Surfair
110799

Jawbone cuts 15% of its staff, shuts down NY office

The company has been struggling recenty to keep up with rivals Apple and FitBit

Financial trends and news by Steven Loeb
November 20, 2015
Short URL: http://vator.tv/n/4199

2015 has been a banner year for the wearables space, with the release of the Apple Watch and the FitBit IPO, which was the largest wearables exit ever. Now it's ready to explode in a big way.

Unfortunately the news has not been as great for Jawbone. The maker of the Jawbone UP health tracker, as well as the Jambox, Bluetooth wireless headsets, and noise-canceling headphones, as the company has struggled to keep up with its rivals.

Now it is being forced to lay off 60 employees, or 15 percent of its staff, the company has confirmed to VatorNews.

While the layoffs are happening globally, it seems like the company's U.S. operations are taking the biggest hit, as it has decided to completely shutter its office in New York, while also downsizing its offices in Sunnyvale and Pittsburgh. No other offices have been affected and no futher changes are planned at this time.

In a statement to VatorNews, the company explained the cuts as a way for it to, essentially, streamline by cutting some of the fat.

“Jawbone’s success over the past 15 years has been rooted in its ability to evolve and grow dynamically in a rapidly scaling marketplace. As part of our strategy to create a more streamlined and successful company, we made the difficult decisions to reorganize the company which has had an impact on our global workforce," a Jawbone spokesperson said.

“We are sad to see colleagues go, but we know that these changes, while difficult for those impacted, will set us up for even greater success.”

This is actually the second round of big layoffs for the company in just a few months. In June it cut 20 employees, or about 4 percent of its workforce at the time. Those cuts came after Jawbone was forced to delay the release of its UP3 fitness tracker.

Jawbone has also had trouble competing against some of the major players in the space, namely Apple and FitBit. According to data from IDC, while FitBIt has a 24.3 percent market share, and Apple has 19.9 percent of the market, Jawbone does not even make it into the top five.

The company also seemed to be getting bogged down in lawsuits in recent months, suing FitBit on multiple occasions, first alleging that it stole both talent and secrets, then accusing FitBit of patent infringement. It also filed to stop FitBit from importing its goods.

The news has not been all bad for Jawbone, though. In April, the company completed a $300 million funding from BlackRock, giving it around $725 million in total funding and valuing it at roughly $3 billion. The company could also be prepping for an IPO of its own; investors in the healthtech space named it as the next company that they believe will file this year. 

The wearables space

While wearables is becoming crowded, there's a huge opportunity for companies in this space.

A report from earlier this year said that the number of wearables shipped would more than double in 2015 going up to 45.7 million units, in 2015, up from 19.6 million in 2014.

By 2019, total shipment volumes are forecast to reach 126.1 million units. That means it will have a five-year compound annual growth rate of 45.1%.

There will be increased wearable usage as well, as it is expected to grow by by nearly 60% this year, according to a report from eMarketer that showed one out of ever four adults in the United States wearing one by next year.

In 2015, 39.5 million adults in the United States will use at least one wearables, including a smartwatch or a fitness tracker. That will be an increase of 57.7% over the 25. 1 million who used them in 2014. There will also be a significant increase in penetration, 18.7 percent of Internet users in 2015, up from 12.2 percent last year.

Of course it will be hard to beat out Apple or FitBit, given their current dominance, but the market is going to be so big that there will be room for plenty of players to make good.

This news was first reported byTechCrunch on Friday.

(Image source: jawbone.com)


Related news