On Friday, CNET reported that Nike is planning to layoff as much as 80% of the company's Digital Sport division, the team behind the Nike FuelBand. For its part, Nike is denying the scope of layoffs, but the wording of the company's statement seems to suggest that even if the scope of the layoffs is being misreported, the sneaker company could still distance itself from FuelBand and not upgrade the hardware going forward.
If you're surprised, you shouldn't be. Wearable fitness trackers like the Nike FuelBand are about to go the way of the dodo. Here's why Nike is (probably) killing the FuelBand off.
Right off the bat, I'll admit something: I think the Nike FuelBand sucks. It's a bad product. With an aesthetic that only Ivan Drago could love, it has a display that's almost impossible to read without contorting your neck.
But the FuelBand has other problems. Like many wearables, the FuelBand is a gadget that does exactly one thing: Count how many steps you've taken throughout the day. Instead of just translating that number into something as intuitive as calories burned, Nike also turns it into "NikeFuel," a confusing and abstract concept--something like Nike's own version of Weight Watchers points--that users have a hard time wrapping their heads around. Historically, it also wasn't particularly accurate. With the first-generation FuelBand, if you went for a swim, did some skating, pumped iron, or did anything besides walking, you couldn't really accurately track how much you were exercising. With its second-generation FuelBand, Nike attempted to address some of the problems, but at the expense of the user experience.
Even if none of that bothered you, there's the price. $150 is a lot of money to spend for something that your iPhone can now do for free. Thanks to activity apps and built-in GPS units, smartphones were already pretty good at tracking your activity. With the addition of new chips and sensors, though, they've suddenly become great at it. Inside every iPhone 5s sold is an M7 co-motion processor, which tracks how many steps you take throughout a day just as well as a Nike FuelBand does. The M7 is always running, and its data is available to any app that cares to use it. Nor is the iPhone 5s the only smartphone that ships with a motion tracker. Google's Nexus 5 also comes with a similar chip.
What's about to happen is obvious. In a year, all new smartphones will be able to count steps just as accurately as a FuelBand or Fitbit. If all your wearable does is track steps, smartphones are about to eat your company's lunch. Just as the smartphone made the alarm clock, the MP3 player, the GPS unit, and the wristwatch obsolete, it's about to make the Nike FuelBand and other fitness wearables obsolete. For wearables like the FuelBand to survive, they need to do something more than just count steps. They need to measure other aspects of your life: Metrics like blood pressure, UV exposure, and more.
But there's a big competitor approaching in this space, a company that makes hardware better than anyone: Apple. The iWatch is coming. It will probably have sensors that can do a bunch of things beyond step counting. And Nike must know it.
Apple CEO Tim Cook sits on Nike's board, and has for the last nine years. It is because Nike and Apple work so closely together that the two companies were able to enter the wearables market as early as 2006 with the first Nike+iPod sports package. Perhaps it is also because Nike and Apple work so closely together that Nike is stepping aside mere months before the iWatch is expected to debut.
Nike is primarily a sneaker company. Apple is primarily a hardware company. There's simply no way for Nike to compete with an iWatch designed by the best hardware designers on Earth. Better for the sneaker-maker to clear some space for the iWatch to make an impact on the market, and use its relationship with Apple to make sure that when the iWatch does land, there's a library of Nike fitness apps that come pre-installed on every device sold.
Last October, Nike CEO Mark Parker was asked about the future of FuelBand at Fast Company's Innovation By Design conference. Here's what he said:
It's really important to understand what we do well . . . what we bring to the party, so to speak, and actually amplify that, and not to expect [us] to really go in and compete with the latest, greatest development of sensor technology.
In 2014, the latest, greatest development of sensor technology is rumored to arrive. It's called the iWatch, and by Nike's own admission, it knows the FuelBand can't compete, that it brings nothing to the party. The writing is on the wall. Why wait to read it until after it's been splattered in your blood?
Update — This story originally claimed that the Nike FuelBand does not track calories burned by default. It also misspelled the name of Nike CEO Mark Parker. We apologize for the errors.