The news broke on a recent Friday night: Nike Fires Majority of FuelBand Team, Will Stop Making Wearable Hardware. It was a shock to just about anyone who had bought, worked on, wrote about, or invested in the white-hot category called "wearables."
Hailed as the next big platform in computing, wearable "smart" devices like fitness tracking bracelets, clip-on heart monitors, Google Glass, smartwatches, and even smart wigs (yes, smart wigs) suddenly looked a lot less interesting.
If Nike (NKE), which had sold an estimated $33 million worth of FuelBand bracelets in 2013, employing 200 people and even running an accelerator program around the device, was no longer interested, did this spell disaster for the category? What does Nike know that the rest of us didn't?
Since the news, the top wearable makers have openly touted the future of their business. This week at the TechCrunch Disrupt conference in New York, Hosain Rahman, CEO of Jawbone, said his company will expand the amount of data it tracks and services around it. Jawbone's UP band accounts for 19% of the fitness tracking device market. Meanwhile Fitbit, which dominates the category with 68% market share, made a short statement to CNET that it's been doing this for seven years, guys. Fitbit, with products like the Flex, One, and Zip, remains confident, "despite some of the recent sensationalized headlines."
Even Nike has clarified the initial report, saying it is not giving up on all of fitness tracking, only the hardware part. Nike will stop producing FuelBands itself, but it will continue to build software and fitness tracking apps for phones, smartwatches, and whatever other form factor smart devices take.
Nonetheless, it's clear the fitness tracking and wearables need to evolve beyond their initial offerings. Many of the fitness trackers in their current form are large, unattractive, uncomfortable bracelets. But an even bigger issue is what these devices do. As my colleague JP Mangalindan wrote earlier this week, his quest to become a quant junkie failed when the available options required him to use disparate systems that didn't talk to each other:
One day, I just stopped using everything. I had invested hundreds of dollars into hardware and software and cobbled them together so I could to get a holistic picture of my day. But the process felt too complicated for its own good -- a wristband for sleeping, another for the daytime. An app for eating, and then another running. Why couldn't there be one piece of hardware and software to rule them all?
Beyond that, merely knowing how many steps you've taken each day isn't all that compelling to a large, mainstream audience. It's why one-third of consumers have abandoned their devices, according to a report by Endeavor Partners. Industry insiders say the number of inactive fitness tracking devices is likely much higher than that.
For wearables and fitness trackers to become a permanent part of our lives, the devices must become "need to have," not "nice to have." The only way to do that is to offer better functionality. I spoke with Sonny Vu, CEO of Misfit, about the future of the category. His company was called Misfit Wearables until recently, when it dropped the word "wearables" from its name.