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Is Nike's FuelBand Running on Empty?


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Nike FuelBand
Bebeto Matthews/AP
The tank is starting run dry for Nike's (NKE) FuelBand. CNET is reporting that the athletic footwear and apparel giant is laying off the majority of the members of the hardware team responsible for Nike's fitness bracelet.

CNET speculates that this is the end of the FuelBand, and that this also includes nixing a slimmer model that was supposed to hit the market this year. Nike is refuting the claim that the FuelBand is toast, but the massive layoffs don't paint a very flattering prognosis.

A Strong Start

Nike seemed to be taking the nascent fitness tracking market by storm 26 months ago when its FuelBand hit the market to rave reviews. The original Nike+ FuelBand -- a $149 wristband -- stylish and simple, with a three-axis accelerometer tracking all of the wearer's physical activity. An LED screen measured calories burned, steps taken and time. It also recorded NikeFuel, a proprietary metric of movement that Nike pitched as "the ultimate measure of activity."

Preorders sold out quickly, and early adopters bid them up on eBay and other online exchanges. Nike later introduced new colors, styles and games called Missions. Nike seemed to be leading the fitness craze, but then it got undone by its own complacency and a rapidly evolving marketplace.

Nike wasn't the first fitness tracker on the market. FitBit wireless trainers and the Jawbone UP band had beaten Nike to market -- and with cheaper price points. However, Nike brought financial muscle and brand awareness to the niche, flooding the market with celebrity-studded ads.

It should have put Nike on top for a long time, but supremacy didn't last. Just as the Nike+ FuelBand was being introduced, folks were turning to Kickstarter to bankroll an upstart named Pebble, which would go on to introduce the first smartwatch.

Samsung (SSNLF), Qualcomm (QCOM) and other tech tastemakers quickly introduced watches and bracelets that use Bluetooth to connect with smartphones. Suddenly it didn't seem so cool to have a wristband that tracks steps taken when smartwatches could do that -- and take incoming texts and social notifications and engage with a growing number of apps.

Missing the Android Memo

One of the biggest shortcomings for the FuelBand is that it never got around to embracing Android. The original Nike+ FuelBand could connect with Apple's (AAPL) iPhone via Bluetooth to update wirelessly into an App Store application, and it was assumed that support for the more popular Android devices would happen. It never did.

Conspiracy theories bubbled up to the surface. Apple CEO Tim Cook sits on Nike's board. Was that why Nike was ignoring the global leader in mobile operating systems? As more fitness trackers and smartwatches hit the market with broader wireless support than the iPhone, Nike didn't have much of a chance.

Is this really the end of the FuelBand? There is no such thing as a permanent death in the tech world. The software end of the business isn't going anywhere, and it wouldn't be a surprise to see NikeFuel evolve as a measuring tool across more third-party devices. However, Nike blew a golden opportunity to corner the market of fitness trackers. It failed to evolve. It failed to embrace more than one mobile operating system.

Complacency kills, and that's something that anyone taking it easy while wearing a Nike+ FuelBand knows all too well.

Motley Fool contributor Rick Munarriz owns shares of Qualcomm. The Motley Fool recommends Apple and Nike. The Motley Fool owns shares of Apple, Nike and Qualcomm.


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