In Digital Health, Does Nike Have A Path To Victory After Fuelband?

Editor’s Note: Semil Shah works on product for Swell, is a TechCrunch columnist, and an investor at Haystack. He blogs at Haywire, and you can follow him on Twitter at @semil.

This past week, conflicting reports about Nike leaked, suggesting either big changes or outright abandonment of its high-profile Fuelband line. For those focused on the intersection of digital health, wellness, mobile startups, and wearable technologies, a move by Nike, one of the world’s most iconic brands and visible companies, will be examined under the microscope.

With the news swirling about the future of Fuelband, chatter has focused on the prospects for wearable hardware moving forward and what moves Nike makes as a result. Will they acquire a new team to rethink Fuelband? Will Nike instead attempt to connect items that they already sell? Will they just focus on mobile software, and if so, how will they get the data and distribution? The answers to these questions may help us all sort through how technology startups in this space may best position themselves moving forward.

As reports conflict with company statements so far, I’ll lay out their two scenarios and briefly discuss what options could make sense:

Keep The Fuelband, Change The Team: To Nike, having user data is important, so there’s a decent rationale here. Well, good luck. There are very few teams in the world that can build fully-integrated hardware and software products, and this is in part why Google shelled out over $3Bn for Nest and wired about $1Bn of that directly to Tony Fadell, who had learned his craft under Steve Jobs at Apple. Companies like Jawbone have now reached an orbit and breadth of offerings which would make an acquisition difficult to swallow for Nike. Smartwatch makers, like Pebble, likely have too much upside ahead of them to concede at this moment.

Abandon The Fuelband, Focus On Software And Services: Makes sense on the surface, but I’ll contend again that Nike needs to access user data in order to provide these services. The Fuelband was their data capture vehicle, so without that device, Nike could either (A) build out its own branded software-focused products across iOS and Android, focused on the application layer, but there they’d be competing with (B) a number of health and fitness apps which already have distribution, consumer attention, communities, and data. (For more on this and the startups in this space, click here to see a great Twitter conversation I had this morning with Barry Graubert and Arjun Ram.)

These aren’t the only scenarios for Nike, a $65Bn company. Back in December 2012, Nike announced a partnership with TechStars to leverage the company’s existing technologies. It’s very possible Nike had already considered these scenarios years ago in inking such deals, and those relationships likely provided the insights to eventually plan for a mobile software-focused strategy. If eventually Nike moves away from hardware (which I think they will), it will have started out with an Apple-like strategy of being vertically-integrated between its own hardware and software offering and potentially will end up with a Google-like approach focused on mobile software and services.

Additionally here, Nike can take advantage of the onslaught of off-the-shelf sensors hitting the market and mobile hardware advancements (like Apple’s M7 motion sensor in the iPhone) to create the next great mobile health and wellness service. Or, maybe Nike will elect to eventually take a Facebook-like portfolio approach and focus on buying products to access user data? It’s no longer a crazy idea.

While all of this is easy to chart out on the whiteboard or a blog post, an ominous storm looms over the horizon for Nike and their desire to crack this space. While they were figuring out Fuelband and investing in the startup ecosystem via TechStars, a handful of small, scrappy, focused startups (isn’t this always the case?) have been aggressively building health and wellness mobile products and communities for the mass consumer market. in the context of user data and graphs, startups like FitBit, Jawbone, Runkeeper, Fitocracy, and others have a terrific chance to own the space inbetween the consumer and his/her data.

For instance, Runkeeper, a startup focused entirely on building software products for the running community, has been one of the first teams to take advantage of the M7 sensor in the iPhone and deliver more value to its loyal base — and this week, they announced yet another app to their suite, Breeze, which tracks a user’s steps. It sounds cliche, but small, dedicated, driven teams focused on these seemingly narrow challenges and opportunities are more likely to find the speck of white space to leverage current technologies and build incremental value for their users.

And, if that is an immutable law of small teams versus big corporations, in the world of consumer health and wellness, Nike is presented with a complex challenge in order to preserve its self-proclaimed association with victory.

Photo Credit: Vernon Chan / Flickr Creative Commons

With Its New Samsung App, Health Startup Lark Moves Away From Hardware

Among the freebies included in Samsung’s just-released Galaxy S5 was a new app from Lark, a health startup that’s been pretty quiet for the past year or so.

In fact, co-founder and CEO Julia Hu told me that Lark has been “pretty much in stealth mode” as it worked on the new app. The vision, she said, is still the same — the company is still trying to provide “personalized health coaching” that’s aimed at people who are less interested in counting their steps and more in general health and wellness.

However, Lark is pursuing that vision in a new way. First of all, Lark’s tips (like observing that you’ve been sitting still for a while and should maybe go for a short walk) are now packaged in a conversational format, with the app asking users questions about their activity and providing suggestions. Hu said this brings the experience closer to interacting with a real-life coach or assistant.

For another, this is a standalone app, rather than the app-plus-wristband that Lark was selling before. Apparently the company worked with Samsung to take advantage of the S5′s low-power sensors to track user activity, no additional hardware required.

Hu suggested that this marks a broader shift away from building hardware, although the company will continue to support existing Lark customers. The app-only approach should make the service more accessible, since users no longer have to buy or charge an additional device. (I tried out the Larklife wristband for a few months but eventually stopped using it.) Why make the change now? Hu said it’s because phones have advanced, so they can collect the necessary data without seriously draining the batteries: “We’ve realized that, in essence, the new smartphone with low power sensors is the ultimate wearable.”

Lark first launched at TechCrunch’s Disrupt conference in 2010 with a silent alarm product. (The presentation was memorable for its on-stage marriage proposal, and for prompting Sean Parker, who was one of the startup competition judges, to ask, “Are you serious?”) The company later expanded its product to include sleep coaching and broader health tracking and advice.

Last fall, a regulatory filing suggested that Lark had raised another $3.1 million. Hu confirmed the funding to me this week, saying that existing investors put the money in to support the company’s new direction. (Lark’s backers include CrunchFund — which, like TechCrunch, was founded by Michael Arrington.)

The service costs $2.99 a month, with Galaxy S5 users getting a year for free. Hu said the company is looking to launch the new app on other smartphones as well, but there are no concrete plans yet.

US Health Secretary Kathleen Sebelius To Resign

Health and Human Services Secretary Kathleen Sebelius is resigning. President Obama, according to the New York Times, has selected Sylvia Mathews Burwell of the Office of Management and Budget as her replacement.

Secretary Sebelius became a household name following the catastrophic launch of Healthcare.gov, the government’s portal to provide a marketplace for private health insurance during the rollout of the Affordable Care Act, better known as Obamacare.

Despite that flop of national proportions, the secretary weathered withering calls to resign, and, after the site got on its feet, oversaw, at least in part, the come-from-behind victory of Obamacare to reach its initial, un-revised sign-up goal of 7 million by the end of open enrollment in early 2014.

According to the New York Times, who spoke to both the secretary and White House Chief of Staff Denis McDonough, her exit was of her own accord. Her conversations with the president regarding her exit are said to have begun before the March 31 deadline that ended with a victory lap for the administration. McDonough told the Times that the Secretary felt that the moment was propitious for change.

What appears doubtful is that the political war over Obamacare is over. This morning Secretary Sebelius indicated that the total Obamacare sign-up tally is now 7.5 million.

IMAGE BY FLICKR USER U.S. Embassy Bangkok, Thailand UNDER CC BY 2.0 LICENSE (IMAGE HAS BEEN CROPPED)