nike keeping quiet about its motives, we’ve collected the leading theories on what the company is planning.
iWatch incoming: did Tim Cook persuade Nike to ditch FuelBand?
Apple’s foray into wearable technology is expected later this year in the form of the iWatch, a wristband with iPhone connectivity. Assuming that occurs, the iWatch is likely to have a very big impact on the wearable technology market, potentially putting some rivals out of business.
Nike is keeping its fitness software around, leading some to reason that the company is planning to focus on software for the iWatch instead and avoid taking Apple on at hardware. Forbes quoted wearables analyst Daniel Matte of Canalys Research as saying: “Competing with Apple on hardware is a very unappealing prospect.”
Nike wouldn’t even need to rely on rumour to know about the iWatch – Apple CEO Tim Cook sits on the Nike board and may well have dropped a few hints.
Death of wearables: did Nike abandon a dying industry?
For some, however, Nike’s move to can FuelBand is just a wider reflection of the industry as a whole.
According to this theory, Nike took a good look at the wearables industry – including the low sales, quick decline in use and general consumer hostility – and ran in the other direction.
Only time will tell if this one is right, but something tells us that this is more of a software vs hardware discussion than a wearables vs no wearables one.
Super software: canning hardware for a softer solution?
All of the employees that were fired were in the hardware division of a wider, larger software department that (apparently) has not been affected by Nike’s mysterious repositioning.
The company may be focussing more on fitness apps, which will no doubt be in part for Apple’s iPhone and possibly the iWatch.
However, Nike is also releasing the API for Nike+ later this year. The company may be planning to make its software into the standard for sports wearables, and take a backseat on hardware.
Poor planning: was the project just handled badly?
A post on anonymous sharing app Secret from last week also suggests that this was just a case of a mishandled project.
The anonymous poster, who is likely to be a current or ex Nike employee, said: “The douchebag execs at Nike are going to lay off a bunch of the eng team who developed The FuelBand, and other Nike+ stuff. Mostly because the execs committed gross negligence, wasted tons of money, and didn’t know what they were doing.”
Images courtesy of Nike+.