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Sporting Goods digitalization

The Digitalization of Sporting Goods | ID Motion

 

Companies like Nike, adidas, and Asics lead the way when it comes to merging digital with the world of physical products.

Starting with running where the idea of measuring time and distance is pretty straight forward these companies now try to branch out into different directions experimenting with other ways of applying digital to athletic apparel and equipment.

The strategy is three-fold.

The first reason is pretty straight forward and is simply to use the technology to create better products.

The second is less obvious to the consumer but has real effects in the market: to lock-in the consumer to a specific brand by making switching costs higher and by leveraging network effects.

If your friends and others are also on this network the cost of switching rise exponentially because you would need to persuade all friends, and all other people with whom you interact to move also. If Nike or adidas owns your data or if the format is incompatible with other services it is inconvenient to go elsewhere since the switch would come at a loss.

Big data is the new buzz word in the world of business. Google and Facebook sit on the biggest loads of data but surely any digital platform no matter the size has the ability to generate valuable insights. So no doubt that adidas and Nike also use their digital platforms for data mining.

For other companies in the industry the challenge to keep up is daunting. Firstly, it is necessary to develop and roll out a good product which does not come cheap. Secondly, the problem with everything digital is that there tends to be a winner takes it all effect. If you already have a profile on Facebook and your friends are there you do not want to be on google + or myspace etc. also.  If you already have a profile on adidas do you want to run other profiles simultaneously on 3-4 different platforms for other brands?

Solution ? Open Source.

My suggestion in order to combat this development of walled gardens is to create an open source framework where a number of sporting goods manufacturers come together and create an open standard which can then be used to build digital products.

The advantages would be many and the same as seen from the world of software. E.g. Linux, Mozilla, Android etc. Which are all very effective and market leaders in their niches for server software, browsers, and mobile OS.

Developments costs for everyone involved would go down dramatically. The fact that the digital dimension could be used cross-brand would be a boon for consumer choice and options. Productivity, creativity, and development of new products would be much greater than if the system was to be developed and maintained by just one company. Reach would be bigger.

The great success of Apple is not due to its devices but due to its app ecosystem where it managed to take advantage of first mover effects catching everyone by surprise. The app store is now thriving due to the immense network effect mentioned previously.

By developing a basic API standard, and by putting some basic tracking devices compatible in format with products from companies subscribing to the open source format into stores it would allow anyone in the whole world to write an app which could then turn the information generated by the tracking device into valuable information in innumerous ways. The app developer would be free to sell the product or offer it for free as known from the app store or from google play (former android market).

The retailers would love it. Adidas and Nike now compete heavily with their own retailers by locking in consumers and by marketing to them and selling to them through their proprietary platforms. With an open source system InterSport could create their own app tapping into the data generated by the devices used in conjunction with products from brands like Puma, Warrior, Under Armour, Macron , etc. whoever subscribes to the framework.

As a user you would own your own data and you would be able to move it, upload it to new apps and other services coming out so that you would be able to bring your online digital “identity of motion” with you. It would put the user in control.

Smaller brands would be able not only to compete with the big boys but also actually win the digital war since their digital offering would be more appealing. Anyone who has used adidas micoach for anything but running realizes how poor it is from a technological point of view as well as the limited benefits to the athlete. But with an open source system laid out for anyone to participate in the wisdom of crowds would flourish and would unleash an enormous creativity as seen with the app economy of Apple. Niche products suitable for only a small group of people would emerge. Adidas and Nike target mass-market. An app economy would mean greater targeting and many more niche products = more consumer value.

New hardware could come out as well with smarter tracking devices and smarter uses. Puma could come out with a piece of intelligent clothing where the tracking device could sync the data with a Facebook app which would also be able to pull data from a pair of sneakers from New Balance. A hardware device by a third part company from Taiwan could be sold as a stand-alone product and Under Armour could then design apparel or footwear in such a way that the device could be inserted into a slot in the shoe or in the jersey.

It would be possible to merge sports with lifestyle since the standard could just as well be adopted by apparel and shoe manufacturers in fashion. So you could track your movement not only when wearing sneakers but also when wearing dress shoes.

There is no need to invent and re-invent the wheel 2345 times for every single sporting goods manufacturer out there. One time ought to be enough and it would surely benefit those companies with a smaller R&D budget than Nike / adidas.

 

 

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