In iPod - Apple's Best Innovation, I had talked about the growing and successful partnership between Nike and Apple:One innovation that Apple created with another Top 20 Innovator of The Innovation Index, Nike, is Nike Plus or Nike + iPod. Apple calls it the "ultimate synthesis of sport and music: a pair of Nike+ shoes, an iPod nano, and the Nike + iPod Sport Kit." Apple Inc. (NASDAQ: AAPL) and Nike, Inc. (NYSE: NKE) are two of the Top 20 Innovators of The Innovation Index.
Nike and Apple announced another key innovation today in their quest to get more customers to use Nike + iPod as they work out in the Gym. The partnership that began with customers using Nike shoes and iPods for running and running clubs is culminating in the Gym. After all, according to Nike, runners have logged in close to 50 million miles on Nike shoes with iPod, making it the world's largest running club.
Bottomline:Nike and Apple are working with major gym equipment manufacturers such as Life Fitness, Precor, Star Trac and Technogym to make their cardio equipment Nike + iPod compatible so health club members can easily track workouts on cardio equipment like treadmills, ellipticals, stationary bikes and stair climbers. Nike + iPod users will simply plug in their iPod nano into the equipment at the start of their workout to automatically record their progress. Users can then connect their iPod with their computer to upload the workout to www.nikeplus.com.
At participating gyms, including 24 Hour Fitness nationwide and Virgin Active Health Clubs internationally, members will soon be able to use Nike + iPod to track their workout and log their data on www.nikeplus.com.
-- Nike + iPod will allow gym members to track progress, set goals and make challenges on www.nikeplus.com.
-- By using the www.nikeplus.com coaching tools, personal trainers now have the ability to help clients chart their progress.
-- When gym users connect their iPod nano to their computer, their workout data is sent to www.nikeplus.com through iTunes. This workout data is converted to "CardioMiles" so that users of cardio equipment can easily set goals and participate in challenges with runners and with users of other cardio equipment.
Nike + Sport Music has also been extremely popular on the iTunes Store (www.itunes.com) offering a wide range of playlists perfectly suited for your favorite sport.
1. This expansion of the partnership between Nike and Apple will create 5% to 10% more iPod nano sales in 2009 when most gyms would have deployed the new equipment.
2. It remains to be seen on whether Apple will also make this compatible with the latest iPod touch, although this makes strategic sense. Most new iPod buyers will buy iPod touch. If Apple makes the gym equipments compatible with the iPod touch, expect 1% to 5% more sales of iPod touch in 2009.
3. Apple will see modest incremental sale of sport music on the iTunes Store - in the range of 1% to 5%.
4. Nike will see a solid upside in the Nike + iPod shoes in 2009, large enough to impact the topline revenue.
Innovation Index Group, Inc. maintains a Buy rating on both Apple and Nike, with price targets of $250 for Apple, and $80 for Nike in 2008.
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References:
Nike and Apple Press Release
