A Wearable Industry Hiccup

Is Jawbone’s Looming Liquidation a Sign of a Bigger Trend?

Jawbone, the technology company founded in 1999 and at one time valued at more than $3 billion, is shutting down. The news is not a surprise: Jawbone had been struggling for several years as sales slowed and it dealt with patent litigation.

The company from San Francisco began operations under the name Aliph selling Bluetooth headsets for phones before expanding into wireless speakers and health-tracking wristbands. Jawbone raised close to $1 billion in funding from backers including Sequoia Capital, Andreessen Horowitz and Khosla Ventures.

The company’s Up activity-tracking wristbands had become its main focus during recent years, but faced growing competition from Fitbit and Xiaomi, as well as smartwatch makers Apple and Samsung. Launched in 2011, the wristbands promised consumers a stylish fitness tracker that made the Nike+ FuelBand and Fitbit’s belt-worn pedometers look outdated by comparison.

Jawbone is the latest in a series of wearable brands to fold or leave the business. Pebble, a smartwatch pioneer, sold off some of its assets to Fitbit late in 2016 and Hello, the maker of sleep-tracking device Sense, announced last month that it was ceasing operations and selling its remaining assets. Even GoPro and Fitbit, two companies that enjoyed spectacular initial public offerings and were once considered the future of the wearables market, have seen their valuations tumble as sales slowed.

These developments are signs that the wearables market is still looking for its footing. In general, making money from hardware can be notoriously difficult, but making money from wearables can be entirely elusive. Even Jawbone, which had years of experience building Bluetooth audio equipment, faced challenges bringing the right hardware and software components together to profitably compete against better known brands.

Hosain Rahman, Jawbone’s co-founder and chief executive officer, has started a new company called Jawbone Health Hub, which will focus on medical devices rather than consumer electronics. The new company plans to sell through institutions such as healthcare providers and insurance companies.

Potential regulatory problems could complicate these ambitions, but new business models could offer better opportunities in the wearables market. Jawbone didn’t have the brand clout of Fitbit or the bare-bones pricing strategy of Xiaomi. This is a market that’s still very close to its beginnings and there will be more growing pains ahead.