This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Why Nike Is Better Off Ceding Wearables to Apple

NEW YORK (TheStreet) - If you've looked at the Nike+ FuelBand Facebook page recently, it's no wonder Nike (NKE - Get Report) is rumored to be backing away from the wearable technology device, but this might be more of a blessing than a hindrance.

While the company has not officially announced anything, a CNET report on Friday said that Nike was laying off about 70 employees of its hardware team, which are a part of its larger 200-employee Digital Sport division.

CNET reported Nike was planning on releasing a slimmer version of the FuelBand this fall, but has canceled the project and shelved any future "physical" projects related to the device. Nike will continue selling FuelBand for now and is even reportedly coming out with new colors. Nike denied report to CNET saying that the FuelBand "remains an important part of our business." Nike+ FuelBand SE retails at $149 and up, according to the Nike+ Web site.

Employees at Nike Digital Tech, which is responsible for Nike's Web software, were not affected, the article stated. While Nike may be sticking to creating fitness-related software through its Nike+ platform, reports are also surfacing that Nike could be in cahoots to collaborate on the hardware side and signs are pointing to Apple (AAPL - Get Report), specifically the upcoming iWatch. Apple CEO Tim Cook sits on Nike's board. The FuelBand is already incompatible with Google's (GOOG) Android system and Apple has been poaching experts to focus on its health-related software, according to Fast Company.

Nike may be ceding the wearable tech hardware niche to Apple, "but don't expect them to lay idle during the wearable device movement," says Brian Sozzi, CEO of Belus Capital Advisors and a contributor to TheStreet.

A partnership with Apple iWatch would free up Nike for "more focus and resources could be put into making a very strong app-based user experience. It's much more cost efficient compared to employing both hardware and software teams," Sozzi said.

Apple is rumored to be releasing the iWatch in the third-quarter and there has been no shortage of speculation as to exactly what the iEverything company will focus on in its wearable device. One big area is likely health and fitness as well as preventative health care. Other areas of focus could be industrial, military uses as well as infotainment, enhancing people's lifestyles. That said, Apple CEO Timothy D. Cook has acknowledged the fact that wearable technology needs to demonstrate why people should buy it, as opposed to just being another gadget.

"The wrist is interesting," Cook said at a 2013 tech conference, speaking with Walt Mossberg and Kara Swisher. "You still have to convince people it is worth wearing."

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
AAPL $123.25 0.00%
NKE $99.88 0.00%
FB $83.30 0.00%
GOOG $548.34 0.00%
TSLA $185.00 0.00%


DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs