Under Armour Dumped Its App, and Consumers Feel the Heartbreak

(Bloomberg Opinion) -- In 2016, Under Armour -- a company typically identified with form-fitting athletic wear and star athlete endorsements -- made a big bet on a lateral play: The company sought to challenge the likes of Fitbit and Apple, teaming up with tech giant HTC to introduce a line of fitness devices, including a wrist-worn tracker, a heart-rate monitor and a smart scale.

Last month, that foray into hardware came to an inevitable end when Under Armour said it is, effectively, conceding defeat. The products originally retailed as a bundle for $400; they were reasonably well received by critics and consumers, but were pricey for the mainstream market and quickly saw declining sales. As Ars Technica reported, Under Armour now is killing the app that runs its “connected fitness” ecosystem, and forcing users to switch over to a new option with substantially lower functionality; most user data from the old app can’t even be saved.

This is the kind of development we are all going to have to get used to: As our lives get more and more connected, it becomes ever more likely that companies will downgrade or deactivate our favorite products and features on short notice, leaving us in the lurch.

Nowadays, there's much sadness but little surprise when your favorite email app or video game vanishes into the dustbin of the internet.  Those so-called dash buttons you strategically placed around your home to make it easier to order household staples online might one day stop talking to the central server, as Amazon's did last year. And even your smart juice press might refuse to make your drink because it decides the ingredients are a few seconds past expiration -- and then later could leave you with nothing more than an avant-garde kitchen decoration when its parent company burns through the last of its start-up capital.

Startups are risky businesses, so no one's surprised when they go belly-up. Likewise, it makes sense that large companies might deactivate smart products when corporate priorities change, or when the products themselves simply don’t live up to the hype. In this light, the death of Under Armour's fitness tracking ecosystem feels par for the course -- one more unavoidable casualty as companies explore innovations en route to some far-off tech utopia.

But there’s a difference between the two cases: relying on a startup's product is inherently uncertain. When you make a purchase, you understand there's some chance the company will collapse, ending product support and leaving you with just a piece of plastic, a microchip and some wiring.  That’s what happened with the Jawbone UP fitness tracker and the aforementioned juice machine disaster – Juicero, magnum opus of the self-proclaimed “Steve Jobs of juice,” which originally retailed for $400 and now is pretty much useless. And this has been going on forever; in another era, for example, Preston Tucker launched the short-lived 1940s “car of the future” turning out just 51 vehicles before investment collapsed and production ended.

But when large, successful companies such as Under Armour sell you a product, you're implicitly buying a brand guarantee. (Sure, there's a kajillion-page terms of service agreement that says something like "product support is subject to change," but most people don't read or think about those.)

Some people likely bought the Under Armour fitness trackers instead of some startup's precisely because they trusted that Under Armour would stick around. That means the company has some responsibility to make those customers whole.

Under Armour could provide refunds or offer credits toward other purchases. Alternatively, the company could at least guarantee some form of continuing functionality for existing users, as Sonos just announced it will for owners of its legacy smart speakers. But that all seems unlikely to happen, given that the connected fitness products were already losing money, contributing to two years of net losses for Under Armour.

But if Under Armour doesn’t do something its brand might suffer, making consumers less likely to trust the company’s product support promises in the future. That will only make it harder for Under Armour to explore new businesses and have a chance of staging a comeback.

Seriously -- they bricked the Tetris phone app!? The irony is at least four layers thick.

Fun fact: As a millennial, I know nothing about cars and thus have literally never heard of the Tucker before writing this column. But my boomer editor assures me that it is a reasonably well-known example and was fodder for a modestly entertaining movie starring Jeff Bridges. I have never heard of Jeff Bridges either.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Scott Duke Kominers is the MBA Class of 1960 Associate Professor of Business Administration at Harvard Business School, and a faculty affiliate of the Harvard Department of Economics. Previously, he was a junior fellow at the Harvard Society of Fellows and the inaugural research scholar at the Becker Friedman Institute for Research in Economics at the University of Chicago.

©2020 Bloomberg L.P.

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