Nike: Just Do It (Again)
By: Manas Marwaha & Jason Zhang
The Ivey Business Review is a student publication conceived, designed and managed by Honors Business Administration students at the Ivey Business School.
The Check that Changed Sports
Nike, originally Blue Ribbon Sports, was founded in 1964 by Phil Knight alongside his University of Oregon track team coach Bill Bowerman with a focus on developing lighter running shoes to improve athlete performance. The duo’s early obsession with product innovation set Nike apart from competitors and laid the foundation for decades of dominance. Nike has since expanded into athletic apparel and sport-specific footwear, becoming a global leader in the athletic footwear and apparel industry through a unique ability to blend innovative products with impactful marketing. The company’s athlete-focused innovation philosophy has led to longstanding partnerships with global icons like Michael Jordan, Cristiano Ronaldo, and Serena Williams. Despite its success, Nike faces ongoing challenges in maintaining its competitive edge in the footwear industry.
Running in Place: Nike’s Battle to Stay Ahead
Increasing competition from core brands like Adidas and Asics, and emerging brands like HOKA and On Running, has reduced Nike’s market share in global sportswear over the past 5 years through rapid product development and viral marketing techniques. On Running, for example, has continued to push the envelope on running shoe innovation through its new Cloudboom Strike LS shoelace-less running shoe weighing just 170 grams, made using a robotic arm for a customized fit. Meanwhile, HOKA and Asics have actively engaged runners through roadshows, handing out free merchandise and having runners test out new shoes. In contrast, Nike missed the opportunity to capitalize on the pandemic-fueled running boom, instead prioritizing its athleisure segment and limited-edition sneaker releases in 2020. In early 2024, former CEO John Donahoe acknowledged that Nike's innovation had fallen behind its competitors due to underinvestment in the division, emphasizing the need to refocus on the company’s "disruptive innovation pipeline" to regain its competitive edge. Nike’s sales channel mix has also been suboptimal as the company pulled back from key retail partnerships, losing valuable shelf space with major retailers like Foot Locker, Macy’s, and Dick’s Sporting Goods. These missteps have stagnated Nike’s sales growth in a competitive athletic footwear and apparel industry.
In October 2024, Nike replaced Donahoe with new CEO Elliott Hill, who similarly emphasized the importance of revitalizing Nike’s innovation pipeline to reassert the brand’s top position. Despite these comments, trailing twelve-month revenues as of November 2024 were $49.0 billion, down 5% from FY24 earnings of $51.4 billion, with Nike’s share price trading at an average of $82.79.
The Swoosh That Gets Smart: Nike’s Wearable Tech Comeback
The fitness and health-related wearables market has seen tremendous growth as market demand grew at a CAGR of 14.6% between 2019 and 2023, and is forecasted to maintain a CAGR of 16.7% through 2029 as fitness wearable companies transition to subscription-based business models and integrate artificial intelligence into their products. Currently, Apple dominates the wearables category with annual sales of ~54 million in 2022, accounting for 34% of global smartwatch shipments. Apple has experienced success in the wearable market as consumers opted to purchase multi-function smartwatches over single-purpose fitness bands, leading to a decline in market share for companies like Samsung, Garmin, Fitbit, and even Nike itself. On the software front, the pandemic era sparked a boom in digital fitness. Between 2020–2021, the virtual fitness market roughly doubled from around $6 billion to $11 billion. Recognizing this trend, Apple launched its Apple Fitness+ platform in late 2020, generating about $300 million in revenue in 2021, with projections to reach $3.6 billion by 2025. Apps like Strava also gained significant traction, nearly doubling their user base to over 100 million between 2020 and 2022.
Despite having long positioned itself as an innovation-driven, athlete-focused brand, Nike has historically missed multiple opportunities to capitalize on the running industry's post-pandemic growth. By focusing on software with Nike Run Club and Nike Training Club, Nike has struggled with user churn to analytics-driven apps like Strava. Nike needs a strategy to differentiate its hardware and software to drive competitive advantage; re-entering the wearable fitness tracker industry could be an attractive opportunity to complement footwear with game-changing analytics and a well-integrated product ecosystem. As a result, Nike could integrate wearable fitness hardware into their products and gain access to consumer data to iterate, improve, and innovate on future products. While this move seems logical for Nike, the company has a history of entering and exiting the wearables market. A decade ago, it led the space before shifting focus from hardware to software—so what’s different this time?
Swoosh and Miss: Nike’s Bumpy Wearable Journey
Nike has made several attempts to break into the wearable space, most notably through its partnership with Apple in launching the Nike + iPod Sport Kit and its own wrist-wearable FuelBand. The Nike + iPod Sport Kit was launched in May 2006 in a nascent wearable technology market. Users would attach a pedometer sensor under the insole of particular Nike+ shoes, allowing them to track pace, distance, and calories burned through their iPod nano. The device was a huge success, establishing Nike as a pioneer within the growing wearables market. In the following years, Nike continued investing in wearables and software, releasing updated sport-band kits with new features. The Sport Kit was phased out in 2014 after Apple introduced motion coprocessors on the iPhone 6.
In 2012, Nike launched the FuelBand, a wrist wearable fitness tracker that quickly gained traction in the wearables market thanks to the company’s strong brand presence and ability to generate marketing buzz. However, just two years later, Nike discontinued the product and laid off nearly their entire wearables hardware team. In 2017, Jordan Rice, now Head of Innovation Business Operations and Portfolio, addressed Nike’s exit from wearables, citing how FuelBand bombarded users with data but did little to contextualize the metrics, which led to a lack of long-term stickiness with consumers. Additionally, Apple’s entrance into the wearables space with their Apple Watch ecosystem elevated the level of competition in hardware development, something Nike was never well-equipped to pursue in the first place. A lack of user stickiness and hardware expertise eventually led Nike to exit the fitness wearables market, focusing on watch straps and complementary software for the Apple Watch via Nike Run Club and Nike Training Club.
However, Nike’s continued partnership with Apple Watch has been a lacklustre branding play. Nike’s role within the partnership is limited to the watch branding and the pre-installed Nike Run Club app. The Apple Watch Nike offers no additional functionality beyond a simple Nike-themed watch and wrist strap, establishing no meaningful differentiation from the other Apple watches. Furthermore, Nike has no ownership over the customer relationship or data collected through the Apple Watch. As a result, Nike Run Club software is not as comprehensive as it could be. There is minimal insight-driven integration between the Apple Watch and Nike Run Club beyond simple pace and heart-rate metrics, leaving significant room to improve user experience.
Nike is still in no position to enter the fitness wearables space, nor should they pursue internal innovation efforts. At its core, Nike is an athletic footwear and apparel company driven by performance-enhancing, athlete-focused innovation, not hardware. Nike can still capitalize on the wearable fitness industry’s growth through strategic partnerships with hardware companies. This will allow them to use data-driven insights to improve their software offering meaningfully and innovate in its core athletic footwear & apparel business. Nike and Apple should look to strengthen their partnership by integrating more meaningful performance-driven biometric insights into the Apple Watch Nike ecosystem with complementary products, providing personalized analytics and enhanced user experiences to consumers. Unlike competitors, like WHOOP, who have built interconnected hardware and software ecosystems, Nike’s collaboration with Apple lacks a tangible, physical presence outside of the standard Apple Watch configuration. Expanding beyond software and developing complementary hardware could allow Nike to complement the Apple Watch Nike to create a more immersive brand experience. Nike should focus on integrating technology into their existing running shoe line, using its Apple Watch Nike partnership to create a comprehensive hardware-software integration catering to high-performance athletes.
Case Study: WHOOP’s Mastery of the Fitness Wearable Market
WHOOP is a wearable technology company that focuses on providing in-depth, personalized insights to performance-driven and health-conscious consumers. The device measures key vitals (sleep, strain, recovery, stress) and allows users to input behaviour to gain insights into their health and fitness. Since its inception in 2012, WHOOP has experienced significant growth through an innovative blend of hardware and software, strategic partnerships with athletes, and its clever subscription-based model. Unlike traditional trackers, WHOOP AI Coach uses heart rate variability and AI to turn biometric data into personalized performance insights. Elite athletes like LeBron James, Michael Phelps, and Patrick Mahomes have been spotted wearing WHOOP, while global icons like Cristiano Ronaldo have taken it a step further by becoming brand ambassadors, solidifying WHOOP’s presence in the world of elite performance. WHOOP’s unique business model has positioned the brand as a product for high-value customers, as the company charges a monthly subscription, locking in users by making them pay for the software rather than the hardware. With rising demand for data-driven health insights, WHOOP has built strong consumer loyalty and a recurring subscription base.
Running in Sync: The Future of Nike and Apple’s Game-Changing Collaboration
Nike and Apple should deepen their partnership in the fitness wearables space by introducing complementary products that allow users to gain deeper insights into their performance. Now is the perfect time to turn that collaboration into an additional game-changing product: a next-generation shoe sensor designed to measure performance metrics that an Apple Watch simply cannot capture. This lightweight, unobtrusive sensor, placed inside the shoe or worn around the ankle, would track advanced data like ground contact time, foot strike patterns, stride efficiency, and force distribution, providing elite runners and athletes insights beyond heart rate and GPS tracking. Unlike WHOOP, which charges a high monthly subscription, this sensor would be a one-time purchase priced lower than WHOOP’s upfront cost, making it an accessible yet powerful tool in an athlete’s training kit.
The running shoe industry presents a perfect opportunity to create a complementary product similar to the Nike+iPod Sport Kit. Over the past five years, the exponential growth of wearables and fitness apps indicates that people are eager to quantify their health and workouts. Targeting the running community presents a significant opportunity for Nike and Apple. Globally, approximately 621 million people participate in running, indicating a vast and engaged audience. The running gear market is also experiencing substantial growth, with projections estimating the market to reach USD 69.9 billion by 2033, growing at a CAGR of 5.18 percent from 2025 to 2033. This expanding market underscores the potential for innovative products tailored to runners' needs, offering both companies a chance to capture a share of this lucrative segment. By enhancing data-driven insights through embedded sensors, Nike can reengage runners who seek more precise performance metrics, aligning with the broader trend of fitness quantification and pushing the envelope on industry innovation.
The Nike + iPod Sport Kit measured basics (distance, pace via foot strides) and proved reasonably accurate for its time. Since then, sensor technology has advanced dramatically. Modern inertial sensors (accelerometers, gyroscopes) are smaller, cheaper, and more precise. Today’s shoe pods can capture steps, speed, and detailed running dynamics. For example, the Stryd foot pod, a third-party device used by serious runners, can estimate running power (watts), ground contact time, stride length, and even wind resistance. Nike can emulate similar technology in its products to track the same metrics while integrating this data seamlessly with the Apple Watch Nike wearable. An Apple-Nike shoe sensor could sync with the Watch, providing data on stride length, jump height, and foot impact. For runners focused on improving form, foot sensors can provide valuable and detailed metrics for coaching and injury prevention. For example, the shoe sensor could detect left foot pronation or a 5% stride reduction from fatigue, complementing heart rate and GPS data on the Apple Watch Nike to provide a holistic analysis of one’s performance. Apple excels at device ecosystems, and Nike’s footwear expertise ensures optimal sensor placement. Nike has already integrated tech in shoes, like the self-lacing Adapt BB, making a lightweight motion sensor a feasible next step. Low-energy Bluetooth and accelerometers make the complementary shoe sensor feasible with minimal power needs.
From a partnership standpoint, it helps that Apple and Nike have a longstanding relationship. Notably, Apple CEO Tim Cook has served on Nike’s Board of Directors for years, and the companies have collaborated on products like the Apple Watch Nike edition and previous Nike+ projects. This reduces the execution risk on the partnership side because there’s a history of trust and aligned vision at the leadership level. Mark Parker, Nike’s former CEO, once said he was “bullish” on the Apple partnership and that “I look ahead to what’s possible between Nike and Apple, two, as you said, amazing brands, technologically we can do things together that we couldn’t do independently.” Through this partnership, Apple can expand its fitness reach without compromising its flagship wearable, while Nike gains a differentiated hardware product that strengthens its ecosystem. This partnership could be a significant move for Nike’s growth to drive innovation and meet the evolving demands of high-performance athletes, especially their core running segment. Through complementary product offerings, the Nike-Apple partnership could make more significant strides.
