Jawbone confirmed to make switch from consumer wearables to clinical health products, repo...
A report on Friday claims Jawbone is officially exiting the consumer wearables space, seemingly confirming rumors that the audio accessory maker turned fitness tracking firm will instead focus on high-margin health products sold to clinicians.
Citing sources familiar with the shift, TechCrunch reports Jawbone is preparing to pivot away from low-margin consumer wearables like the UP line of fitness trackers to a more lucrative business model targeting medical practitioners.
While details are few and far between, the report says Jawbone is working to deliver an unspecified health product and accompanying services to clinicians who work with patients. For the first time, the company will no longer sell its wares directly to consumers.
Jawbone continues to raise investor money as part of the revised strategy, and is seeking infusions from foreign entities and players in the medical sector, the report said. Though the company has apparently raised some $951 million from the likes of Andreessen Horowitz, Kleiner Perkins, JP Morgan and other big names, a lot of that funding has been spent to thwart a collapse of the wider wearables market.
Explaining the move to TechCrunch, one source said the consumer hardware game is "too challenging" for all but the largest tech companies. A shift to a burgeoning health wearables market might be the ticket out of Jawbone's dire financial straits.
"There are a lot of things to learn about the interactions between health wellness and consumer electronics," a source said. "If you think about what a good consumer electronics company looks like, it's 30-percent margins, annual release cycles and huge risk. It's turned into a blockbuster game."
As for the Jawbone's future, the source pointed to Omada as having a potentially like-minded business model. The company offers employers and other entities with health plans a unique 16-week digital health program for people at risk of chronic disease, complete with personal coaches, smart biometric tracking devices, social networking aspects and a full online curriculum.
In Omada's case, fees payable are based on participant performance. In addition, because the program is based on peer-reviewed intervention methods, it can be billed through medical claims.
Whether Jawbone plans to go down the same road is unknown, but the company is clearly looking for alternatives to the traditional consumer model.
"Every wearable company today will be posed with this question: Do I want to play in consumer and narrow margins, or healthcare and service and make incredible margins but with possibly a lot of upfront fixed cost," the source said.
Starting life as Aliph, the company saw early success in with a Bluetooth headset called Jawbone, which in 2008 earned a coveted spot on Apple's retail store shelves. Jawbone later produced a successful line of Bluetooth-connected speakers and in 2011 decided to dip its toe into wearables with UP, its first non-audio device. The firm has been heavily investing in the fitness tracker space ever since.
An increasingly crowded market -- helped along by Apple Watch -- combined with luke warm reviews and a legal battle with low-cost wearables leader Fitbit to drain Jawbone's coffers.
Reports last year claimed Jawbone had ceased manufacturing of its UP fitness trackers and was looking to sell off its speaker business. Around that same time, rumors began to circulate about the firm's interest in switching from consumer electronics to clinical medical devices.
Most recently, reports claimed Fitbit attempted to buy out Jawbone's talent in a so-called "acqui-hire" in December, but negotiations ultimately fell through.
Citing sources familiar with the shift, TechCrunch reports Jawbone is preparing to pivot away from low-margin consumer wearables like the UP line of fitness trackers to a more lucrative business model targeting medical practitioners.
While details are few and far between, the report says Jawbone is working to deliver an unspecified health product and accompanying services to clinicians who work with patients. For the first time, the company will no longer sell its wares directly to consumers.
Jawbone continues to raise investor money as part of the revised strategy, and is seeking infusions from foreign entities and players in the medical sector, the report said. Though the company has apparently raised some $951 million from the likes of Andreessen Horowitz, Kleiner Perkins, JP Morgan and other big names, a lot of that funding has been spent to thwart a collapse of the wider wearables market.
Explaining the move to TechCrunch, one source said the consumer hardware game is "too challenging" for all but the largest tech companies. A shift to a burgeoning health wearables market might be the ticket out of Jawbone's dire financial straits.
"There are a lot of things to learn about the interactions between health wellness and consumer electronics," a source said. "If you think about what a good consumer electronics company looks like, it's 30-percent margins, annual release cycles and huge risk. It's turned into a blockbuster game."
As for the Jawbone's future, the source pointed to Omada as having a potentially like-minded business model. The company offers employers and other entities with health plans a unique 16-week digital health program for people at risk of chronic disease, complete with personal coaches, smart biometric tracking devices, social networking aspects and a full online curriculum.
In Omada's case, fees payable are based on participant performance. In addition, because the program is based on peer-reviewed intervention methods, it can be billed through medical claims.
Whether Jawbone plans to go down the same road is unknown, but the company is clearly looking for alternatives to the traditional consumer model.
"Every wearable company today will be posed with this question: Do I want to play in consumer and narrow margins, or healthcare and service and make incredible margins but with possibly a lot of upfront fixed cost," the source said.
Starting life as Aliph, the company saw early success in with a Bluetooth headset called Jawbone, which in 2008 earned a coveted spot on Apple's retail store shelves. Jawbone later produced a successful line of Bluetooth-connected speakers and in 2011 decided to dip its toe into wearables with UP, its first non-audio device. The firm has been heavily investing in the fitness tracker space ever since.
An increasingly crowded market -- helped along by Apple Watch -- combined with luke warm reviews and a legal battle with low-cost wearables leader Fitbit to drain Jawbone's coffers.
Reports last year claimed Jawbone had ceased manufacturing of its UP fitness trackers and was looking to sell off its speaker business. Around that same time, rumors began to circulate about the firm's interest in switching from consumer electronics to clinical medical devices.
Most recently, reports claimed Fitbit attempted to buy out Jawbone's talent in a so-called "acqui-hire" in December, but negotiations ultimately fell through.
Comments
When the Apple Watch has better biosensors it will surely see a sales explosion.
/s
"The consumer hardware game is too challenging for all but the largest tech companies."
sorry but it's proving hard for big companies like Samsung, Microsoft, Goog too.
Apple got this.
not sure if I'm using the phrase right but "out of the frying pan into the fire". Why Jawbone is leaving consumer wearables for health products seems like a bad idea considering Apple has a huge head start in this space and is ready to move in.
unless they mean non wearables like difribilators and stethoscopes and stuff?
Until Apple shows up, as Cali mentioned. Unless... Jawbone can find a niche in that market where they either produce products that closely integrate with Apple's ecosystem or develop technologies Apple or an Apple competitor might want to acquire once the space heats up. But for sure Apple's philosophy on creating products and services to positively change the world, and the Steve Jobs legacy of health issues and his reaction to the medical sensors he encountered along that path will have Apple taking a leading role in revolutionizing aspects of health sensing and data collection.
Even if they can create a niche that offers one excellent biometric that could be an early indication of a lifefthratenting situation they could corner a market Apple may never enter. For example, occasionally I come across individuals with Diabetic Alert Service Dogs. These animals are trained to pick up a scent. If they can put that tech into a wrist-worn device with sufficient accuracy they could charge many times more than what an Apple Watch costs while doing nothing else. I have to assume that the canines are expensive to train, not to mention to feed and care for; and then there are issues with people that can't necessarily care for the animal or have allergies to dogs.
Im not convinced that a failing wearables company is going to find an easier competitive environment in the medical space. Now they will have the added burden of satisfying the medical device regulators.
I wish them luck but fear they will get crushed here too.
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For medical devices there are 3 main restrictions:
1) Health care professionals and organizations who have nothing but contempt for any and all consumer grade equipment.
2) Insurers only care about money. "Will this increase or decrease my bottom line" (It has little to do with "peer reviewed" anything)
3) Government (FDA) regulations and approvals trump the first two.
But, with Trump promising to gut the regulatory environment, he could open up the market for consumer grade wearables to quickly become medically approved devices. But, both medical providers and insurers will still have the final say.
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There is a TON of money to be made in medical devices. And, with Trump loosening up (or destroying?) approval regulations, the field may be open to an organization that can contribute to the financial health of the industry. Just go see your physician and he'll prescribe a FixBix (or whatever) and your insurance pays for it. Everybody wins! The physician gets his fee, you get a free FixBix, Jawbone gets their $1,000 for the FixBix and your insurer gets to raise their rates to pay for it.
Please watch the politics so this site doesn't go off the edge like so many other places. And if you do, please don't spread that fake news. You have an interesting point, but it gets lost when you make up an absurd statement like, " the President wants to "gut any and all" regulations." He, along with most of his party, and many Democrats at the federal, state and local level, have pledge to eliminate unnecessary regulations that are hurting small and large businesses, stifling innovation or job creation while still preserving the many important ones that protect the environment, consumer safety, etc. As far as health, the pledge to remove unnecessary regulations to move life saving drugs to market is welcome by many who otherwise will suffer or die, and reducing unneeded costs will make treatments more affordable, again a benefit for all, but mostly for those with less means.
One very quick example from the state level is that yesterday the great state of South Dakota eliminated the silly, absurdly expensive and time consuming and completely useless requirement that you had to obtain a license before you could braid hair which impacted many people, but especially small businesses, lower income people ,and minorities.
From Forbes --"Previously, braiders faced the toughest law in the nation. Before anyone could work twisting or braiding hair, they first had to obtain a cosmetology license. That license requires at least 2,100 hours of training, which can cost nearly $15,000 in tuition. Meanwhile, braiding without a permission slip from the government could lead to fines and even jail time. Adding to the absurdity, many cosmetology schools don’t even teach African-style braiding techniques, and those that do dedicate almost no time to the subject.
... BTW, most of what you said falls under the category spin and propaganda....
It would be nice if all citizens were more certain of the skills, ethics and good governance of our national leadership. But for many elected and business officials, the opposite opinion holds true. Until a time when this becomes clear, it behooves those of us who do care about such things to speak out and challenge the more outrageous policies and other disfunctional plans intended to be foisted on us all.
Nosofast, you pick your battles and I will pick mine. Braiding laws, while antiquated in SD, don't rise to the level of climate change, constitutional freedoms, immigration policy, and a hundred other very important issues currently in limbo, under the new leadership.
Mr. Trump said that for every new regulation, two will be removed. This plan, now passed in Congress, is as absurd or more so than what you found fault with in the previous commenters general point.
If my right to post to this web site do not include speaking to the current affairs of this country, then so be it!