Nike fires almost entire Fuelband team

The news broke over the Easter weekend that Nike has fired the majority of its Fuelband team, which resides in the US and in Hong Kong, and has cancelled an upcoming slimmer version of the Fuelband. As many as 55 people on Nike’s 70-person hardware team were reportedly laid off last week, according to a report on CNET.

A later report on PC Magazine came with clarifications from Nike about how the company has decided to focus more on developing software than on the hardware for wearables. Sales for the Nike+ Fuelband SE will continue indefinitely, says Nike.

The Nike Fuelband is one of the more popular fitness bands in the wearables market, in the same league as the Jawbone Up and the Fitbit. According to this article quoting the NPD Group from Mobihealth news, Nike’s Fuelband, the Jawbone Up and Fitbit accounted for 97% of all smartphone-enabled activity trackers sold at brick-and-mortar stores or through big e-commerce sites in 2013. However, Fitbit accounted for 68% of all sales, and Nike, just 19%, which shows that the company is not actually getting much traction in the market.

One reason why can be seen in a February 2014 story by Dr David Ahn, who wrote on “While my favorite tracker one year ago was the Nike FuelBand, the newly released Jawbone UP24 and Fitbit Force ran to the head of the class with class-leading battery life, third party connectivity, and robust feature sets.”

One of the key words is ‘third party’ – the Fuelband works only with the iOS system, and not the increasingly popular Android platform. I’ve also heard anecdotal reports that the Fuelbands tend to fail, and if that happens for any device, owners are typically encouraged to try some other brand.

While some users are may be wary of Fitbit because of a recall of the newly-launched Force this February due to reports of skin irritation, there are brands a-plenty to choose from in the fitness wearables market. Garmin and LG have jumped on the bandwagon, while smartwatches which could probably do the same thing, and smartphones as well.

When there are too many players in a market, it can be challenging for any one player to get a large piece of the pie. Perhaps that’s what Nike saw with the Fuelband – an opportunity to innovate somewhere where it could shine better.