Not a fortuneteller but my guess is they're giving up way too early. One of the few mass-market, non-tech companies that actually had a shot in wearables.
With the iPhone having the M7 built-in is there any need for the Nike FuelBand? I find data from the M7 to be quite accurate. Seems like they can just create the software and let Apple (and eventually Android device makers) build the hardware.
The iPhone's still a heavy, bulky, expensive and fragile thing to take with you to the gym or out running, as are other smartphones. The screen is also not easy to interact with while you're exercising seriously. However, smartwatches or smartglasses with 5s-level-or-better motion sensing and the capacity to run apps independently of a smartphone do have to the potential to make dedicated fitness trackers mostly obsolete, though expense and fragility will still be concerns.
I use a Garmin Forerunner. Before I used an iPhone. Not only is the Forerunner a far more accurate GPS and has better battery life, it's also far more convenient to 'carry' during running, since it's a simple and compact watch. Also, it's easy to monitor your stats at any moment, in contrast to iPhone arm bands.
In the end smart watches will probably eat this market. But the iPhone is certainly not a substitute.
But you can't always have your phone with you. It's not effective for the same use-case when you've handed it to someone else to use the phone or when you're out playing soccer (well some people might keep their phone on them on the field but I don't).
