Jawbone out of the consumer fitness tracker business, going to clinical model, raising funds: report

Confirming reports from various sources last year [TTA 21 Dec] and prior (July) is a report in TechCrunch confirming what we already guessed: Jawbone is out of the consumer fitness tracker market, is aiming at a B2B2C market of health providers, and needs to raise a lot more money.

Key points in the article:

  • It intends to market a “health product and accompanying set of services sold primarily to clinicians and health providers working with patients”
  • It’s seeking additional funding from investors. TechCrunch‘s sources claim that is at an advanced stage, but no closings as of yet.

We noted in December that research/analytics company CB Insights calculated that 2015 wearable computing (a broader category that includes smartwatches) investment funding fell 63 percent from 2014 to a level comparable to 2012-13, in large part due to the cooling of the fitness segment. TechCrunch’s end of year report from eMarketer and other sources also noted that 2016 sales growth of the wearables sector, forecast at 60 percent, only achieved 25 percent growth and will be equally weak in 2017. Lack of demand, lack of loyalty (most fitness bands are discarded after 3-6 months), unreliable (TechCrunch makes much of customer displeasure), their looks and generally useless (in a clinical sense) data and the greater versatility (and appearance) of smartwatches for those who want them, are all factors. There’s a disenchantment here (‘who needs ’em?’) that mass marketing can’t overcome.

It is worthwhile reflecting that Jawbone, which started off in 1997 as an audio technology company, has burned through over $980 million in 14 funding rounds, generously provided by various VC luminaries of Silicon Valley. (One wonders how much equity is even left in the company, a la ‘The Producers’) The company sold off or closed their once-pacesetting Jambox audio business. It did not help that the fitness tracker had a long list of technical problems (see Editor Charles’ litany from 2015), they hadn’t updated software since that year, and they had lost most of their battles with Fitbit over patent rights. Though their design was innovative, after 2015 its share declined to less than 3 percent of what is still a small market, which is projected to be further declining.

Fitbit is also going in the clinical quality direction despite its own struggles (announcing termination of 6 percent of their staff last week and a reorganization after weak 4th Q sales), along with a roster of niche players we noted in December, Jawbone’s chances rely on its equity holders deciding that the pivot is doable, that the IP is there, and further opening up their wallets. However, this Editor would not bet on any of this, believing that more likely outcomes are an asset sale or reorganization.

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