Last Updated Sep 10, 2010 4:45 PM EDT
Take a look at the tepid performance of Nike+, an early Apple-Nike (NKE) venture. Nike+ is perhaps the oldest teacher's pet in the App Store. In fact, it predates the App Store; when Apple opened up the iPhone platform in summer 2008, Nike+ had already been in iPods for over a year, and people liked it. Nike had every conceivable lead.
Fair? Not nearly. But with all its money and expertise and branding, why is Nike+ losing to RunKeeper, a startup app created by a nine-person team from Boston? Why was RunKeeper named one of the top 10 apps in the App Store by Time magazine last year instead of Nike's?
Founder and CEO Jason Jacobs of FitnessKeeper, the little company that makes RunKeeper (pictured at right), acknowledges that Nike didn't screw this up for lack of trying. "They're not constrained by smarts, and not by development dollars," he says. "But their core is selling more shoes and apparel."
But this is much more than a simple B-school case where a big company strays from its core competency. Nike+ just this week achieved parity with RunKeeper by offering GPS route-tracking and some other nifty features, and the app is gorgeous. Adidas too has poured millions into developing its miCoach system, a copycat, and marketed heavily at the World Cup. New Balance tried a white-label solution that was quickly abandoned.
"They didn't make a dent," says Jacobs. "Instead of killing us, our numbers doubled. They came in and educated everyone," and RunKeeper kept selling.
The problem was simple, says Jacobs: "Nike tried to build a system that tied people to Nike shoes; they tried to build a closed community." RunKeeper, by contrast, works with iOS, Android and Garmin (GRMN) devices (soon), Polar brand heart-rate monitors, and sundry "smart" devices like scales, treadmills and ellipticals. And because it has tracked runners using GPS since the beginning, no special shoes were required.
This would seem like a freak success if other app startups weren't making a killing doing the same thing: namely, letting interoperability underpin their apps in a way that would seem anathema to F500 companies. Box.net has done it with their enterprise intranet software, which I've argued succeeds because it connects to all sorts of awesome Web services and has opened its API to act as a hub.
French Web entrepreneur Loic Le Meur topped Techmeme headlines a few weeks back by discussing the concept of a "body API" for health apps like RunKeeper, which he uses. "Apps" as we know them -- all quarter-million of them -- are relatively obscure and impotent when they stand alone. But when they unite in a schema, they become downright amazing.
"If you said that someday we would be a hub for health apps, you wouldn't be far from our ambitions," says Jacobs. If they're smart, other app developers are thinking the same.