Nike’s FuelBand SE

Last Friday, Nike announced that it would be stepping away from the wearable technology hardware market, with a layoff at its technology-focused Digital Sport division. Since 2012, Nike’s Digital Sport team has introduced the FuelBand wristband, which tracks aspects of its wearer’s health and fitness, such as how many steps he or she takes. While Nike may be quitting the manufacture of smart wristbands, the company is still very much focused on software, such as its Nike+ fitness app platform. Indeed, just over a week ago, it announced the setting up of its Nike+ Fuel Lab, a space for app developers to work with the firm’s Nike+ and NikeFuel platforms.

Could this news signify the increased crowding in the sports wearable market, driven by hardware, and initiatives from big tech firms to startups alike? There certainly seems to be a small indication of splitting in the wearables market, with big tech firms like Samsung taking the lead in powerful, multifunctional smartwatches, and startups and small companies like Fitbit and Jawbone focusing on lightweight minimalist wristbands and activity trackers.

The upshot to this is increased specialisation, with device manufacture falling on companies that have a track record in making hardware themselves. Nike’s refocus on software means too that hardware firms can leverage on tried-and-tested platforms for their devices, reducing the need for software development and minimalising duplication of effort and incompatibility.

It can be argued that Nike itself is betting on the multi-functional camp, with its Nike+ fitness platform. In fact, with Apple CEO Tim Cook being on Nike’s board, it seems that the company is preparing for an expedition to conquer the Apple iWatch platform when it’s released. With the ability to track aspects of one’s fitness goals, as well as the opportunity to interact with over 18 million fellow users (as of Aug 2013), iWatch users will have little incentive to use rival platforms.

So what does this mean for the fledgling wearables market? Nike’s exit from the wearables hardware market is a likely sign of consolidation in the fitness tracker and app segment, and it is certain that the pattern will be repeated in more wearable market segments, with established companies faltering and upstarts taking their place. The days ahead are going to be very interesting indeed.

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