Just Fuel It? Nike Fans Get Exercised Over FuelBands
Nike+ FuelBand won't hit the market for several more weeks, but the sultan of swoosh already knows it has a hit. The $149 cutting-edge bracelets sold out quickly during two short-lived online buying opportunities over the weekend, and those pre-orders won't be delivered until Feb. 22.
Consumers fearing that the scarce FuelBands will be in short supply next month have taken to eBay where several units are selling for more than double their retail value. This isn't some phantom figure of what greedy sellers are hoping to get and never do. Yes, there have been several completed transactions on the auction site north of $300.
What is the Nike+ FuelBand? What will it mean for Nike as a business and for you as a consumer? Allow me to take you by the wrist -- the way that Nike wants to later this year -- to unravel the FuelBand technology.
These Are No Silly Bandz
Fashion trends for wristbands in recent years have typically steered toward the cheap and colorful. There's the charitable allure of Livestrong rubber bracelets. There's the comic charm of the oddly shaped Silly Bandz for kids.
Designer wristwatches are surprisingly popular these days. Just check out the heady growth lately at Fossil (FOSL) with its proprietary and licensed timepieces.
However, folks must be expecting a lot out of Nike's $149 FuelBand if they're selling out quickly and being bid up in the aftermarket.
In a nutshell, Nike+ FuelBand is a mobile health wrist-hugger that tracks any and all forms of physical activity. From walking to the kitchen to going for a morning jog to hitting the dance floor, Nike's bracelet features a three-axis accelerometer that accurately scores your every move.
The stylish yet simple black bands feature an LED screen that measures time, calories burned, steps taken, and NikeFuel.
NikeFuel? Oh, right. NikeFuel.
Fill 'Er Up
NikeFuel is a proprietary metric which the footwear giant is calling "the ultimate measure of activity" – it boils down a day's physical activity to a four-digit score.
What's in a number? Well, Nike is hoping that FuelBand wearers will go about setting daily NikeFuel goals. This won't be merely a number on the wrist. The Nike+ FuelBand connects wirelessly to Apple (AAPL) iPhones, sharing data for a more intensive breakdown of your day's performance. (Nike and Apple have been partnering up for mobile since the Nike+ technology was launched in cahoots with the iPod, though it's hard to imagine Nike ignoring rival smartphone platforms in the future.)
Nike isn't the first company to embrace mobile health. FitBit wireless trainers and the Jawbone UP band are already on the market. They're also cheaper than the FuelBand. However, the Nike brand, its global appeal, and access to celebrity athlete endorsers will make FuelBand a hot gadget this year.
Altruistically, Nike wants a healthier you. If you begin monitoring your daily NikeFuel score, turning the monitoring of your physical activity into sport should encourage you to be more active.
Obviously Nike stands to benefit here, and not just through the one-time sales of these slick wristbands. A more active lifestyle will find you going through more Nike sneakers, shirts, and shorts.
The sweat-trickle-down theory won't stop at Nike. Investors can already begin to smoke out the winners if Nike's wristband turns the world into more active exercisers:
- Under Armour (UA) will sell more of its sweat-resistant clothing.
- Upscale yoga mom magnet lululemon atheltica (LULU) will go through more athletic apparel.
- Cloud-based event organizer Active Network (ACTV) will register more people for local 5K runs and related athletic endurance events.
Nike has a real shot to get consumers to avoid cutting corners when it comes to physical activity. Now it just needs to make sure that it can crank out enough of these bracelets to meet demand.
I was lucky enough to get in on the second pre-order event this past weekend, and I'm certainly not going to flip my FuelBand on eBay. That wouldn't do much to elevate my NikeFuel score.
Longtime Motley Fool contributor Rick Munarriz does not own shares in any stocks in this article. The Motley Fool owns shares of Apple, lululemon athletica, and Under Armour. Motley Fool newsletter services have recommended buying shares of Under Armour, Nike, The Active Network, Apple, and lululemon athletica. Motley Fool newsletter services have also recommended creating a diagonal call position in Nike and a bull call spread position in Apple.