Nike Ends Smartwatch Competition With Apple

Consumer Electronics

Published: April 20, 2014 9:53 am

Last Updated: April 20, 2014 10:00 am

“Wearables,” essential smart devices which people can use as they would glasses or wrist watches, are considered the future of the portable consumer electronics device business which has effectively killed off the popularity of laptop PCs. The “wearable” market is important enough that many analysts consider it the next major battle ground for industry giants Apple Inc. (NASDAQ: AAPL) and Samsung. One of the most promising ventures into “wearables” was killed off as Nike Inc. (NYSE: NKE) abandoned the market. According to a late Friday story from tech news site CNET:

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.

The number of people fired was pegged at about 70. In theory, Nike should have an edge in the “wearable” market, given the huge array of athletic shoes, clothes, and golf equipment it sells. Perhaps the athletic use of “wearables’ is too narrow. After all, it does not have a foundation in multimedia, voice, or text communications. Nike’s withdrawal does hint at how difficult it is for even the largest, most well funded companies to enter a tremendously competitive market.

Part of the reason in Nike’s case is that Apple and Samsung can create athletic software applications along with tens of thousands of others they already offer. This is one of the advantages each of the consumer electronics companies have. Apple’s App Store has been in existence for years. So has the Google Inc. (NASDAQ: GOOG) app market place which feeds Samsung and other smartphone and wearable makers with software for the Android operating system that they employ as the foundation of their products.

As the smartphone business developed, it quickly became apparent that there were only two leaders and the rest of the competition dropped far behind. Because of brands, balance sheets and distribution networks, Apple and Samsung may have a similar position in “wearables” as well. Nike may be smart to drop out of a market in which success will be extremely difficult, if it is possible at all.

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