Is Nike's FuelBand Running on Empty?

Before you go, we thought you'd like these...
Before you go close icon
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.

%VIRTUAL-article-sponsoredlinks%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.

Tech's Highest-Paid CEOs
See Gallery
Is Nike's FuelBand Running on Empty?
Company: Oracle
Cash compensation: $5.5 million
Stock and options: $90.7 million
Total compensation 1-year change: 24%

Despite his $1 salary, Ellison is not only the highest paid tech CEO this year, but the highest paid of all CEOs.
Most of Ellison's pay comes from his stock grants. In June of 2011 he was given an option to purchase 7 million shares of Oracle (ORCL) common stock.
Company: Yahoo
Cash compensation: $1.6 million
Stock and options: $35 million
Total compensation 1-year change: N/A

Mayer left Google (GOOG) to join Yahoo (YHOO) as its CEO, president and a board member in July of 2012. Her base salary was set at $1 million with an annual bonus target set at $2 million a year.
Though she only took home $6 million last year, Mayer reached No. 2 on this list because she was also offered a one-time retention award when she was hired, consisting of stock grants that could total $30 million when they vest over the next five years.
Company: eBay
Cash compensation: $4 million
Stock and options: $25.7 million
Total compensation 1-year change: 81%

The 81% jump in in Donahoe's salary this year is largely due to a one-time award of about $14.9 million paid in stock. According to a regulatory filing, Donahoe got the grant because he led eBay (EBAY) "successfully through a difficult turnaround ... and positioned it well for additional growth."
Cash compensation: $3.2 million
Stock and options: $18.9 million
Total compensation 1-year change: 25%

Benioff's base salary has been set at $1 million for the past two years. He received a $1.3 million cash bonus last year and almost $19 million in (CRM) stock options and awards. He also received $650,000 to cover costs related to his personal security, which is "of paramount importance to the company," according to a regulatory filing.
Company: AT&T
Cash compensation: $8.4 million
Stock and options: $12.6 million
Total compensation 1-year change: 12%

Stephenson, who has served as CEO and president of AT&T (T) since 2007, was paid a $6 million bonus on top of his $1.6 million base salary in 2012. About $13 million of his pay came in the form of stock and awards.
Company: Qualcomm
Cash compensation: $5.7 million
Stock and options: $15 million
Total compensation 1-year change: -5%

Jacobs was given a $3.4 million cash bonus on top of his $1.2 million salary. Other compensation for the CEO included more than $280,000 for personal use of Qualcomm's (QCOM) corporate aircraft and more than $4,000 for things such as home office costs, personal travel and entertainment.

Read Full Story

People are Reading