SBD/April 21, 2014/Marketing and Sponsorship

Nike Lays Off Most Of Its FuelBand Employees, Is Done Making Wearable Hardware

Nike as early as last fall had planned on releasing another iteration of the FuelBand
Nike is "gearing up to shutter its wearable-hardware efforts, and the sportswear company this week fired the majority of the team responsible for the development of its FuelBand fitness tracker," according to a source cited by Nick Statt of CNET.com. Nike North America Senior Communications Manager Brian Strong in an e-mail wrote, "As our Digital Sport priorities evolve, we expect to make changes within the team, and there will be a small number of layoffs." The company on Thursday "informed members of the 70-person hardware team ... of the job cuts." A source said that about 70-80% of the 70 employees -- "were let go." Nike as early as this fall "planned on releasing another iteration of the FuelBand -- an even slimmer version -- but cancelled the project." The source added that the company "appears to have shelved all future physical product projects under the Digital Sport helm." Nike confirmed that it "will not, however, stop selling the second-generation FuelBand SE for now" (CNET.com, 4/18). Sterne Agee research Analyst & Managing Dir Sam Poser said Nike getting out of the wearable-hardware market is not "really that material" to the company, but it is "certainly press they probably don't want to see." Poser: "I think they realized that they're better at making shoes and they've talked about possibly doing some of the software, they're still going to do Nike+. I think they found that probably some of the other products from other people ... can give a lot more detail as far as heart rate and things like that, something that the FuelBand wasn't doing. With Nike, when they can't be the best, they don't play." Poser added, "This is making a lot out of something that probably isn't that big of a deal." Business Insider Founder & CEO Henry Blodget said "what it sounds like is Nike wants to focus on software instead of making hardware, which is very difficult" ("Squawk on the Street," CNBC, 4/21).
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