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Nike's reluctance to work with Android could cost it dearly

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October 15, 2013

Some wireless industry observers are now suggesting that Nike could be making a big mistake with its stubborn reluctance to work with Google's Android operating system, and instead sticking to Apple's iOS.

The athletic apparel company today introduced its second-generation fitness tracker, the FuelBand SE, which worked beautifully on all Apple's iOS devices and computers. But completely missing from the presentation was any mention of Android. Anywhere.

It's a very bad thing that Nike still doesn't offer support for Android, which is the mobile platform champion, with about 80 percent of the global market.

At a critical time when more and more app developers are looking to expand the number of platforms they are on, Nike has stubbornly clung to its comfort zone and stayed with Apple's iOS.

But for its part, Nike maintains that the decision is tied to its desire to focus on a single consistent experience. "With the audience using iOS and the audience using the Web, we wanted to make sure that we had the best experience possible," said Ricky Engelberg, the experience director for Nike's digital sports business.

"We always want to evaluate new platforms, but we want to make sure we take care of the platforms that we're on now," he added.

But that was the same old argument Nike gave when it first introduced the original FuelBand in January of last year. But it doesn't hold up as well after nearly two years since its debut, and that's where all the problem is.

Nike's strategy only works if you operate in a void. But the company isn't alone in the fitness tracker business, and indeed, competition has risen quite a bit.

Since then, there have been a number of worthy products that have hit the market. The Basis Band, for instance, carries a number of sensors including heart rate monitor and accelerometer, and will work on Android and iOS.

At a time when the fitness tracker business is heating up, Nike can ill-afford alienating a huge chunk of the population with an iOS-only product. While Nike won't admit to it, there are a few reasons why it has shied away from Android.

For the most part, Nike has gotten away with staying on iOS. As a largely North America-centric product, the FuelBand benefits from the higher mix of iOS users in the United States.

While Samsung and Android have taken the smartphone crown, the iPhone remains the country's single most successful mobile franchise.

FuelBand, however, is starting to go global, expanding into France, Germany, and Japan. It's in the newer markets where Nike will start to see the shift towards Android dominance. And that's the scary part. But the fact that Nike isn't scared is really mind-boggling.

Of course, there's also the thinking that iOS users are typically consumers that are more affluent. While there are a fair number of high-end Android phones, including the HTC One or Galaxy S4, there are also many more low-end devices purchased by consumers who may not necessarily spring $149 for a band that tracks your movement.

"A lot of Android's market share comes from the low end," said Avi Greengart, an analyst at Current Analysis. In many cases, the wearable device costs more than the inexpensive Android phone itself."

To be sure, Android is also far more fragmented than iOS is. In the first week of iOS 7's debut, 50 percent of the user base had converted over. On Android, there are smartphones with multiple versions of Android, altered flavors like the HTC Sense, and different screen sizes as well, so it's really a mixed bag.

Additionally, Bluetooth support is also an issue. The new FuelBand SE also runs on the newer Bluetooth 4.0 standard, which hasn't really yet been embraced by the Android community and was only recently officially supported by Android in version 4.3.

In comparison, Apple's iPhone 4S, the iPhone 5 and later versions all support the standard, which allow for simpler, longer, and more power-efficient connections between devices.

The original FuelBand didn't use Bluetooth 4.0, so there technically isn't a reason why Nike couldn't create an Android app for it, when you think of it.

But there's also an argument that the sheer amount of new sensors in Android phones, such as the sensor-loaded Galaxy S4, may dampen the need for a device like the FuelBand.

However, that concern doesn't appear to bother Nike when it pertains to the iPhone. When asked about the M7 processor found in the iPhone 5S, Engelberg said that the company is happy to support the sensor (the Nike+ Move app allows your iPhone 5S to earn NikeFuel points), but said there would be instances where you wouldn't want to carry a smartphone, such as when you're playing basketball or playing tennis.

But he saw it as an opportunity to build awareness for a product like the FuelBand. Engelberg declined to comment on the prospect of Apple potentially getting into the business with the long-rumored iWatch, noting only that it would be hard for any company to replicate the thousands of hours of R&D it has done to adjust the NikeFuel algorithms.

Lastly, conspiracy theorists may point to Apple CEO Tim Cook's presence on the Nike board as a hint of some deeper alliance between the two companies. Nike, of course, denied any such influence, and so did Apple, but it doesn't take a rocket scientist to figure that one out.

While some of the issues with Android are valid, the market is moving to a point where companies and app developers can no longer ignore Google's Android platform. Nike, you should wake up before it's too late...

In other mobile news

BlackBerry cofounder Mike Lazaridis has indicated that he is considering a bid to acquire the company's struggling smartphone maker, even as analysts say that selling the company off in small pieces may be a better deal for the shareholders.

Lazaridis made his intention known in a regulatory filing with the U.S. Securities and Exchange Commission late yesterday, in which he said he is exploring "a potential joint bid to acquire the shares of the issuer that they don't currently own."

According to the filing, Lazaridis currently owns about a 6.4 percent of BlackBerry's outstanding shares, and he has hired Goldman Sachs and Centerview Partners to help him review his options for acquiring the rest.

The disclosure comes as investors grow ever more skeptical that Fairfax Holdings will be able to raise enough funds for its proposed $4.7 billion buyout of the struggling Waterloo, Ontario company.

A number of other firms have also expressed interest in BlackBerry, including Cisco, Google, LG Electronics, Samsung, and even SAP.

But according to sources cited by Bloomberg on Thursday, those suitors are only interested in parts of the company, and analysts agreed that BlackBerry is probably worth more in pieces than as a whole.

On its own, BlackBerry's patent portfolio could be worth anywhere from $2 to $3 billion, wireless industry analysts say, while its enterprise network could be worth between $550 million and $1.1 billion to a rival wireless carrier.

The company is also sitting on about $2.47 billion in cash. One part of BlackBerry that prospective buyers probably won't be interested in, however, is its loss making smartphone business.

BlackBerry took a $934 million charge on unsold inventory of its Z-10 handsets last month, and its new owners will be very unlikely to risk a repeat performance of the same.

One analyst even told Bloomberg that the smartphone division "isn't even considered an asset." Lazaridis has not said whether he would keep BlackBerry whole or sell off its parts, should he manage to raise a successful buyout bid.

But BlackBerry shareholders seemed encouraged by the idea of its cofounder taking control of the company. BlackBerry's stock price was up by around 1 percent on the news, giving it a total market capitalization of about $4.21 billion.

In other mobile and wireless news

The Mozilla Foundation said earlier this morning that it released its Firefox OS version 1.1. This is the first significant update to the web-based smartphone browser it launched three months ago. "Just weeks after the first Firefox OS phones hit the market, an update was made available adding new features, support for a number of new languages and significant performance improvements," the Mozilla Foundation explained in a blog post. Among the new additions are MMS (multimedia messaging service) support, a new API for push notifications, and improvements to several of the bundled core apps, including the calendar, the contacts manager, and the email client.

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Many of these fixes are welcome improvements on the original version of the operating system that we tested last month.

For example, Firefox OS can now import contacts from Gmail and Hotmail, where before it could only pull them from Facebook, and even that wasn't so easy after all.

Additionally, the onscreen keyboard, which was a frustrating bare-bones item in version 1.0, has been enhanced with an auto-correct feature that can help replace misspelled words.

However, and as good as it is on the surface, Firefox OS still has a long, long way to go before it can compete feature-for-feature with the likes of Android.

But the fact that its developers have shipped a major update three months after the first version debuted demonstrates that they're serious about making it a viable and competitive platform.

In July, Mozilla's product release manager said the Foundation plans to ship new feature updates four times a year along with security fixes every six weeks, and so far, it appears to be on track.

Also, Mozilla clearly wants to expand its platform's reach even more. To this date, Firefox OS phones are only available through wireless carriers in a few select markets including Colombia, Poland, Spain, and Venezuela. But Firefox OS 1.1 has now been localized for fifteen languages.

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Source: MNR.

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