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Nike to focus on 'digital sport' software, excited about future Apple collaborations

post #1 of 17
Thread Starter 
In an interview on Friday, Nike CEO Mark Parker said his company is not giving up on its "digital sport" initiative with the apparent demise of FuelBand and will instead pursue expansion of the NikeFuel ecosystem through high-profile partners like Apple.

FuelBand SE


Following a report that Nike had laid off a good portion of its FuelBand hardware team, Parker told CNBC that the company is looking to expand the reach of NikeFuel through partnerships with other companies.

When asked if Nike is planning to exit the wearable hardware market, Parker said, "We are focusing more on the software side of the experience. I think we will be part of wearables going forward."

While the Nike chief did not confirm the FuelBand's death, he did say there will be a stronger push on the software side of the company's proprietary NikeFuel activity quantification and measurement system. There was some confusion, however, as Parker may have misspoke when he said there are some 30 million FuelBands in circulation, a number Nike hopes to boost to 100 million.

According to recent estimates from market research group NPD, as reported by MobiHealthNews, Nike's fitness tracker accounted for only ten percent of $330 million in fitness tracker sales for 2013. Factoring in a $150 price tag, Nike sold roughly 220,000 FuelBands last year.

If Parker's estimate of 30 million FuelBand users is true, Nike would have sold a combined 28.8 million devices over the band's first year of sales in 2012 and the first quarter of 2014. A more plausible explanation is that Parker meant 30 million NikeFuel users, though CNBC's reporter failed to clarify the statement.

In any case, the CEO did not give a clear-cut answer regarding the future of FuelBand and instead emphasized the company's commitment to expanding NikeFuel through partnerships with companies like Apple.

To that end, Nike recently opened the Nike+ Fuel Lab in San Francisco as a type of incubator for ideas ways to implement NikeFuel into third-party products. While the effort is largely seen as a software effort, the lab could foster hardware integration solutions as well.



As for the possibility of an Apple-made device that incorporates NikeFuel (perhaps the rumored iWatch), Parker was coy on the subject. He did, however, acknowledge the rampant speculation.

"I will just say that the relationship between Nike and Apple will continue," Parker said, adding, "I am personally -- as we all are at Nike -- very excited about what's to come."

Nike and Apple have collaborated on projects like Nike+iPod and more current Nike+ app integration. Apple CEO Tim Cook has sat on Nike's board for nine years, which likely played a role in the brand's ability to stay on the cutting edge of fitness software incorporated into Apple products.
post #2 of 17
That would suggest that whatever fitness device Apple releases will have a API to allow 3rd parties to access the sensors, as opposed to an all-Apple solution.
post #3 of 17
Quote:
Originally Posted by AppleInsider View Post

"I will just say that the relationship between Nike and Apple will continue," Parker said, adding, "I am personally -- as we all are at Nike -- very excited about what's to come."

Ohhhh it's getting exciting. Let the speculation continue!
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post #4 of 17
Did he mean very excited about what's to come from Apple or Nike?

Edit: yeah, he certainly was talking about Apple after watching the video. Interesting. Also, I think his closing up of the fuel band business was perhaps quite a clever strategic move. Nike now gets a mention every time people mention iWatch. If that synergy works well, that alone is invaluable for the Nike brand IMO.
Edited by Ireland - 4/26/14 at 1:59am
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Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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post #5 of 17
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Originally Posted by ascii View Post

That would suggest that whatever fitness device Apple releases will have a API to allow 3rd parties to access the sensors, as opposed to an all-Apple solution.

Why can't it be both?
Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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post #6 of 17
Quote:
Originally Posted by Ireland View Post


Why can't it be both?

You mean there is an Apple app but you can also buy Nike etc ones? There could be, I was just saying it looks like it's not going to be a closed ecosystem, which Apple are known for.

post #7 of 17
Quote:
Originally Posted by ascii View Post

That would suggest that whatever fitness device Apple releases will have a API to allow 3rd parties to access the sensors, as opposed to an all-Apple solution.

Apple don't have experience with gaining and using insight into people's fitness efforts. Apple does hardware and software that sells the hardware. They don't produce movies or music. They don't create CAD programs, etc. they make hardware and linking software to allow people who are experts in these other things to do their thing.

So it sounds like they'll feed the data to nike's app, and maybe others (maybe not -- they only work with a few search engines, and pull stocks just from yahoo) and move on from there. If nike's stuff sucks, though, then watch out.
post #8 of 17
Quote:
Originally Posted by Ireland View Post

Nike now gets a mention every time people mention iWatch. If that synergy works well, that alone is invaluable for the Nike brand IMO.

That depends on what this iwatch is intended to be. If it's an iPod replacement and fitness wearable, will it even be an iwatch? It would be more like an iPod Sport or iPod Fit. The purchase price can't be high if it's to be of interest to Nike and iPod buyers.

Fitness wearables lack music playback and iPods lack wearability.

The iPod market last quarter saw over 50% drop vs last year. They're now selling fewer iPods per quarter than Macs that cost 10x the price. Revenue is now $460m out of $46b (iPod = 1% of revenue and the ASP is high so it's mostly iPod Touches).

I reckon the lower-end iPod line is going to be history pretty shortly. They can ditch the Shuffle, Classic and Nano for a $99 wristband that starts at 8GB and goes up to 64-128GB of storage. But it would have to use wireless audio and the Samsung Gear Fit shows that putting a standard display onto that form factor doesn't look very good.

Does the lower-end iPod line still need a standard full color display? Think of what the iPod nano does with the display: music artwork - not needed, video - not needed as there's an iPod Touch and the nano has a 2.5" screen, photos - not needed as the screen is too small and it doesn't take pictures. It just needs to show text and basic line graphics.

Perhaps it would just be a band with a way to illuminate shapes and text when needed and otherwise, it's all switched off to maintain longer battery life. OLED is flexible:

http://www.zdnet.com/blog/gadgetreviews/amazing-sonys-paper-thin-rollable-flexible-oled-display/15136

but this would still drain the battery quickly and not be easy to see in daylight. The Nike Fuel Band used a series of dots:



The band is far too rigid though and the dots aren't small enough to allow much information. A fabric band would be more comfortable than rubber.

Tim said that reasonable people would consider what they're working on to be a new category (presumably new for Apple). That suggests that it's not entirely new, like another iPod. The Fuel Band has a USB port in the strap so this kind of thing would plug into an iPhone charger or Mac.

It would hardly affect revenue but it acts as a jumping off point for the lower-end iPod line and I expect it's something Tim Cook is interested in.
post #9 of 17
^^. Marvin, you're my new hero. Excellent deducing. I'd put money on your thoughts above.

Maybe iWatch really does end up being the new Apple TV then?
post #10 of 17
Quote:
Originally Posted by Shogun View Post

Apple does hardware and software that sells the hardware. They don't produce movies or music.

You are ignoring eight years of iTunes festivals.
post #11 of 17
Quote:
Originally Posted by Marvin View Post

That depends on what this iwatch is intended to be. If it's an iPod replacement and fitness wearable, will it even be an iwatch? It would be more like an iPod Sport or iPod Fit. The purchase price can't be high if it's to be of interest to Nike and iPod buyers.

Fitness wearables lack music playback and iPods lack wearability.

The iPod market last quarter saw over 50% drop vs last year. They're now selling fewer iPods per quarter than Macs that cost 10x the price. Revenue is now $460m out of $46b (iPod = 1% of revenue and the ASP is high so it's mostly iPod Touches).

I reckon the lower-end iPod line is going to be history pretty shortly. They can ditch the Shuffle, Classic and Nano for a $99 wristband that starts at 8GB and goes up to 64-128GB of storage. But it would have to use wireless audio and the Samsung Gear Fit shows that putting a standard display onto that form factor doesn't look very good.

Does the lower-end iPod line still need a standard full color display? Think of what the iPod nano does with the display: music artwork - not needed, video - not needed as there's an iPod Touch and the nano has a 2.5" screen, photos - not needed as the screen is too small and it doesn't take pictures. It just needs to show text and basic line graphics.

Perhaps it would just be a band with a way to illuminate shapes and text when needed and otherwise, it's all switched off to maintain longer battery life. OLED is flexible:

http://www.zdnet.com/blog/gadgetreviews/amazing-sonys-paper-thin-rollable-flexible-oled-display/15136

but this would still drain the battery quickly and not be easy to see in daylight. The Nike Fuel Band used a series of dots:



The band is far too rigid though and the dots aren't small enough to allow much information. A fabric band would be more comfortable than rubber.

Tim said that reasonable people would consider what they're working on to be a new category (presumably new for Apple). That suggests that it's not entirely new, like another iPod. The Fuel Band has a USB port in the strap so this kind of thing would plug into an iPhone charger or Mac.

It would hardly affect revenue but it acts as a jumping off point for the lower-end iPod line and I expect it's something Tim Cook is interested in.

If it's also has wireless music playback functionary, ala an iPod killer, as one of its tentpole features and is worn on your wrist, I think 1. it'd be the exact product I'd be interested in buying, as I've mentioned before here, and 2. I believe they should move to iWatch branding. Given all the sensors it's rumoured to have I think it deserves a new name for its new category. It would just happen to also have a music player like the iPhone.
Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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post #12 of 17
Quote:
Originally Posted by Shogun View Post

So it sounds like they'll feed the data to nike's app, and maybe others (maybe not -- they only work with a few search engines, and pull stocks just from yahoo) and move on from there. If nike's stuff sucks, though, then watch out.

To me, that seems like the most likely route. We already have the M7 in the iPhone 5S. Why not a whole slew of low-energy chips that either periodically send the information to the iPhone from the "iWatch" or actively request it via BLE.

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post #13 of 17

Apple is in a way "un-cluttering" the market before the introduction of the iWatch. I would bet they will discontinue some of the iPod product line also. 

post #14 of 17
I'd put money on apple and nikie teaming up and making a smart watch. Apple probably told them to stop making their own and they would have a joint venture on hardware.
post #15 of 17

I'm not surprised Nike is backing out/off from their fuel band as consumer electronics are not their core competency.  Besides, the fuel band doesn't really seem to do much other than analyze activity, which is something that can easily be replaced by an iWatch (which could have additional sensors) and/or iBand (for 1/3 the price). Nike's strength is their sports brand and expertise that spans a wide swath of the athletics market, which they could use to develop integrated sensors and software that can analyze everything from running patterns, tennis swing, balance on skis/snowboard, etc. Apple has patents on this very thing (sports sensors), which the have had for many years, and which they could use to license/cross license to Nike (Apple can toss in their random shoe wear-n-tear detector patent to sweeten the deal). Already in Apple's online store are sensors that attach to a golf club or are integrated into a basketball, etc. that work in concert with their own iOS apps.

 

Also, it makes sense for Apple to have both an iWatch and an iBand, where the former has additional sensors and can display info, while the latter is more accessible (cheaper), more easily waterproof-able, and can be worn on the opposite wrist (for those who insist on wearing a different watch, or don't want any watch at all).

   

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post #16 of 17
My guess is that Nike got first hand information on Apple's new wearable(s), and probably got invited as a partner to develop software available at the release date. Nike probably felt "they have no chance in competing with hardware" and quickly closed the wrist band project... which might mean that Apple's wearable is not too shabby.
post #17 of 17
Quote:
Originally Posted by ascii View Post

That would suggest that whatever fitness device Apple releases will have a API to allow 3rd parties to access the sensors, as opposed to an all-Apple solution.

 

I'm fairly certain that the more exotic parts of healthbook, such as blood glucose monitoring, are being designed to pull data from dedicated non-Apple devices. The kinds of centralised control that people look for in home automation are also helpful for health monitoring devices and appliances.

 

The iWatch will not necessarily be the one device to rule them all but something that showcases of the kinds of things that can be achieved when iPhone is the centre of the information hub and intimate electronics are the new eyes and ears that enable iPhone to understand the context of it's current use. Imagine, for example, an iPhone that knows when you are asleep and automatically activates do not disturb. 

 

Whereas the Samsung watch basically duplicated functions of a smartphone on your wrist Apple's will aim to solve new different types of problems and cover new usage cases, and also position the iPhone at the centre of the a new generation of connected devices.

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