Jawbone is officially exiting the consumer wearables market to focus on developing medical products for direct sale to clinical practitioners, according to a new report.
Speaking to TechCrunch on Friday, sources familiar with the matter said Jawbone's latest pivot away from its fitness tracker and Bluetooth speaker business involved working on a health product for the medical sector, including offering services for clinicians who work with patients.
According to the report, Jawbone is seeking to raise foreign investor money as part of the revised strategy, after spending around $951 million in an attempt to prevent a collapse of its consumer wearables business.
One source told TechCrunch the consumer market had proved "too challenging" for small and mid-size technology companies, but that the burgeoning health wearables sector – currently led by companies like Omada and Forward – offered Jawbone a possible escape route out of its financial troubles.
"If you think about what a good consumer electronics company looks like, it's 30-percent margins, annual release cycles and huge risk. It's turned into a blockbuster game," said the source. "But folks in this other area, like Omada and other services, they have a human involved but with a nearly 100-percent contribution margin. It's wildly different economics. Every wearable company today will be posed with this question: Do I want to play in consumer and narrow margins, or healthcare and service and make incredible margins but with possibly a lot of upfront fixed cost."
Reports of Jawbone's troubles go back to May 2015, when the company ended production of its UP line of fitness trackers and sold its remaining inventory to a third-party reseller at a discounted price.
Initially, Jawbone denied claims that it was going out of business and said it was focusing on advanced sensors to sell to other wearable makers, but over recent months a slew of angry customers frustrated by a lack of support have painted a more desperate picture.
Just last month both the head executive of product and the chief financial officer left the company, while MacRumors was contacted by former staff who said that Jawbone had let go of all employees at its four contact centers in Northern Ireland and across the U.S., leaving no-one to deal with customer complaints.
Jawbone still believes there is value in its business, but with a one-star customer rating on review aggregator website Trustpilot.com and an "F" rating on Better Business Bureau's site, the company faces a challenge if it is to win the confidence of additional investors, wherever its future lies.
Top Rated Comments
Moving into medical?
My thoughts are that they will get crushed there too.
How long before the wearables market effectively becomes the Apple Watch market?
They've brought the price down, check out Series 1 or deals on the original models.
Have you looked at Fitbit stock recently? Or read about their layoffs? They're no longer even an acquisition target. They're done. Sorry to burst your bubble.
[doublepost=1486222973][/doublepost]Apple Watch was a year old for a good part of last year. Many people held off for the 2nd generation, which came out toward the end of the year, and was extremely supply constrained until now. Now that the production ramp is complete and the Series 1 is available at a lower entry point, they should do pretty well this year.
Why would they shift gears, if not because the consumer market is not panning out for them? And the chief reason is that the Apple Watch is sucking all the profits out of the wearables market.
In short, do what Pebble did? For all the good that did them.
The Apple Watch lasts 2 days between charges.
Fitbit reported a dramatic drop in profits and recently laid off a bunch of their workforce. Their spare cash on hand is roughly equivalent to one year of operating costs. In short, this next year will be make or break for them.
Fitbit is in a more precarious position than people seem to realise here. I am betting they will be one of the next few companies to exit the wearables market.
This is my current Apple Watch app layout.
Here's what I am currently doing on my Apple Watch.
1) Apple Pay.
2) Interacting with notifications. I love being able to triage incoming email and dictate short replies to messages from my wrist, especially when my phone is not on me.
3) Siri on the wrist can be handy. I am using it to calculate discounted prices of products in shopping malls (e.g. "What is 70% of $139”)
4) Use the workout app to track my runs. Loving the heart rate sensor as well (not sure how accurate it is though).
5) Have apps like 1Password and Authy saved to my dock. I can now retrieve passwords and 2FA codes directly from my wrist.
6) It's just an nice watch all round (albeit one I have to charge every 1-2 days).
I don't feel like my Apple Watch is unnecessarily bloated or needlessly complicated. I came from a pebble watch and I am loving the added functionality.
So Fitbit is supposedly doing well because they gave someone a free sample of their product (meaning, no revenue)?
Fitbit is experiencing declining sales, and what stock they did sell, they had to reduce prices to achieve those sales.
What I am seeing from my colleagues who wear fitbits are that they don't result last very long. 6-9 months on average, and most don't last a year. Compared to an Apple Watch which is projected to last 3 years on average and suddenly, the higher initial selling price of the Watch doesn't seem like such a bad deal after all.
Fitbit is in free fall, at a time when Apple Watch momentum is building. It's telling that Fitbit saw the need to purchase Pebble and enter the smartwatch market, precisely because Apple's renewed emphasis on health has impacted it gravely.
The price of the Apple Watch doesn't need to drop. Apple will do what it has always done. Taken an emerging product category with a frustrating user experience and delivered a polished product made possible by its control over both the hardware and software.
And in the process proceed to suck out all the profit from the industry, leaving only scraps behind for the rest of the competition to fight over.
I am not sure what you mean by fat and heavy. It's thin enough to fit under the long-sleeved shirts I wear to work, and I barely feel it on my wrist.
But keep all that misinformation coming, if you don't think your credibility is already down the drain.