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year of the wearable

The sudden rise and fall of a fitness hardware product backed by a multinational sports giant led many down a path of speculation over what may have gone wrong and whether this was a warning shot for competitors in the spaceMIKE SEGAR/Reuters

Companies are betting big on wearable technology, but so far devices like Google Glass and fitness trackers have remained niche products. In this five-part series, we look at trends for 2015 and why Canada is poised to lead the wearable revolution. Read the first story here: Will 2015 be the year of wearable technology?

The Nike+ FuelBand activity tracker hit the online market for preorder in Nov. 2013 and sold out within minutes. When the wearable device made its first appearance in Niketown, the company's flagship retail outlet, there were reports of customers lining up around the block.

But in the first quarter of 2014 Nike saw its share of the increasingly competitive smart-band market dip 10 per cent, according to a report by Canalys, dwarfed by competitors like Fitbit who claimed half of all sales in the category.

Then in April 2014, hardly 18 months after first hitting the market, Nike announced that it would be cutting its engineering staff and discontinuing the product.

The sudden rise and fall of a fitness hardware product backed by a multinational sports giant led many down a path of speculation over what may have gone wrong and whether this was a warning shot for competitors in the space.

Though Nike's wearable product is off store shelves, Nike shouldn't necessarily be counted out of the wearable ecosystem, says Nike Canada communications director Claire Rankine.

"Wearable technology is significant part of our future," she wrote. "The strength of the Fuelband is NikeFuel, and we have a rich ecosystem to help expand Fuel and its ability to help athletes. From a hardware perspective, we are partnering with industry leading partners to create new ways to extend our community of over 30 million Nike+ members with smarter products and services," she said, via email.

In other words, the FuelBand allowed Nike to amass a community of over 30 million members, and will now turn over the hardware side of the business to its partners while it continues to work on its highly successful software products.

Tom Emrich, founder of We Are Wearables, however, believes that Nike's mistake was in getting too close to partners like Apple, as they waited two years before making its products compatible with other operating systems.

"The keys to success with an activity tracker – or any wearable is the ecosystem – is that you need to be smartphone agnostic," he said. "I think it really came down to the fact that it was iOS-centric, and perhaps didn't play as nice with others, from a partner perspective."

John Nosta, founder and digital health strategist of NOSTALAB, a New York-based digital health think tank, argues that this is only the first generation of fitness tracking devices, and while these simple arm bands may have seen their heyday, more opportunities will soon arise.

"Here's the fundamental question: is this a warning sign for these industries and these companies? I think it is, but not for the reason that most people will think," he said. "The role of the quantified self is not going away, it's only going to grow and become more robust. The question becomes: is the simple wristband tracker the tool to help capitalize on that trend? I don't think so."

Others believe that the close ties between Nike and Apple was a well-calculated move that would eventually allow the fitness company to handoff its hardware offering to the tech giant.

"There may be an Apple band in the future of some type, and this is pure speculation on my part, but I just see it as Nike probably won't discontinue having some kind of fitness band in their offering, or they'll partner in some way," said Paul Sonnier, a digital health social entrepreneur. "I don't think it was a 'failure' quote-unquote, but I think it's brought the market further along and brought them further along."

Mr. Sonnier explains that the FuelBand gave Nike an opportunity to prove itself as an innovator in the health and sports technology space while increasing brand awareness.

Furthermore, Mr. Sonnier believes that this circumstance shouldn't be considered the final nail in the coffin for wearable fitness tracking products; rather it presents an opportunity for new players to enter the market and compete for the title of undisputed champion.

"There's still an open opportunity for one or more companies to really do that in digital health and wearable tech, and whatever the services are or the user experience or the benefits that they can create, I think it would be fascinating to see if someone can solve that and become the Apple of fitness wearables."

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