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NIKE-Apple deal rumored

May 20, 2014

By Oregon Small Business AssociationNike2

Nike recently announced it will no longer produce new FuelBands—a wearable electronic exercise device that tracks heart rate, strides and other activity. Is the Portland-based sports company about to announce a related deal with Apple?

Some business writers and analysts think it’s possible that Nike and Apple are about to team up in a new partnership that incorporates FuelBand technology into hardware produced by Apple. It’s been rumored for a few years that Apple might create a wearable tech device or an iWatch that could be used for exercise but also for much more. In fact, Apple is the highest-profile company of its type not yet in that market space. Samsung and Google, for example, are already selling related gear.

Rumors are gaining steam as media has begun taking notice of noteworthy developments.

Among the most intriguing is the fact that last September Apple hired the former head of the Nike division charged with developing the FuelBand. Nike has now unexpectedly pulled the plug on plans for a new, thinner FuelBand model, which it intended to release this coming fall. It also announced significant layoffs to its FuelBand team.

Far from diminishing, the market for exercise trackers similar to the FuelBand is getting bigger and represents a significant business opportunity. According to one estimate, consumers will purchase 17 million “smart bands” this year—a figure that will nearly triple by 2017. Nike is not the largest player in in the industry, but the potential is there to grow its current 14 percent market share. Though Nike has only said it will no longer make new FuelBands, it appears to be an odd time to retreat from the market.

Many industry analysts believe that a larger partnership between Nike and Apple makes sense when it comes to the future of wearable tech that monitors, tracks and reports exercise activity. The basis for a solid partnership is already there. Among other things, Apple’s iOS is the only operating system compatible with Nike’s FuelBand and its set of apps, and the two companies have joined together to create Nike+ mobile app for iPhones and iPods.

Even more importantly, tech experts believe that fitness bands will eventually be subsumed into a “smartwatch” device, similar to how smartphones have integrated disparate computing technology into one primary device. Future smartwatches would become a digital hub for its wearers, making products similar to the FuelBand obsolete. Few companies would make a better partner for Nike in that regard than Apple.

On June 2, Apple’s Worldwide Developers Conference will convene. In the past, Apple has used the conference as a platform to announce innovative products. The fall, just prior to the Holiday shopping season, has also been a popular time to introduce new versions of the iPhone. Nike’s recent actions and ongoing rumors surrounding an iWatch will likely have industry analysts, competitors and informed consumers paying attention.

  
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