Industry insiders, at least some and at least quietly, acknowledge that usage drops off steeply within a few weeks or months. While a surge of companies have hit the market with all manner of digital health trackers in recent months, it’s still unclear how much demand there is on the part of mainstream consumers. The first public signs of the problem erupted earlier this week on the anonymous posting app Secret, with a post that talked of the layoffs:Įither way, cracks seem to be showing in the wearables space, raising fresh questions about the viability of the devices in their current form. By no coincidence, sources said, Apple CEO Tim Cook is on Nike’s board.ĬNET reported that the layoffs included as much as 80 percent of the hardware team, but Nike didn’t get any more specific than “small” in its email.
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Still, FuelBand has been important as a PR win for Nike, positioning it strongly in the digital space.īut with the expected entry of Apple into the sector soon with its watch offering, sources said Nike might have seen an ability to scale back on its device development and become a software provider to that effort, pushing forward its Fuel metric. “They are getting a lot of data and just do not know what to do with it,” said one source. And big changes are coming to wearables, such as multi-sensors and other new features. It also has very nascent data expertise, one of the key areas of the wearables space.
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Its FuelBand, for example, does not have an Android app as yet, a major deficit and a frustration for a lot of users. In addition, sources note that Nike has been unable to attract as high a level of engineering talent as the business has grown. Sources said that the decision over what to do has been debated for months within the company, due to high expenses, manufacturing challenges and the inability to make adequate margins on the business.
One source with knowledge of the situation said that it could be that Nike wants to be able to run down its inventory of devices, or that it still has not completely decided to shutter the unit. The language does seem to leave a whole lot of room, however, for the possibility that the Portland athletic apparel giant won’t release future products in the FuelBand line. “We will continue to improve the Nike+ FuelBand App, launch new METALUXE colors, and we will sell and support the Nike+ FuelBand SE for the foreseeable future.”
“The Nike+ FuelBand SE remains an important part of our business,” the company said in a statement emailed to Re/code. Nike confirmed a “small number” of layoffs in its digital sports division, but attempted to tamp down a CNET report late Friday that said the company was shuttering the hardware side of its FuelBand team.