Why did Jawbone fail?

Ideas and possibilities from digital health Twitter

  1. A report from The Information earlier this month finally pronounced Jawbone, a well-funded pioneer in the wearable activity tracker space, dead. The company is reportedly liquidating, with CEO Hossain Rahman bidding on some of the assets himself in order to start a new, health-focused company. Response to the news flooded in from organizations grappling for an answer. A Reuters report called it "Death by Overfunding", while Engadget pinned it down to the old 'hardware is hard' axiom, suggesting that the news "heralds the end of wearable industry." I reached out to some voices in that industry to see what they thought.
  2. Ernesto Ramirez, head of research and development at Fitabase and longtime Quantified Selfer, agreed with Reuters that there had to be a connection between Jawbone's nearly $600 million in debt and equity and the company's long, slow decline.
  3. Aaron Coleman, the founder and CEO of Fitabase, talked about his personal experience trying to work with the company, and his account suggests that, in the end, it may have come down to behind the scenes turmoil as much as any particular structural flaw.
  4. The idea of mismanagement was certainly one that came up too many times in the conversation to ignore. Naveen Rao, a healthcare strategist currently serving as editor at Tincture, cited that as one of a handful of reasons he saw for the company's failure.
  5. Others felt that the quality of Jawbone's hardware just wasn't there, and that the company just lost plain and simple to its rival Fitbit. Dan Ledger, founder at Path Collaborative and something of a wearables industry expert, emailed some of his thoughts to MobiHealthNews. Here's three of the reasons he outlined:
  6. "1) Margins - Jawbone always focused on building high end products (both speakers and wearables) and it's difficult to make a decent margin when you don't have much supply chain dominance. This became particularly pronounced as the core functionality of what you're building started to become commoditized (see slide 6 of the attached preso). I think they always struggled to make a decent profit margin on their hardware.

    2) Quality - We have 5 Jawbones in our house, all of them died within a few months. On Amazon, the UP3 hovers around 3 stars while Fitbit's portfolio is up in the 4-5 range. They were aggressive in terms of aesthetics and form factors but I think quality and reliability suffered as a result.

    3) Network effect - without a critical mass of market share, people are less likely to find friends on a platform like Jawbone's. Fitbit published some interesting data in their last quarterly investor call that people who have friends on the platform end up walking 500-1000 more steps / day. This is critical for sustained engagement. I think many Jawbone users have subsequently churned over to Fitbit (or abandoned the category)."
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