In spite of being an avid runner, I have never felt the need to religiously track my mileage -- even when preparing for a marathon. Still, I know many runners who do. This, however, is just one reason why I believe that sales for Nike's (Nasdaq: NKE) new shoe, the Nike Plus, will continue to grow beyond the 450,000 pairs sold during its first quarter on the market.
The shoe grew out of a partnership with Apple (Nasdaq: AAPL) and contains embedded sensors that can wirelessly communicate information to an iPod about the pace and distance a runner has run. This information, in turn, can be downloaded to a home computer, where it can be used to document a person's improvement as well as chart the progress a person is making toward meeting their weekly or monthly mileage goals.
The technology itself is not new. Accelerometer-based sensors have been wirelessly transmitting information to sport watches for a couple of years now. Moreover, Adidas has developed similar sensor technology, and has even taken it a step further. Adidas' sensors can do everything from identifying whether a runner is jogging on an asphalt pavement or a dirt path and adjust the shoe's cushion accordingly, to monitoring a person's heart rate via a sensor-embedded T-shirt.
While Adidas' system is more comprehensive, the $700 price tag makes it much more expensive. By contrast, the Nike Plus costs around $300 -- $100 for the shoes, $30 for the sensors, and $149 for the iPod.
Over time, though, I am confident that sensor technology is going to get both more sophisticated and less expensive. And herein lies the real opportunity for the company. If Nike can successfully transition these sensors from being just gadgets for technophile runners to everyday products -- like their Cole Haan shoes or its line of golf shirts -- the company will expose itself to a much larger opportunity.
According to one government study, 57% of all Americans either do not exercise or exercise infrequently. Yet in spite of being inactive, many of these people -- especially casual exercisers and aging Baby Boomers -- are still interested in monitoring their health.
Moreover, since the iPod has such a large share of the market -- 70% -- most people who might be interested could already have one, cutting the price down to just the shoes and sensors. The others would probably be at least familiar with the technology. With the potential to create a simple, easy-to-use technology that can be conveniently placed in a person's shoe or shirt and have data transmitted to an iPod or even a watch (such as its yet-to-be released Nike Amp, which displays sensor data), Nike could broaden its appeal to a new set of consumers.
And if Nike can help these people "feel their pain" -- or, more aptly, avoid any pain -- it could also help keep itself in better financial shape by selling this larger audience a more diverse line of products.
Thirty-five
Motley Fool CAPS
All-Stars pick Nike to outperform the market. Three say it will underperform. Where do you stand? Join more than 14,000 fellow investors in the Fool's new stock-rating service and
let your voice be heard
.
Fool contributor Jack Uldrichdoesn't wear Nike shoes. He is loyal to his Mizunos. He also does not own stock in any of the companies mentioned in this article. The Fool has a strictdisclosure policy.
Terms & Conditions
RSS Headlines
Fool UK