Image source: Jawbone.
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The wearable technology market is growing quickly. It is expected to be worth $80 billion by 2020, according to Juniper Research. And one of the first companies to realize the wearables' market potential was Jawbone.
The company was founded in 1999 and has released various devices, including headsets and speakers, since its inception. But Jawbone's primary revenue source, up until last week, was sales of itsUP fitness trackers.
According to a recent article
This move still leaves the company with its Bluetooth speaker business, for which the company is also seeking a buyer, according toFortune.
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Why Jawbone's making this move
Jawbone's reported move away from its current wearables business comes amid signs of floundering.
Jawbone sells its trackers both directly to consumers and to businesses that want to start wellness programs. The $99 UPmove is the company's cheapest tracker, while the most expensive, the UP4, comes in at $150. The company also sells a tiered system for health coaching, technical support, and analytics to its enterprise customers.
But Jawbone's full potential has never been realized.
In 2014, the company had a $600 million revenue run rate, for the forward 12 months, and was valued at $3 billion. But in its most recent round of funding, earlier this year, Jawbone received just $165 million, and is currently valued at $1.5 billion.
The valuation drop has come as Jawbone's faced an increasing amount of wearable tech competition from wearable tech leader Fitbit .
Fitbit currently leads all other wearable technology shipments, taking 29.5% market share worldwide. Meanwhile, Jawbone doesn't even make it into the top five vendors list.
And for quite some time, Jawbone's strategy against Fitbit has been to sue the company.
Jawbone's lengthy lawsuits
There have been a handful of lawsuits, and most of them involve Jawbone using its 2,800 patents to sue Fitbit for patent infringement. They also include allegations that former Jawbone employees who were snatched up by Fitbit brought the company's product roadmap to its rival.
It's still unclear whether Jawbone will use its intellectual property assets to take on other wearable-technology makers, but the company did use the assets to secure its latest round of funding this past January, according to the Financial Times.
New wearable tech potential
So while Jawbone makes most of its money (for now) by selling fitness trackers to consumers, the company may also start using patent litigation as a new way to bring in revenue.
The big unknown is how Jawbone will shift its wearables strategy to clinical-grade devices. But with the company's current wearable tech lineup barely treading water, it appears to be a smart move for management to change strategies right now.
The market for smart wearable healthcare devices is expected to grow to $41 billion by 2020, and many see it as the next logical step for the wearables industry. These devices could help manage diseases and help patients and doctors track conditions like epilepsy and diabetes.
To release a clinical-grade device, Jawbone and other companies need to have their devices approved by the U.S. Food and Drug Administration. That's a barrier many tech companies haven't overcome yet. And if Jawbone eventually launches FDA-approved trackers, that would present a serious advantage for the company.
It's yet to be seen if Jawbone is truly moving in this direction and whether it can successfully accomplish this goal. But if the company pivots to FDA-approved wearables soon, we may finally see Jawbone reach its full potential.
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