The news this morning that Nike is effectively exiting the wearable tech market — letting go the bulk of the team behind the Nike+ FuelBand, SportWatch GPS etc. — might seem surprising when every other company is talking up wearables as the next big thing, but it’s a move I’ve been anticipating for a little while.
The demise of the FuelBand in particular is a shame. Since launch it has been an incomparable piece of design in an increasingly crowded market. It did one thing, and from the hardware to the UI of the accompanying app, it did it superbly. When I was first considering getting a FuelBand 18 months ago I was persuaded as much by design blogs as tech sites. The original FuelBand was a wonderful piece of minimal design, and last year’s release of the FuelBand SE made some meaningful changes to further perfect it.
It’ll be a shame to see the FuelBand go away, but it’s not a shock. Even when I was looking for a way to track my activity, back in January 2013, the NikeTown employee talking me through my options said that the company’s push was towards the (free) app for iOS. It might seem counterintuitive that instead of trying to sell me a £120 piece of wristwear, Nike was pushing use of an app they don’t make money off. But the latter has two added values: first, there is no manufacturing cost; and second, the app encourages engagement with the NikeFuel community. At a basic level more user engagement means more opportunity to advertise to users, and it’s far easier for Nike to try and sell me some new shoes via the iOS app, than it is via a dot-matrix display on my wrist. The app is a cheaper, easier way to keep me engaged in the Nike ecosystem.
Make no mistake: even if FuelBands stopped rolling off the production line tomorrow, NikeFuel is here to stay. The company’s proprietary unit for measuring activity is baked into every tech venture they’ve launched in the last couple of years and has increasingly been the focus of a lot of their marketing. From software releases like Nike+ Kinect Training for Xbox, and any one of the half-dozen Nike apps in the iTunes App Store (to track running, basketball, your training regimen…), to the recently revamped Nike+ website, to the API made publicly available in January 2013, it’s clear that NikeFuel isn’t going anywhere.
So why abandon the hardware effort? For the past couple of years the tech world has anticipated the advent of wearables as the next big market after smartphones and then tablets. For various reasons, however, the market for smartwatches will never be as lucrative as the one for portable, general-purpose computing, communication, and entertainment devices: the hardware will retail at a significantly lower price than tablets and phones, will likely require a smartphone to be present to make full use of their most interesting features, and will appeal in the first place to a smaller segment of the population than carries a phone. The predicted $30 billion market for wearables by 2018 is dwarfed even by current iPhone & iPad sales alone. There’s no question that Nike will want a front-and-centre presence when wearable tech becomes mainstream, but being one device among many competing for the consumer pound is likely not an exciting prospect for a company which now has a few years’ experience of the overhead cost of producing these devices.
Recently I started to wonder whether it wouldn’t make sense for Nike+ to be baked into whatever device Apple ends up releasing. It would benefit Apple enormously not to have to build their own movement tracking suite, and it would be a win for Nike to be on the wrist of everyone who buys Apple’s product. This relationship goes back quite some way: the 5th gen iPod nano, released in 2009, had a non-deletable Nike+ app built right in - a trend that has continued to the current generations of the device, and spread also to the iPod Touch and the aforementioned clutch of apps in the App Store. When the iPhone 5S was revealed, with the M7 motion co-processor dedicated solely to motion-tracking, it was the Nike+ Move app - launched alongside the device - that first took advantage of the new technology. Furthermore Apple’s CEO Tim Cook has been a member of the Nike Board of Directors since 2005 and is in an excellent position to know which way the wind is shifting with respect to the wearables ecosystem. He’s also been a vocal proponent of the FuelBand’s value, and with that in mind, though this may be the end of the FuelBand as a standalone device, I fully expect that Apple’s eventual smartwatch will incorporate a large part of what Nike have built (software & community) at system level.