April 27, 2014
Nike reportedly laid off their hardware engineers from the FuelBand team. (See CNET) Financial analysts are speculating that it is to focus on software. Besides, hardware is difficult and the margins tend to be low. We've seen it with product recalls and free replacements from competitors Jawbone and Fitbit. It is difficult to ship excellent hardware products consistently.
My point of view:
1) I have about 5 wearable devices and 4 mobile apps on my phone to track my steps, active calorie burn, route, etc. I wear bulky devices with built in heart rate monitors. I wear a Nike FuelBand and other single purpose devices. I compare the data I collect from the different devices. Last week on a day I burned more than 1,200 active calories and 1,200 inactive calories, two devices were within 2 calories of each other. One was simple – no display. One was bulkier with a full range of sensors. Nike has been more focused on active calorie burn than total burn – which as a runner – is what I want. Mobile apps can do this, too.
2) Mobile apps scale faster with almost no barriers to acquisition. The same CNET article reported that Nike has added 10 million users to its Nike+ platform since August 2013 growing from 18 million to 28 million users.
3) Nike's resources will be better spent figuring out how to ingest more data sources and improving their (software = mobile app) engagement with consumers. The engagement mechanics within the mobile app are the key to shifting consumer behavior. (See Forrester mHealth report)
Is the Pedometer category dead even if the data is a commodity? No. The complexity of linking disparate data sources will exceed the bandwidth of too many consumers. Collecting the combination of active and inactive burn is best done through a wearable device that feels invisible to the consumer. Besides, many of these devices are tackling sleep – the next frontier.
I will miss the Nike FuelBand if it exits the market. I will miss it even if Apple comes out with its band based on Nike's work. (See artist mock-up's of rumored device) Remember Tim Cook sits on Nikes' board.