Nike Goes Digital With New Equipment
Nike Inc. wants to connect with the wired athlete.
The athletic shoe and apparel company said Wednesday that it is diversifying into high-tech sports gear to offer devices such as digital audio players, speed and distance monitors, and walkie-talkies.
“Today’s athletes are looking for something extra to enhance the connection between themselves and the athletic experience. They want more information,” said Clare Hamill, vice president of Nike Equipment. “These are performance products for athletes in the emerging Digital Age.”
The first and most expensive of five new products is a digital audio player that will be in retail stores in July and was produced in collaboration with S3’s Diamond Multimedia division--the makers of Rio Audio digital players. It has 64 megabytes of memory and will retail for $299.
Nike said four other products from the Nike Techlab division would be in stores in the fall for the holiday season, including real-time speed, distance and heart rate monitoring devices, a digital compass and hand-held walkie-talkies aimed for use by snowboarders, hikers and campers.
Equipment has always been a small part of Nike’s business, so the move in this direction is not new. Still, of its $9.5 billion in sales last year, more than $9 billion came from shoes and apparel, said Carol Pope Murray of Salomon Smith Barney.
Analysts said Nike has been trying to expand its equipment business for some time--with such items as basketballs and baseball bats, and more successfully with the Triax ergonomic running watch, of which 2.5 million have been sold since late 1997.
“This is a fabulous brand and it makes sense to extend it into some other categories. You have to do it carefully and prudently, which is typically how Nike executes new businesses,” Murray said. “The hard thing to gauge is that electronics are an incredibly competitive market on price.”
Nike has been in a slump for the last two years as it endured weak sales and a shakeout among retail outlets, though its earnings are improving. Earnings for its fiscal third-quarter ended Feb. 29 rose 17% as the company earned $145.3 million, or 52 cents a share, compared with $124.2 million, or 44 cents per share, in the period a year earlier. Nike Class B shares fell 94 cents on Wednesday to close at $42.25 on the New York Stock Exchange.
