Analysts: Apple deal a boost for Nike

Nike and Apple own two of the most recognizable logos in the entire world. And technology analysts say that while both companies will benefit from their newly announced collaboration on products for athletically minded consumers, it is Nike that stands to see the greatest benefit, by running alongside the red-hot iPod.

“I think Nike has more to gain,” says Ross Rubin, director of analysis at NPD Group. “The athletic shoe market has stronger competition at this point, and many Nike shoe buyers would have purchased an iPod anyway.”

Apple and Nike announced the Nike+iPod Sport Kit this past Tuesday during a press event at Apple’s newly opened Fifth Avenue store in New York. The wireless Nike+iPod system allows certain Nike shoes to wirelessly send data to an iPod nano. The kit lets runners store data on time, distance, calories burned and pace on their iPod nanos. They can view that data onscreen, listen to feedback over the iPod’s headphones, and upload data to a Nike-operated Web site to track training progress over time. A new Nike Sport Music section on the iTunes Music Store rounds out the deal.

“I think it’s one of those deals where it really works out well for both parties,” said Michael Gartenberg, vice president and research director at JupiterResearch. “It gives Nike the ability to associate with a very strong brand like Apple that meshes well [in terms of] demographics. People running are spending a lot more time listening to music than they did in past. For Apple, it extends the iPod as a platform, not just as another portable media player, and creates a strong brand identification. It’s multiple wins for both companies.”

Nike has been trying to penetrate the MP3 player market for several years. Prior to the deal with Apple, the company had sold a line of MP3 players co-branded with Philips. Just last month, Nike announced the PSA 610, an MP3 player made by Philips with a 4GB hard drive and GPS sensor built-in. It is expected to ship in June.

Despite Nike’s strong association with sports, Apple has owned the market for portable players, with the iPod shuffle and iPod nano dominating the flash-based music player market traditionally favored by athletes due to the devices’ smaller sizes and durability. At the 2006 Winter Olympic Games in Turin, for example, a pair of white earbuds were seemingly de rigueur for athletes from all over the world, be they figure skaters or snowboarders.

Although the Apple deal will raise Nike’s profile in the MP3 player market, Rubin and Gartenberg say that it doesn’t necessarily signal the end of Nike’s relationship with Philips.

“The Nike-Philips relationship is a brand-licensing agreement that has served a niche,” says Rubin. “With music being such an important part of the exercise experience, though, Nike expands its reach by capitalizing on Apple’s great market share.”

“I can’t imagine the folks at Philips were too happy about it, but how unhappy they were and what they’ll do remains unclear at this point,” says Gartenberg. “But at the end of the day, a relationship with Apple is one many companies would like to have and build off of.”

A growing field

Although this is a new area for Apple, portable computers that help athletes keep track of data are hardly new. In fact, it’s a market that has boomed over recent years, as athletes have flocked to increasingly smart data-tracking devices such as wristwatches, heart-rate monitors, pedometers, and cycling computers.

Products such as Polar’s line of heart rate monitors have long provided runners and cyclists with the ability to create training regimens and then upload data to computers to track results. More recently, products like Garmin’s Forerunner, a handheld GPS that attaches to the wrist, or its Edge line of GPS-enabled cycling computers, let athletes track not only heart rates, time, and distance, but also more esoteric data such as altitude changes and weather patterns. Thanks to real-time GPS location tracking, some devices even let users race against virtual competitors. And numerous sites exist that allow athletes to upload training data from their devices online to compare with others.

Yet prior to the Nike deal, Mac users have largely been left out. Often the software that lets portable athletic gadgets interface with a computer or connect to the Internet is Windows only—including popular Polar and Garmin models. In addition to connecting two powerful brands, the Nike+iPod Sport Kit gives Mac users solid footing in what had previously been a murky field.

Loss of focus?

Not everyone has been positive about the deal. Columnist John Dvorak declared it “nutty” and a loss of focus in a MarketWatch.com column. But both Gartenberg and Rubin rejected Dvorak’s line of thought.

“I think Apple is already a digital lifestyle company and the core of that is the personal computer—from Apple’s perspective that’s the Macintosh,” says Gartenberg. “The experience doesn’t stop and end at iPod. It goes back to iTunes Music Store with athletic playlists, uploading statistics to the Web, finding an online community of runners to interact with. If anything, it means more uses for a computer, not less.”

And with all the other products on the market that serve to help athletes track data, it’s hardly surprising that Apple and Nike hinted that the Nike+iPod Sport Kit is just the first of several products to come from the partnership.

“I think that certainly anything is possible. The iPod is clearly becoming more than a personal media player, it is becoming a platform,” says Gartenberg. “A lot will depend on how well this first one does.”

Rubin also points out that Nike isn’t necessarily limited to working with Apple. Not only might that mean that other Nike-branded MP3 players might integrate with the Nike+ Web site, but that iPod integration could possibly come to users of other athletic-shoe brands.

[ Mathew Honan is a San Francisco-based freelance writer. View his Mac and iPod weblog at mac.honan.net. ]

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