Nike reportedly dropping the FuelBand to focus on software, exiting wearable hardware market

By Alexandra Burlacu | Apr 19, 2014 07:02 AM EDT

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Nike will apparently stop making wearable hardware, as the company has reportedly fired most of its team working on the FuelBand fitness tracker.

The company isn't giving up on this niche altogether, however, as Nike reportedly plans to focus its efforts on fitness software rather than hardware.

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The news comes from an exclusive CNET report citing an unnamed source familiar with Nike's plans.

"The shoemaker isn't throwing in the towel on technology. Rather, it's turning away from hardware and realigning its focus exclusively on fitness and athletic software, a strategic shift that would still benefit the company in the long run, analysts said," reads the report.

"As a fast-paced, global business we continually align resources with business priorities," Nike spokesman Brian Strong told the publication in an email following the report. "As our Digital Sport priorities evolve, we expect to make changes within the team, and there will be a small number of layoffs. We do not comment on individual employment matters."

According to CNET, Nike's Digital Sport hardware team had roughly 70 employees, of which as many as 55 people were laid off, revealed the insider. Nike Digital Tech, the department responsible for Web software, was reportedly not affected. While Nike had planned to release another FuelBand iteration this fall, the company ultimately canceled the project.

Nike will continue selling the second-generation FuelBand SE for now, however, the spokesman further told CNET.

"The Nike+ FuelBand SE remains an important part of our business. We will continue to improve the Nike+ FuelBand App, launch new METALUXE colors, and we will sell and support the Nike+ FuelBand SE for the foreseeable future," Strong added in a follow-up statement.

Nike's move to cease making wrist-worn hardware comes at a time were competition is heating up as Apple Google and others are getting ready to join the wearable party. Samsung has already launched its Gear Fit wristband along two new Gear smartwatches, Apple is expected to launch its much-rumored iWatch soon, while Google recently unveiled its new Android Wear operating system exclusively designed for smartwatches and other wearable devices.

Focusing its efforts on software rather than hardware allows Nike to stay in the game while avoiding competition from the slew of new devices expected to hit the market this year. Moreover, Nike may choose to team up with Apple when the iMaker takes the plunge toward wearables.

"Partnering with industry-leading tech companies is nothing new for Nike," added Strong. "We have been working with Apple to develop products since 2006, including Nike+ Training Club, Nike+ FuelBand and Nike+ Move." 


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