Microsoft Corporation Is Giving Up on Fitness Bands

The software giant still hasn't learned its lesson with hardware.

Evan Niu
Evan Niu, CFA
Sep 15, 2016 at 2:35PM
Technology and Telecom

Microsoft Health. Image source: Microsoft.

For Microsoft (NASDAQ:MSFT) and fitness bands, the third time will not be the charm. Because there won't be a third time.

According to ZDNet, all signs indicate that the Microsoft Band 2 will be the final product of the software giant's foray into smart fitness trackers. The original Microsoft Band from 2014 was poorly received by the market, as was the follow-up successor, even though it was redesigned and improved in many ways. Band 2 even got a price bump and launched at $250, which didn't help its chances. The company has since reduced the price to $175, presumably in an effort to clear out inventory.

ZDNet's sources say that Microsoft is pulling away from the fitness tracker market, at least in terms of hardware. Microsoft provided this statement to ZDNet: "We continue to invest and innovate in the Microsoft Health platform, which is open to all hardware and apps partners across Windows, iOS, and Android devices. We also continue to sell Microsoft Band 2 and remain deeply committed to supporting our customers and exploring the wearables space."

That's a fairly noncommittal response. While no one should expect a company to announce a new product in a statement to the press, the language still implies that Microsoft really is looking for an out.

Time to pivot

Instead, Microsoft is said to be turning its attention to its cross-platform Microsoft Health service. By targeting both Apple (NASDAQ:AAPL) iOS and Android and integrating with a wide range of third-party apps, Microsoft hopes that the cross-platform strategy that it has successfully embraced in other areas will pay off here. But it won't.

Microsoft is again a little late, even though this market is quite young. Fitbit (NYSE:FIT) has high hopes of creating a health platform, which is why it doesn't really integrate with other services like Apple Health. Apple is clearly focusing quite heavily on fitness, beefing up Apple Watch Series 2 with even more fitness tracking capabilities and improving Apple Health. There are a few other, smaller players trying to carve out a spot for themselves, too.

This is one of those situations where a company feels compelled to offer a product or service primarily out of fear of being left out. But that's the worst reason to make something.