Monday, 21 April 2014

Nike’s attempt to roll NikeFuel as a platform play is smart but doomed

In some ways, it’s no surprise that Nike is refocusing away from fitness/wearable hardware to software. Despite the Nike+ brand, the FuelBand tracking bracelet (below) hasn’t found a strong position in the market, while the Nike+ TomTom GPS running watch - which I’ve happily used over the past 2 years - is too expensive compared to the competition.

According to Cnet, the company's decision sees around 70 staff of the 200-strong Nike Digital Sport being laid-off. Interestingly, though, Nike says it will keep supporting and selling the current FuelBand SE, as well as improving its app.

Given the relative small savings the company will be making, and the short/medium-term decision to remain in the market, this clearly is more a strategic than a ‘religious’ move. Fitness hardware will remain a main driver in the wearable category, but Nike has understood that it doesn’t really get hardware innovation.

Instead, it’s hoping thirdparty companies will adopt the NikeFuel training metric; something it’s supporting with its Fuel Lab testing space.

Of course, with the likes of Apple (a big Nike support in iOS) and Google, not to mention every phone maker, currently looking to get into wearables, getting out of the hardware market enables Nike to get its brand into the hardware of multiple vendors.

In that sense, it is a getting out of a highly competitive market in which it is failing in the hope of making more revenue and/or brand kudos with a co-operative platform play.

Sadly, then, the bigger issue for Nike is the entire NikeFuel concept - its proprietary measurement of training - which is entirely vacuous.

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