Boston, MA 05/06/2014 (wallstreetpr) – Two years later to launching its most prospective wearable gadget FuelBand bracelet, Nike Inc (NYSE:NKE) is turning away from the hardware to activity tracking software such as fitness apps. Nike wants to replicate the way Apple and Amazon have used digital entertainment to get consumers to buy high-end electronics, by alluring consumers to purchase more of its shirts, shoes and sweats.
Targeting $36 Billion Market
According to an analyst, Paul Swinand at Morningstar, Nike Inc (NYSE:NKE) wants a greater connection with its customers, the thing that is most sought after. Therefore, Nike is employing digital strategy in order to meet its ambitious sales goals. In the previous year, the company projected its revenue to hit $36 billion mark by the end of the financial year May 2017. This implies a compound annual growth rate of 9.2%. In the last 12 months till February, the company has been able to boost its sales by 8.1%.
FuelBand, when launched in 2012, was seen as one of the intelligent moves by the company in the hyped wearable technology space and helped it to quickly earn the tag of an ‘innovator’. The rubber bracelet with a sleek digital display was debuted at $149 that captured fitness data. Moreover, the gadget wearers earned ‘Fuel Points’ based on the level of activity recorded on the gadget. The band was floated with the sole objective of enhancing customer engagement with Nike brand, and it succeeded to quite an extent too.
Dumps FuelBand
While Nike Inc (NYSE:NKE) wont’s affirm about the shutdown of FuelBand, its recent move of cutting or transferring FuelBand employees reinforces its shift of focus. It is easy to understand as to why Nike is shifting away from wearable gadget space, which is of late getting packed up by new offerings at a tremendous rate. The latest example being Samsung Electronics, which made an entry with its $200 worth fitness band called Gear Fit, this February. The news is making rounds that Apple Inc. (APPLE) soon will enter the space. At the same time, the number of smartphone based fitness apps are also mushrooming at a rapid pace.
So, now Nike Inc (NYSE:NKE) looks over to a big challenge of positioning its ‘Fuel’ app as one of the preferred fitness apps for consumers. The success of which will depend on extending Fuel’s appeal to people beyond determined runners. The company has already aired commercials featuring graffiti artists as well as short order cooks who are seen accumulating Fuel points in their daily schedule.
In this direction, the company has already started the Nike+ Fuel Lab last month, where the operation is aimed at designing products based on a Fuel algorithm through partnering tech companies.
