San Francisco-based wearable device maker Jawbone is said to be exploring the sale of its Jambox family of wireless speakers.
In January 2016, the wearable tech unicorn raised $165 million in a drastic down round at half its previous $3.3 billion valuation, led by the Kuwait Investment Authority, bringing its total funding so far, to over $890 million. Its blue chip investors include Andreessen Horowitz, Kleiner Perkins Caufield & Byers, Deutsche Telekom, BlackRock, JPMorgan, Sequoia Capital, Khosla Ventures, Wells Fargo, Silver Lake Partners and others.
Jawbone’s prominent board members include Michael Abbott, general partner at Kleiner Perkins; Roelof Botha, partner at Sequoia Capital; Ben Horowitz, co-founder & partner at Andreessen Horowitz; and Marissa Mayer, CEO & president at Yahoo! Jawbone was founded in 1997.
The company’s co-founder and chairman Alex Asseily told Fortune that selling the non-wearable business would be “painful” but prudent, after Jawbone’s share of the speaker market in the US reportedly shrunk to approximately 5%.
The move comes a month after the U.S. International Trade Commission ruled against Jawbone in a patent dispute against No.1 wearable device market leader Fitbit, which had a 26.9% market share in 2015, according to research firm IDC.
No. 2, Xiaomi had a 15.4% market share, followed by No. 3, Apple with a 14.9% share, No. 4, Garmin with a 4.2% share, and No. 5, Samsung with a 4% share of the market in 2015.
Jawbone faces stiff competition from its top 5 rivals in the worldwide wearable device market, which grew 171.6% in 2015 according to research firm IDC.
“Triple-digit growth highlights growing interest in the wearables market from both end-users and vendors,” noted Ramon Llamas, research manager for IDC’s Wearables team. “It shows that wearables are not just for the technophiles and early adopters; wearables can exist and are welcome in the mass market. And since wearables have yet to fully penetrate the mass market, there is still plenty of room for growth in multiple vectors: new vendors, form factors, applications, and use cases.”
“What is warranted is continued innovation and development,” added Llamas. “The market can only get so far with ‘me too’ and ‘copycat’ wearable devices. End-users expect improvement from what they have now, and new applications to spur replacement and increased adoption.”
“Fashion and design will play an equally important role in increasing adoption,” said Jitesh Ubrani, Senior Research Analyst for IDC Mobile Device Trackers. “Simply encrusting your watch with gold and jewels is not going to cut it. Rather forming partnerships with notable fashion icons, a route taken by Fitbit and Apple, is far more likely to succeed.
“It’s also worth noting that the wearables market isn’t just about smartwatches and fitness bands,” continued Ubrani. “Though the top 5 certainly dominate with wrist-worn devices, there’s been an immense amount of growth in other form factors like clothing, footwear, and eyewear – form factors that arguably require even more fashion sense than watches or bands.”
“The two patents that are the subject of the ITC ruling represent only a portion of Jawbone’s case against Fitbit and a small subset of Jawbone’s overall patent portfolio,” Jawbone said.
In January, the company’s relatively new president Sameer Samat departed within less than a year, and is said to have been replaced by CEO and co-founder Hosain Rahman.
Last year, Jawbone laid off about 80 employees in two rounds of layoffs, closing down its New York office.
“As part of our strategy to create a more streamlined and successful company, we have made the difficult decision to reorganize the company which has had an impact on our global workforce,” a company spokesperson said.