Jawbone Runs Out of Financial and Legal Battery; Accessory Company to be Liquidated

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3Q 2017 | IN-4663

Several media sources are reporting that accessory company Jawbone is being liquidated. Known for its Bluetooth earpiece early in the formation of the wireless audio category, Jawbone was received by the market for providing good noise cancellation and a distinct metallic appearance to its device.

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Accessories Market Loses One of it Pioneering Bluetooth Companies

NEWS


Several media sources are reporting that accessory company Jawbone is being liquidated. Known for its Bluetooth earpiece early in the formation of the wireless audio category, Jawbone was received by the market for providing good noise cancellation and a distinct metallic appearance to its device.

The company followed its audio earpiece with introductions of a wireless speaker called Jawbone Big Jambox and the Jawbone UP fitness tracker. More recently, Jawbone had shifted focus from hardware to developing health-related software and services.

Jawbone Health Hub to Replace Jawwbone Entity

IMPACT


Jawbone’s co-founder and CEO Hosain Rahman has already formed a new company, Jawbone Health Hub, and several original Jawbone employees have apparently signed on. The new entity will focus on health-related products and services, though it is rumored that Jawbone Health Hub will also provide support for legacy Jawbone products.

Jawbone encountered legal and financial challenges in 2016 as it battled rival Fitbit in the courts related to trade secret and patent infringement charges. The company had raised over US$900 million in investments since its inception.

Shifting to New Markets Too Quickly Can Be More Perilous than Staying Too Long

COMMENTARY


Jawbone continued to get trapped in fast-paced accessory markets where hardware quickly became commoditized. Once the company had encountered success with the earpiece, investors were quick to put money into the Bluetooth speaker market. And a similar cycle occurred once the fitness tracker market emerged.

The Bluetooth headset market is expected to generate more than US$21 billion in hardware revenues during 2017 and grow to over US$25 billion in 2022. The accessory segment is increasingly switching from mono (single ear) products to the use of stereo (two ear) support. The Bluetooth stereo products include both cabled and entirely wireless solutions.

ABI Research also forecasts the mobile media speaker market to reach nearly US$4 billion in revenues during 2017. Over the next five years, revenues are predicted to reach US$4.7 billion annually.

While remaining agile in product development is generally a good recipe for repeat success, Jawbone moved its resources quickly from one innovation to the next and did not assure that prior product introductions had lasting power in the market with respect to differentiation and a loyal customer base. Product launches within each accessory segment also lacked a portfolio approach. Successive introductions appeared to be replacement models, instead developing an A/B choice strategy or high-medium-low tiered approach.

Jawbone was also a small fish in a large pond. More specifically, in the Bluetooth speaker market, Jawbone faced competition from large audio brands, including Bose and JBL, which have well-developed supply chains and market experience, along with Chinese manufacturers that would attack on price. Similarly, in the wearables market Jawbone would be squeezed by the larger original equipment manufacturers (OEMs), including Apple, Samsung, and Xiaomi, in a shrinking market.

Jawbone’s practice of moving to the next “shiny object” before the market developed created frustration for its buyers and built confusion into what the Jawbone brand promised.

For on-going tracking and analysis of the mobile accessories market, see the ABI Research mobile accessories market data and semiannual market update summary.

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