Nike FuelBand Reveals New Truth Of Competitive Advantage

Apr 26 2014, 9:18am CDT | by

Nike‘s acknowledgement that it is slowing down its commitment to making wearables (the FuelBand), covered by Parmy Olsen here, has added to speculation that Apple will launch its iWatch later this year.

Nike and Apple are long-term partners and the FuelBand is basically an iDevice. By withdrawing the Fuel Band Nike can piggy back on Apple’s wearables projects, so the argument goes.

The more important piece of logic though is that Nike simply could not keep pace with the level of innovation needed to scale a device-centric strategy.

Behind this lies a platform challenge, a problem created by the new world of platforms and ecosystems.

Nike resisted calls to make FuelBand available on Android and limited its availability to a narrow range of markets. In an interview with TheNextWeb at the back end of last year Stefan Olander, VP of Digital Sport at Nike, explained why: Android fragmentation:

With the original FuelBand, you still had the challenge of catering for 200 different handsets and however-many versions of the operating system…. As we’re looking forward, for us it’s really about making sure we have a great experience. We have nothing against Android. Our running app [Nike+ Running] is on both iOS and Android, and we have learned a lot from that – at the end of the day, you really do get reach. But for us it’s quality first, scale second. If we can’t guarantee quality to a number of our users, we’ll wait until the platform is ready. And right now, we don’t believe the effort is worth the return, for Bluetooth LE. And we want to do it really, really well for iOS.

A feature of enterprise strategy since Apple and Google began scaling iOS and Android has been an increasing desire on the part of CTOs to get in on the act by way of a small platform adoption and a set of open APIs.

It worked for Netflix who stopped licking stamps and made APIs the core of its business. It did wonders for Expedia (the travel company pays around $500 million a year on developing its platform). But what about Nike?

Platforms like iOS and Android are innovation titans that introduce a wholly new logic to the way enterprises function. There is a huge lesson in Nike’s move for companies that are looking to the future and hoping to fashion a platform-based innovation strategy.

Olander is pointing to one of the big innovation challenges of the day – supporting over 200 different versions of one OS, and then localizing interfaces and documentation into dozens of languages, as well as supporting all that on the back-end through the platform.Netflix supports over 1,000 end-user device-types for its streaming TV services.

HP’s Paul Muller estimates that apps for devices (products with software and services) will be updated every three days by end 2020. 120 updates a year, across different end-user terminals running different versions of an OS. Add in continuous delivery, if you are a platform owner.

Jez Humble at Thoughtworks had this to say recently about continuous delivery in the service infrastructure for a device-centric economy:

Amazon is on record as making changes to production every 11.6 seconds on average in May of 2011. Facebook releases to production twice a day. Many Google services see releases multiple times a week….. When we analyzed the data we found that high performing organizations ship code 30 times faster (and complete these deployments 8,000 times faster), have 50% fewer failed deployments, and restore service 12 times faster than their peers

You can read about Netflix’s continuous deployment here and here.

But if that is the infrastructure, a similar development is taking place at the product level. Those 200+ variations of Android are only one part of the challenge./>/>

Platform businesses, I pointed out earlier in the week, intersect with each other, like Nike’s intersects with Apple’s, like Ford’s does with Apple and Android, and probably in future with Expedia’s or Waze’s platform, those of USAA and many more.

They are also likely also to intersect with innumerable Internet of Things platforms that relate product usage to component performance, driving even faster, automated innovation requirements’ specifications.

If it gets focus maybe Nike can be the platform for fitness where it will no doubt have to share some of the glory with Apple. It needs to seek the utility position, to withdraw from device competition and use its existing fitness assets to enable other people’s businesses.

The intersection of the platform and ecosystem creates innovation planning requirements and deployment skills that few companies possess. Anyone who thinks we have seen the end of competitive advantage needs to think again.

Follow me on Twitter @haydn1701 or join me on Facebook. I am here on Google


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