Nike is a clothing company, not a technology company. They said so themselves back in October when they released the FuelBand SE.
Today Nike has announced that it's killing off the FuelBand. It's no longer focusing on wearables. This isn't a shock, the FuelBand is not Nike's focus. It is just but one product (that most likely made Nike no money).
The bigger issue is if Nike abandoned 'NikeFuel'. 'NikeFuel' is a strategic focus for Nike, a proprietary fitness metric that it has been building over the last few years. Nike's aim is to ensure an active population. With a healthy and fitness conscious public Nike has a market for their clothes and equipment.
The recent trend in this market has been to track activity via units such as steps, kilojoules burnt and/or calories shed. Back in January 2012 Nike announced 'NikeFuel' and with that they hoped to create not only a metric, but a backbone to all fitness activity. It is easy to picture a community using Nike running shoes, Nike golf clubs, wearing Nike yoga equipment etc. and having their activity tracked via 'NikeFuel'. Nike provides third party hardware and software companies a market, financial incentives and an API and they provide tools for this community to get increased value from 'NikeFuel'. From food diaries, running maps, golf swing analysers the ideas are endless. A prosperous 'NikeFuel' ecosystem ensures Nike's core clothing and equipment business will flourish.
You see, 'NikeFuel' is to Nike as what the iTunes Store was to Apple in the early days. Apple launched the iTunes Store to help it sell iPods. Nike needs 'NikeFuel' to succeed to help them sell clothes.
There is no doubt that Nike wanted the FuelBand to succeed, but the fact that it didn't isn't a huge issue. It helped legitimise the 'NikeFuel' ecosystem. It showcased how 'NikeFuel' was to work.
In 2013 Nike launched an accelerator to help companies launch products on the 'NikeFuel' platform. In the last month they kicked off the FuelLab in San Francisco to help incentivise companies to build 'NikeFuel' into existing products. I've also noticed its developer site has had a revamp over the last few months with more detailed API documentation. Nike is most likely at the point where it needs to invest millions of dollars in helping others build hundreds of products on 'NikeFuel' rather than pouring millions into one wearable device.
Maybe the FuelBand isn't needed anymore. Maybe 'NikeFuel' is mature enough an ecosystem for Nike to divert its focus (and dollars) onto the next phase of the strategy. Maybe it's seeing some great tech exiting the accelerator or awesome potential in the FuelLab. Or maybe one of their board members has showcased a product that incorporates 'NikeFuel' that will take wearables where they couldn't take the FuelBand.
