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Sozzi: Nike's Fuelband Runs out of Gas

Stocks in this article: NKE AAPL GOOG UA BBY

NEW YORK (TheStreet) -- Nike's (NKE) decision to scrap its Fuelband wearable device came as a shock to all tech enthusiasts, including yours truly. ICYMI, Nike has apparently fired the majority of the team responsible for Fuelband development, a total of 70 out of the 200 that make up the larger Digital Sports division.But the app will continue to be upgraded, according to Nike, which is great news as its social experience and overall items tracked are seriously lagging that of competitors Jawbone and Fitbit.

I personally took this as shocking news as it was about one month ago that I chatted with the Nike Fuelband team. The passion in the voices there was readily detectable, and the team kindly provided insight into the volumes of global data being accumulated by a rubber and plastic device being worn on wrists. I was definitely intrigued by how this data collection would benefit Nike long-term through better tailoring of apparel and sneakers to people's needs, and by opening shops like Dick's Sporting Goods (DKS) and Best Buy (BBY). The analyst in me should have sensed something was up when the conversation was redirected after I asked how the Fuelband design would evolve in the future.


WATCH: More videos from Brian Sozzi on TheStreet TV

Nevertheless, we did learn at least three things from Nike's decision, besides the Fuelband being worn on my left wrist now being on obsolete collectable to be sold on eBay (EBAY):

Apple's (AAPL) iBand (my term, don't want to say iWatch as it limits the potential of this hypothetical device) is now the most imminent it has been, and perhaps a reality ahead of the holiday season of 2014. Tim Cook, Apple CEO, has sat on the Nike board of directors for nine years so don't think for a hot second there haven't been backroom discussions about what and when Apple will release a wearable device that sets the standard for an industry in bad need of direction. So having the information why would Nike continue to employ industrial design folks for a device that would be headed for extinction from the hands of mighty Apple?

Under Armour (UA) was right on the mark in buying wearable device app maker MapMyFitness for $150 million in November 2013. The app by MapMyFitness, which at last count boasted 20 million users, is an open data tracking platform that connects to 400 wearable devices, including Nike's Fuelband. The future for Nike in wearables, as in Under Armour, appears to be putting resources behind developing and maintaining the best user interface for a wearer of hardware by Apple and Google (GOOG).

Nike had been testing Fuelband pop up stores (WATCH: as seen in my exclusive Vine footage here) under the radar, which I viewed as a sales opportunity for Dick's and Best Buy. Each one of the two retailers are modest losers in Nike's decision as they will lose a product that was for sale in display cases at Dick's and on the shelf at Best Buy.

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"3 Cool Things Happening in the World You Don't Know About"

See what Nike told me about its Fuelband...

-- By Brian Sozzi CEO of Belus Capital Advisors, analyst to TheStreet.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.



At the time of publication, Sozzi held no position in the stocks mentioned.

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