Comments for Nike+ and its competitors: a running battle?

The market of mobile applications has strongly increased these past few years. More specifically the sport applications know a great growing success too (increase of 53% from 2014 to 2015 (1)). Launch an application is then a really great idea for brands for their notoriety and Nike has it surely well understood. But did they choose the better option at the introduction of its Nike+ application by choosing a closed strategy?

We can notice that the partnership between Nike, Apple and Tomtom is really impressive because they are three big brands that have a huge notoriety and possess many advanced technologies. It is a big advantage because they can build together high quality products because they are all very competent in their domain. Indeed, working with partners can be lead to profitable synergies.
But to form an alliance with only Apple and Tomtom locks Nike to a closed strategy. Indeed, only the people who possess Iphone or Ipod or Tomtom sportwatch can download the application. That leads to a limited number of users although the number of people who possess an Apple phone is already high significant. However, the Apple consumers who can benefit from the app can feel them very privileged and they could price it. That could make them more loyal to the brands. This strategy can lead to a network effect but this effect will be limited because the app is only reserved for the Apple users.
Another advantage of the closed strategy is the cost of the creation of the app. Indeed, in order to be used on every smartphones, the app should be adapted for each of them. This is not only more expensive but it takes also more time than just create the app for one type of smartphone as Nike+ which is adapted only for the different versions of Iphones and Ipods.
Moreover, the partnership leads to switching cost for the people who bought the sportwatch which works only with Nike+. So if they want to move to another running app, they have to give up their watch which was an significant investment (around 135€ (2)).

In both strategies (open and closed), the people who possess the Nike+ application and who want to move to another will face another type of switching costs. As a matter of fact, Apple proposes different kind of running application; it is then really easy to change. (3) But, they will loose all their data they collected with the app (history, progress, statistics, …) and they will also loose all their friends. Moving to a competitor means begin again at the starting point which could be disappointing and discouraging. Then, it could brake the people to change their app. Of course, this fact will only work with the people who were invested on the app.

This closed strategy has not only advantages. Indeed, some disadvantages exist and Nike was aware because its strategy has already been adapted since its start, as we will see.
An important aspect of the application Nike+ is the relation between people created on it. In fact, the users can share their performances to their friends and challenge them… And in order to allow that part of the application, the people have to add many friends on the application. The more users can add other users and the more products compatible with the app the more they will appreciate the application. We can call this phenomenon the network effect. More specifically, we can also point the direct network effect which explain that the non-users will be tempted to join the app more there are people on the network. This fact can work with both strategies but it will be bigger with the open one.

The closed strategy of the brands seems to open itself. Indeed, Nike extended its partners in order to allow Nike+ on non-Apple items. In 2014, Nike made a partnership with Samsung, which is a big competitor of Apple (4) in order to offer Nike+ app on Samsung phones (5). In 2015, Nike has also made partnership with Garmin, Wahoo Fitness et Netpulse. (6) Nike+ is compatible with Android now. (7) All these extensions lead to a more open strategy, which means that the Nike+ can know better network effect now than before.

To sum up, both closed and open strategies have pros and cons. In this case, closed strategy was perhaps not the better option because Nike moved to a more open strategy as we have just mention. Nike has to be creative and improve his strategy to fight against his competitors and especially Addidas which launch Boost Energy League and which is highly present on the social media. (8)

Sources
1. http://techcrunch.com/2016/01/05/mobile-app-usage-up-58-percent-in-2015-with-emoji-keyboards-leading-the-pack/
2. http://www.i-run.be/electronique/Cardio-Gps_c59/Nike_m6/Nike-SportWatch-GPS-Nike-tomtom_Nike_fiche_11190.html
3. http://mashable.com/2010/02/23/iphone-apps-runners/#G9n9fnLzpkqG
4. http://time.com/3840414/samsung-apple-market-share/
5. http://www.samsungmobilepress.com/2014/08/29/Samsung-Partners-with-Nike,-Launches-Nike-Running-App-1
6. http://www.cdusport.com/application-nike-plus-running-garmin-tomtom-20124
7. http://www.nike.com/be/fr_fr/c/running/nikeplus/gps-app?ref=https%253A%252F%252Fwww.google.be%252F
8. http://www.challenges.fr/sport/20160217.CHA5184/adidas-contre-nike-la-guerre-du-running-branche-est-lancee.html

First of all, we may admit that NIKE+ and Garmin Forerunner (GF) (we only consider two competitive firms) are avoiding competition by colluding at extensive margin. That is, the two firms collude by avoiding entry into each other’s markets (segments) since competition makes prices fall (ordinary athletes for NIKE and professional athletes for Garmin Forerunners). Second, the diluted gains by making GF series compatible may be larger than marginal gains obtained from open market to GF.
Excluding the possibility of collusion, a closed strategy by NIKE has its advantage. All thing being equal, a closed strategy (incompatibility of GF series) means switching costs for NIKE’s customers who value the possibility of uploading their historical data on website and, among others, sharing it with others (friends, family, …). Thus, they became a lock-in consumer and give more market power for NIKE. Further, NIKE’s service triggers network effects which increase the switching costs making the lock-in consumer a valuable asset for NIKE. Yet, a closed strategy keeps customers loyal to NIKE´s products (GPS sportwatch and NIKE+ app) and provides benefits from the value of data of NIKE’s customers, especially, information on customers’ demand and thus gets competitive advantage for NIKE.
However, on the other hand, with an open strategy, NIKE has also advantages. It can attract more consumers to its service (uploading data), raising both the traffic of its online shop and the visibility of its brand. The economies of scale may arise by sharing their own knowledge and technology and thus decreasing the average costs of supplying the services. Yet, diversification of supply capacity may eliminate the specific risk of NIKE’s product/services. Finally, regarding to network effects and switching costs, with open strategy we should note the following: the switching costs of using the GF series disappear, since both product give access to upload the data on website. So, all thing being equal, a consumer is indifferent between Garmin watch and GPS sportwatch. Network effects, in turn, arise from two channels: the direct and indirect network effects. The direct network effect results by the fact there are more consumers on website and so more interaction among them. The indirect network effects result by the fact that more users in the NIKE+ system and the effects of economies of scale incentive the firms to improve and expand the applications and more incentive for consumers (runners) to join to the system.

pros of closed:
If the customer wants to use the nike+ service, he/she need to have an idevice or an equipment with nike+ app, then customer wont buy a product from other competitor in the market.

pros of opened:
Nike could give the use right to other equipment brand, it will have the chance to attract more customer to use Nike+, and I think it might the internet effect.

pros of both:
Nike is one of the leaders in sportwear industry. It’s brand reputation will attract the consumer of ios to use them, and it will stick customer with nike’s app(because of the first player in this sporting assistance app).

cons
it may not have the maximum pros if nike+ keeps the strategy with closed, because if every equipment could have nike+ inside, it will reach the critical mass easily.

Nike+ is operating in a not so old market where there are not many competitors. They are looking for a strategy which permit them to limit the market and reach a dominant position by creating a barrier to entry and avoid new competitors. This is what they doing thanks to their collaboration with Apple. This has some effects as described below.

By excluding its competitors, Nike+ try to gain some direct network effects. People have an incentive to join the network Nike+ if they have already friends using the application. In this way, they could compare their results, distances, etc… This can be seen also through the new “fuelband” they promoted. With the Nike+ application, more you have friends using the application, more you accumulate Fuelband points. This is an additional way to grab network effects.
In the same way, if Nike+ success to collect enough consumers and overtake the critical mass, they will create a barrier to entry and discourage their competitors. It will be difficult for them to gain market shared due to the switching costs involved.
The association with Apple give to the brand a way to benefit of Apple’s great brand image and to put on the leader status. They are both leader in their respective markets and their combination allow the application to be seen as a top product, of good quality. Also, if a customer want to accede the Nike+ application to join his friends but doesn’t have an IPhone or IPod, he will buy a Nike gear and contribute to increase the Nike’ sales.
Behind this effects, if a large number of customers are using the Nike+ application, it will grow the visibility of the Nike’s products thanks to their visits on the Nike website to consult their results and compare them with friends.

On the other hand, the choice of an open strategy may allow Nike to have more visitors on their website, comparing to what they know currently. But they need to improve their application and offer a better one than their competitors with this in mind.
Finally, there are some risks with a closed strategy if the brand isn’t a market leader or if a concurrent become bigger. The customer could suffer switching costs to acquire Nike gear or Apple products.

There are companies that prefer using a closed strategy even though it has its downsides. We can take for example how Apple caught up to Microsoft by having a close strategy with their products. So, many would think that a close strategy might be the best way to go, but the truth is that there are advantages and disadvantages in both open and closed strategies.

When we talk about Nike, we talk about a multinational company since 1964 and that it is well known as selling good quality products, so it has earned the trust of their clients and attracting new ones every day. Having this in mind the advantage of having a closed strategy would be that clients who already trust Nike will continue to purchase the products attached to the ones they already own. The service that Nike gives in their website is not looking for revenues, it’s just something they give like an extra to convince people to buy their products instead of the competition, and by giving this service they are also opening their online shop for more people to see it, but of course if the Nike+ service would be compatible with more devices, an open strategy, they would be able to attract more customers. But also by having a closed strategy you’re giving a sort of elite treatment to those who chose to be faithful to your brand. So the problem or the disadvantage comes when talking about customers outside Nike frequent buyers. By having a closed strategy they are limiting the options for this customers, because if they don’t give their full support to Nike products it will be more difficult for them to commit and buy Nike products.

By having an open strategy you are welcoming all types of customers; frequent buyers, new buyers and buyers from the competition, so the options are more for them to buy from and it opens up the Nike products for more people. You are not limiting your targets and this way your brand is able to get to more people. But by having an open strategy you’re also taking away special treatment customers get by being faithful.

After realizing that both strategies haves their ups and downs is up to every company to decide which type of business they would like to be, and what kind of treatment they want to give to their customers. Every business is different and every sector in the market will react differently.

With its website nikeplus.com,Nike is obviously trying to create a network effect by some marketing strategies like posting on the home page the activity (total calories,steps,miles runed,achievements earned,etc) of its community called Nike + Community,trying to make people join,which is quite successful with the help of the notoriety of Nike in sportswear (especially in the global athletic footwear according to http://www.trefis.com/stock/nke/articles/172877/nikes-market-share-gains-rely-on-its-success-in-emerging-markets/2013-04-09) and its cooperation with the smartphone giant Apple(Apps for Iphone,pedometer built in Ipod nano,etc).
Using a closed strategy,Nike is forcing consumers who want to use its website,to buy a sports tracker(sportwatch,fuel band,running app) branded Nike.
What if Nike uses an open strategy?In my opinion,it can lose market share in sport watch market to its competitor Garmin which seems to have a niche strategy,different than Nike,which targets to more professional athelets,with some characteristics like better battery life(more than two times longer than Nike Sportwatch) and water resistance of 50 meters in even its cheapest watch with which you can even dive(Nike Sportwatch is only 5 atm resistant,you can only take a shower with it).So,a professional swimmer or diver who wants to join the Nike + Community(because his friends use it) will definitely buy the Garmin one.
Another reason to use closed strategy is,Garmin has a better product line of sportwatch with 8 products from 129 to 399 euros,while Nike only has two from 149 to 169 euros.So Garmin would be more convenient for professional athelets as i said before.
It is a fact that,using a open strategy,the number of users will increase.However,i’m not sure if the value that they bring will be more than the cost of making the site compatible with other devices.
In my opinion,Nike does not need that move as its notoriety is very high in the sport communities.On the other hand,i don’t think Garmin will want that cooperation too because if two web sites remain open Garmin’s site http://connect.garmin.com/en-US/ will loose traffic to nikeplus.com.
Finally,i think that it’s better for the two to have two other websites with closed strategy.

By arguing in favor of a closed strategy, we can say that it offers exclusivity of the product. Nike is creating a need to be part of a special community. They have enough influence, and this influence is even more intense with the strong partnerships that they have (TomTom and Apple). That situation is increasing the network effect, people are willing to join the community and therefore, Nike seems to have interest to stay on this closed market with their large amount of users.

The willingness of staying in the closed market may also come from the partners. TomTom, which is considered as co leader(1) with Garmin in the market of GPS, therefore, want to keep the business closed. They will then present some incentive to Apple in order to keep going in a closed market with the objective to stay away from competition with Garmin on this GPS sports watch sector.

Finally, we can see some switching cost advantages in this particular situation. Indeed, they had already attracted many customers in their business. The willingness for customers to switch to Garmin sports watches may be quite weak. Nike’s customers are already used to the system and they will have strong switching cost in case of moving from Nike to for example Garmin sports watches. Nike then has to work hardly on the competition before the subscription to attract lots of users.

On the other hand, with a closed strategy, there is a risk of stagnancy. It seems hard to keep improving a product or a service without any competitive pressure. Excluding competitors may eventually diminish the innovation potential of the firm.

With an open strategy, Nike may attract more and more customers and therefore extend his community of users. Being compatible with different brands will increasing the interest for the brand and then increase the profit made.

Despite this, with an open strategy, we can use the argument used in disfavor of the closed strategy. With the fact that, low competition may reduce innovation! Here, too strong competition may lead to lost that can affect the profit.

As a conclusion, the choice of the strategy depends on the status of the brand, and how they want to be seen by the consumers. It looks like Nike wants here to be more exclusive by closing this market. But it can evolve, and being in an open strategy can also present some advantages.

1. http://www.lefigaro.fr/societes/2011/12/09/04015-20111209ARTFIG00647-le-smartphone-bouscule-le-high-tech.php

The market of fitness tracking, and lifelogging more generally, has dramatically expanded in the last few year. With companies such as Sony and Samsung entering this market this year, the competition that will be facing Nike will be stiff.

Nike has adopted a closed strategy for his line of activity tracker device since the introduction of the Nike+iPod in 2006. Back then, this device had little to no competition, let alone the level of brand awareness that the combination of two giants like Apple and Nike had. That first-mover advantage had clearly a lot to do with the decision to take on a closed strategy. Being the first meant easily capturing the entire market for fitness trackers and creating high barrier to entry for subsequent new entrants. Nike’s choice to partner up with Apple also created a link that would be hard to break in the short run. Therefore making it impossible to switch to an open strategy until their contract expired.

An open strategy would broader the community using the Nike+ Running app, but at what cost ?
The main goal of Nike wasn’t so much the sales of it’s device but the positive effect that they had on the rest of Nike’s products sales. By the end of 2006, Nike second-quarter profit had risen to an unexpected 8,1 percent thanks in part to those Nike+ devices (http://www.bloomberg.com/apps/news?pid=newsarchive&sid=atzJkAXnEhAQ&refer=home). If Nike had let other manufacturers use its app, the brand hype, moreso than the brand awareness, would have been a lot flatter. New entrants wouldn’t have needed to bear the cost of R&D that had gone into the creation of the Nike+ fitness tracker and would have therefore been able to offer a similar product at a cheaper price while still use Nike’s app. And as time passes, another app could have taken its place and Nike would soon be out of that market or would need a lot of effort to make a comeback. This situation would more importantly render void Nike’s plan to boost its other products’ sales. If Nike hadn’t been the first to enter that market but had been a late new entrant, it could be argued that an open strategy would have yielded the best results. As it would, if the best app of its kind, have swept a lot of users from their current app. These users would have probably still have to endure some switching cost such as losing their historical data though.

In our case, Nike has adopted a closed strategy and being first has let it create a vast network of users. But since most of the switching cost comes down to the historical data, Nike is not an undisputed leader in this market anymore. Companies like Fitbit in 2008, Jawbone in 2011 and many others have started launching their own fitness tracker devices and have been successful in creating their own community. In this now crowded market, Nike will need more than it’s brand awareness to stay relevant.

Sony has announced it’s own lifelogging band which will log a lot more than your average fitness tracker. We are talking incoming calls, texts, social media notifications, music and games played, app used, sleeping cycles and much more.
Samsung is also gearing up on this with its life-logging app and its smartwatches.
The transition between those fitness tracking devices to these new lifelogging devices is gonna be hard on Nike. That is unless it’s partnership with Apple continues and it can become part of that (r)evolution.

In my opinion, both open and closed strategy for Nick with its Nick+service has advantages and disadvantages.

On the one hand, advantages of closed strategy of Nick+service have the follow points. Firstly, it can increase the sell of Nick products (no matter is the competing devices or other related products, for example shoes). Because Nick+system is incompatible with other competing devices, if you want use Nick+service, you should buy Nick devices. Secondly, it can attract people’s awareness of Nick, so this is can in order to increase market share and be a dominant position. Finally, it can decrease entry and restrict other competitors like Garmin Forerunner.

Disadvantages of closed strategy of Nick+service are consisting of the following aspects. Initially, it can easily to develop discrimination. For example, if you are a user of Garmin Forerunner, you want upload your data to Nick+websit, you will find it doesn’t work, only because you are not the user of Nick device. Lastly, it can help Nick to be a dominant position, so maybe it can develop the abuses of dominant position. Because this strategy will restrict other competitors and decrease entry, maybe it can let Nick enjoy a monopoly position in the future and Nick will increase the price and grab profits, harm consumers and market as well as.

On the other hand, advantages of open strategy of Nick+service have some reasons. Firstly, more users of other devices can upload data to Nick+website can promote investment in R&D and innovation of competing devices. Because more firms in the competing devices market can promote innovation development of devices, each firm want to be the best one, so they will invest R&D to produce the more advanced products to consumers. Secondly, it can promote entry of other devices and protect competition in market. Lastly, if more users of other devices can enjoy the service of Nick+website , Nick can have more high reputation from it and can promote the products to do more better (more users of other devices, you can get more information of other devices, so this opinion and information can let Nick to do more better than its competitors).

More firms/brands in the market, Nick can get fewer profits. This is the disadvantage of open strategy of Nick+service. Because the open strategy can promote entry indirectly.

In collusion, different strategies have different disadvantages and advantages, so Nick firm should based on different situation and different market condition to choose different strategies.

I think that the pro of an open strategy for Nike is a higher number of subscribed persons to their Nike+ app and thus a higher rate of sales of this same app: it seems quite logical that if different devices (other than TomTom or Apple) can run their application, there will be more users. Not everyone has indeed an Iphone or even a smartphone (in this last case, I assume people to use a GPS watch).
By being on a wider network, Nike could also reinforce its image of sport partner. No matter what device you prefer to use, Nike will be there for supporting you during your effort. Regarding the question of advertising, it is hard to say if displaying its app on various devices will raise its brand awareness mainly because Nike has already a huge one. But it could perhaps convince youth that they are the best.

The pro of a closed strategy lies in the brand image of the companies at play. Nike provides an indirect positive image to their partners: Sport is healthy for my body and so is Nike. If Nike has a strong relationship with TomTom and Apple, they should be good for me too. Of course this may seem exaggerated but it reflects what happens in the subconscious of the consumer. Furthermore, Nike, by its nature of well-known brand can raise the sales rate of apps for Apple and perhaps the products of Apple (or TomTom) as well. In return, by keeping these relationships with well acclaimed companies in their category (smartphones and GPS), Nike will be associated with quality and success. I think that this cannot be (or at least badly) fulfilled by working neither with companies producing cheap smartphones or GPS devices or neither with not top selling companies.

Nike doesn’t want to increase traffic or brand visibility for the sake of it. Of course, the ultimate objective is to increase sales or margins and thus profits.

In on hand, by following an open strategy, the increased online networks and reputation will surely have a positive effect on profits (ceteris paribus). On the other hand, it may also have a positive effect on its competitor’s sales. As these are durable substitute products, then, if consumers buy from Nike’s competitors they will probably not buy from Nike, translating into a negative effect on sales for the latter.

Therefore, the analysis of this topic must have the following research question: does the positive effect in profits from an open strategy outweigh the negative effect? And the answer is, of course, it depends.

Many arguments were already put forward in previous posts, mainly in regard to the creation of switching costs vs exploration of network effects. The spillover analysis is also interesting and its result will depend on whether we assume firms are competing à la Bertrand or à la Cournot.

The analysis I want to introduce is whether it could be possible for Nike to follow an open strategy, taking fully advantage of its positive effects and minimizing the negative ones, basically, turning threats into opportunities. If Nike’s competitors benefit from Nike’s open strategy, then Nike could appropriate part of that benefit by asking its competitors to pay for each of their consumers who are using Nike+. The framework for this analysis will end up being the same as the model of licensing an innovation to competitors. Therefore, if Nike believes their innovation will be disruptive and thus wipe out competition, they should keep Nike+ closed. In the case it isn’t, there are benefits from following an open strategy, licensing Nike+ to its competitors.

Reading the article and the posted comments, it seems pretty obvious to me that having an open strategy would not benefit Nike.

First of all, thanks to their social platform, which has the biggest market shares in the running/sporting community apps, Nike benefits of a huge network effect. Indeed, the more people will join Nike+, the more incentive it will give to other people (friends, family, acquaintances) to also join Nike + instead of other apps – such as Endomondo and Garmin for example.

Secondly, the fact that Nike+ is a closed platform is a source of switching costs. Because people value the app – which they can only use if they have bought the right Nike product(s), because their friends are also using the app (which more relates to a network effect, as stated before) and because the use of the app is kept simple and it might take them some time to get used to a new one, people will be willing to have more costs to stay with Nike but, most importantly, they will also regard a change of brand/product as more costly, because it won’t offer them the exact same comfort and/or network than Nike+

Third, Nike has put a lot of investments in the development of Nike+, and letting other brands be compatible with their application might be seen as a lost in regards of return on their investment, as people are ready to spend money to get the right gear to use the app.

Fourth, it may be that making the Nike+ app compatible with one or more other brands will cost a lot to Nike in terms of development. Every brand of GPS-integrated runing device calculates, stocks and interprets data differently, which would inevitably lead in huge changes in terms of development and data handling.

Fifth, in our times, data is gold. So why would Nike want to share their data handling system with others , As it would take away from them one of the main strategic advantages they may have for the development of future devices and/or gadgets, based on the habits of their users ?

The only arguments I could find for Nike to be wanting to work with an open strategy regarding Nike+ would be the brand recognition that would come with it. As Garmin users, for example, would use the Nike+ app and/or website to collect and share their running data, they might be more willing to buy Nike products in the future (if their expererience has been good). But I reckon a global and historical brand as Nike does not need such an “improvement”.

They could also want to work on an open strategy and build a common platform, in collaboration with the other brands, thereby lowering their costs thanks to costs of scale. But, again, I reckon this would have enormous costs to develop, as the collected data would have to be treated differently, or all the systems would have to be modified. but I also reckon that Nike does not need this, as their app is working just fine the way it does now.

It looks like the scrutinized market of (let’s call it) portable training coach devices is of an oligopolistic kind with just a handful of rivaling firms (Nike, Garmin, Polar, Motorola, Strava). These firms are competing for what looks like a series of niche segments. There is some room for product differentiation in both vertical and horizontal directions; e.g. the amount and quality of data that can be extracted (heart-rates, distances, calories burned, trajectory maps), quality of the materials, etc. Crucially, Nike, Garmin, Polar and co. offer further, complementary services. Such services, like the provision of a social network platform for users of these devices and software that stores exercise data and extracts meaningful information from your data history add value to the devices. Should Nike and co. allow for interoperability between services and devices, i.e. make these services compatible with competing devices?
First of all, note that were the firms to make these services compatible with the competitors’ devices, they would also increase the value of the competitors’ devices. Introducing such compatibility can be seen as an investment. We’ve seen in the Innovation Economics class that unless such investment is met by a soft response of the competitors, it is not worth investing (see Belleflamme & Peitz, 2012: 492-496; Leahy & Neary, 1997). Here, response is likely to be tough because spillovers are large (the investment renders the platform and services thereupon accessible to competing devices) and no one has an incentive to invest in interoperability.
This being said the above framework advanced by Leahy & Neary (1997) abstracts away the possibility that such platform can be used for advertising purposes (which, by the way could be rather effective since it is targeted directly to enthusiastic runners, or at least so it seems), thereby indirectly contributing to further revenues. Note also that increasing the number of users of such platforms can be valuable for other reasons, especially extracting information (through surveys, behavior on the platforms, etc.) from very specific customer segments that can prove useful for (targeted) marketing purposes. Yet, giving access to only those consumers who actually use the firm’s device can also be interesting if loyalty rebates are a profitable strategy.
It also abstracts away the idea of network effects and more specifically that the service itself becomes more valuable as the number of users increase. Katz & Shapiro (1985), Farrell & Saloner (1985) and Chen, Doraskelski & Harrington (2007) predict that as the installed customer bases become more asymmetric, product compatibility is less likely to occur because the firms with the larger shares would lose their competitive advantage conferred through the larger networks.
Secondly, allowing for interoperability of such services with competing devices would reduce switching costs and thus undermine rents that could otherwise be extracted from locked-in customers. This seems like a particularly compelling argument in this case; especially the data storing, treatment & analysis services are an essential complement to the device without which the device would lose most of its value. In addition, the personal value put on the data history increases as your data base becomes greater. Since the scrutinized devices are durable goods, users gather data for dozen workout sessions before the device eventually breaks. When looking for replacement, one important attribute looked for in the replacement product is that it should ensure access to the data set, continued data collection, and no disruptions in data analysis. Similarly, at some point we’ve all had the frustrating experience of confronting discontinuity in the data because the OECD, World Bank or other bodies have changed the time intervals or variable definitions thereby compromising our empirical projects.
Thus companies have no interest in facilitating data transfers (especially exports) between their and their competitors’ devices. Strava, for instance is currently rendering transferability more complicated, see: http://www.dcrainmaker.com/2013/07/cutting-removing-functionality.html. Further evidence for the actuality of the problem is the existence of a dozen of third party companies which have specialized in data transfer, gathering and analysis services for the scrutinized devices. See:
http://smashrun.com/running/devices
http://about.mapmyfitness.com/2013/01/5-reasons-to-sync-your-fitness-data-to-mapmyfitness/
http://trailrunnerx.com/en_faq/index.php

References:
Belleflamme, Paul & Martin Peitz (2012): Industrial Organization: Markets & Strategy, Cambridge University Press.
Chen, Jiawei, Ulrich Doraskelski & Joseph Harrington (2007): ‘Avoiding market dominance: product compatibility in markets with network effects,’ The RAND Journal of Economics, 40(3), 455-485.
Farrell & Saloner (1985): ‘Standardization, Compatibility, and Innovation,’ The RAND Journal of Economics, 16(1), 70-83.
Katz, Michael & Carl Shapiro (1985): ‘Network Externalities, Competition, and Compatibility,’ The American Economic Review, 75(3), 424-440.
Leahy, Dermot & Peter Neary (1997): ‘Public Policy Towards R&D in Oligopolistic Industries,’ The American Economic Review, 87(4), 642-662.

What are the pros and cons of an open vs closed strategy for nike?

I will try to mention some pros of their strategy:

– They are the pioneer, so with the first customer they created a kind of network effect: people can share stat or challenge with friend. So when a new customer wants to buy such kind of watch, if they have friend who use the nike+ app, of course they want to use the same app. So they cannot buy a garmin watch, so they have to buy a Nike one… They create a direct network effect

– Imagine a customer has to buy a new watch, he had a Nike+ before (he lost it for example), he may desire to buy a garmin one, to test it. But the customer knows that if it doesn’t like the application, he can’t go back to the nike application because it is not allow with the garmin watch. So it refers to the theory of the switching costs.

Off topic: I read an article of the problems of this kind of application; some insurance can use this kind of information (heartbeat for example), to calculate for example life expectancy and adapt their offer.