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Exclusive: Nike FuelBand engineers courted by Nest, Oculus, Intel, and Microsoft

Tech companies are lining up to nab Nike engineers after the sportswear maker decided to dismantle its wearable-hardware team. Apple is reportedly on the hunt as well.

Nike FuelBand SE
Sarah Tew/CNET

Nike engineers and other hardware and manufacturing experts from the company's FuelBand team are at the top of the recruitment list for high-profile tech firms racing to deliver new products in emerging categories like wearable technology.

Last week, Nike fired a majority of its wearable-hardware team -- as many as 55 people in the 70-person unit -- within its Digital Sport division, CNET has learned. Nike CEO Mark Parker today confirmed that the company is shifting its focus to software. Many FuelBand employees are staying on at Nike through the end of May, which marks the end of the company's fiscal year.

Smart-device-maker Nest, now owned by Google after a $3.2 billion acquisition in January, is among the first in line to scoop up Nike members who were let go. Nest reportedly flew members of its team to Nike's worldwide headquarters in Beaverton, Ore., on Thursday, according to a story by TechCrunch. Nest, the maker of smart thermostats and Internet-connected smoke detectors, set up an "impromptu interview session" at a local hotel to gauge the interest of FuelBand engineers in joining its team in Palo Alto, Calif.

This flyer, provided to TechCrunch by an anonymous tipster, was allegedly handed out to Nike employees at its Beaverton, Ore., headquarters Thursday. TechCrunch

Microsoft, Intel, and virtual-reality gear maker Oculus VR, which was acquired by Facebook last month, are also pursuing members of the FuelBand hardware team, a person familiar with the matter told CNET.

Apple recruiters have also been in talks with Nike Digital Sport members since Nike began development on the FuelBand in 2011, the person said, but it's unclear what relationship the sportswear company has been building with Apple regarding the iPhone-maker's rumored wearable, which is either a smartwatch dubbed the iWatch or a FuelBand-like fitness band. That puts poaching efforts by Apple up in the air, though Nike's CEO Parker has hinted at a partnership.

"I will say that the relationship between Nike and Apple will continue," Parker told CNBC Friday. "And I am personally, as we all are at Nike, very excited about what's to come."

Whether that means Apple has a fast lane to hiring members of the FuelBand team when they do depart Nike is uncertain, the person said.

What would all those other companies want with the architects of an activity tracker?

Oculus, bought by Facebook in a deal worth $2 billion, is flush with cash and eager to expand. It's also trying to take its virtual-reality headset -- which has gone through two developer-kit iterations alongside its second-generation Crystal Cove prototype -- and deliver a consumer product soon. Nabbing hardware engineers would accelerate that process, and Nike's team members come with years of wearable-hardware experience.

Nike has never disclosed sales figures of its FuelBand, but in 2013 the device captured 10 percent of the wearable fitness-tracker market sold through e-commerce and brick-and-mortar retailers, according to the NPD Group. However, Nike sales through its own website and Apple's online store accounted for a majority of FuelBand sales throughout the last two years, the person familiar with the matter added, meaning the 10 percent figure that would appear to tip the scales toward a Fitbit and Jawbone lead in the market is not a fully accurate picture.

As for Nest, the Google-owned startup is now reportedly responsible for more than just smart home devices. After being folded into a new Google hardware division responsible for the company's physical product efforts, Nest, led by Apple's former iPod chief, Tony Fadell, may soon -- or already -- be working on Google tablets and smartphones, even wearables. The recent release of Google's wearable-specific mobile operating system Android Wear makes the possibility of new wearables more likely.

Intel's interest in FuelBand members also makes sense. The company has been investing heavily in the wearable market through key acquisitions like the March 2014 takeover of Basis Science, makers of the Basis Band line of smartwatches. Intel also led funding rounds for Google Glass competitor Recon Instruments and armband-maker Thalmic Labs last year, and is designing its own line of wearable-device chips, called Quark.

At the Consumer Electronics Show in January, Intel CEO Brian Krzanich said the company had been working on wearable projects for six months -- including a smartwatch, and earbuds with a built-in heart-rate monitor -- and planned to deliver those products this year.

Though Microsoft has yet to make a move into the wearables market, it's making significant steps to do so soon and has long invested in experimental research. Last October, ZDNet reported that Alex Kipman, head of Xbox incubation and a leading visionary behind the Kinect camera and sensor, began work at Microsoft's "new devices" division, which is reportedly working on wearables including a Google Glass competitor called Kinect Glasses. In December, The Verge reported that Kipman was working on optimizing Windows software for smaller screens, including a headset and a smartwatch.

The latest piece of the Microsoft wearable puzzle is the company's purchase of $150 million worth of intellectual property assets from Osterhout Design Group, a wearable manufacturer mainly contracted by the government for products used in military operations. So it would appear that wearable engineers are on Microsoft's radar.

While the FuelBand wind down has resulted in jobs lost and an internal redirection toward software, those same engineers who spent years building one of the leading fitness trackers -- and taking Nike to the forefront of the market while transforming its image as a corporation -- will be able to continue pushing the wearable frontier. That the Nike employees will be landing on their feet is a win for everyone, said the person familiar with the matter.