Is Nike Saying Goodbye to its FuelBand?

According to CNET, Nike NKE laid off most of the team responsible for developing future versions of its FuelBand fitness tracker. Does that mean that the FuelBand is dead?

Yes, but not yet.

Nike issued a statement that said—well, nothing, when asked about the layoffs:

"As a fast-paced, global business we continually align resources with business priorities," Nike spokesman Brian Strong said in an email to CNET.

"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."

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According to person familiar with the matter, Nike is laying off nearly 80 percent of the 70-person team assigned to the project, but some may be internally rehired in other areas.

Nike’s planned to release a slimmer version of the FuelBand in the fall but scrapped those plans to concentrate on other endeavors in the digital sports realm.

FuelBrand's Future

Does that mean that the days are numbered for the FuelBand?

The company says no. Nike said that the FuelBand remains an important part of their business. The company will continue to improve the product, “for the foreseeable future.”

Nike has considered ditching the FuelBand after statistics found that it held only a 10 percent market share in the relatively small, $330 million fitness tracker market.

And while it won’t be quick to admit it, Nike knows that the competition is quickly heating up. With rumors of Apple’s AAPL iWatch as well as its new iOS 8 reportedly having advanced fitness tracking abilities along with Google making strides in this area, the company would be better served to concentrate on the software market.

Creating apps that take advantage of other devices’ hardware capabilities is money better spent. Hardware development, especially for a company not primarily in the technology business, is an expensive endeavor—one that Nike has failed to capitalize on to date.

Tim Cook, Apple’s CEO, sits on Nike’s board giving the company the perfect strategic partner in Apple. Cook was even seen wearing a FuelBand in 2012 but that did little bolster sales.

An extended partnership between the two companies would be a perfect match as Apple looks to bolster its fitness presence and Nike still wants a piece of the sports technology market.  

Disclosure: At the time of this writing, Tim Parker was long Apple.