In a huge corporate shakeup that I don't think anybody saw coming, Nike today fired the majority of its FuelBand team and will completely get out of the hardware business.
CNET first broke the story on Friday afternoon:
The company informed members of the 70-person hardware team -- part of its larger, technology-focused Digital Sport division comprised of about 200 people -- of the job cuts Thursday. About 30 employees reside at Nike's Hong Kong offices, with the remainder of the team at Nike's Beaverton, Ore., headquarters.
Nike's Digital Sport hardware team focused on areas like industrial design; manufacturing operations; electrical and mechanical hardware engineering; and software interface design. Products included not only the FuelBand but also the Nike+ sportwatch and other, more peripheral sport-specific initiatives.
Of those 70 employees, about 70 percent to 80 percent -- or as many as 55 people -- were let go, the person said, asking not to be identified because the information was confidential. Some of the employees will be staying on at Nike through May. It's unclear how many current employees, if any, have been internally recruited to join other Nike divisions.
With Nike apparently getting out of the hardware side of fitness tracking, the company will presumably now focus exclusively on fitness software that other hardware manufacturers can integrate into their own products.
Of course, what's perhaps interesting about this is that Apple's rumored iWatch may be released later this year, according to the most recent rumblings from the rumor mill. Also note that Tim Cook is a board member at Nike. Now this shouldn't be taken to mean that something strange is brewing underneath the surface, but perhaps Nike, realizing tha Apple may be entering the market soon, decided that relatively low margin hardware wasn't the market area it wanted to participate in. Over and above that, perhaps Nike found that focusing resources on the FuelBand, especially in an increasingly competitive marketplace, wasn't how it wanted to allocate its time and money.