A couple of days go, Nike put out a press release for their first quarter ended August 31. It?s not the whole quarterly report, so I can?t delve into any footnotes. They sold, uh, a whole bunch of stuff and made a lot of money. I?ll deal with the details when the 10Q is filed. Here?s the link to the press release if you want to review the summary financial statements. You don?t need me to spew the numbers back at you.

As I read the press release, I was struck by the fact that a few years ago, I wouldn?t have bothered. I mean, who cared about Nike in the surf, skate and snowboard businesses? They weren?t a factor and they played in a market that just didn?t seem relevant to us. Every time they tried to get into the industry, we went to their parties, drank their beer and that was it. What?s changed? They bought Hurley and did skate shoes right is the obvious answer, but I want to suggest it?s more than that.

Like Nike we, as an industry, are more and more about shoes and apparel.That?s where the growth opportunities are and where the money can be made. Like Nike, we want to use the appeal of sports and athletes to sell product to non participants. Like Nike, we are concerned with branding and fashion trends.

It sounds like we?re increasingly competing with Nike. Yikes! Nike sales were $5.4 billion for the quarter. Double yikes. Even traditional action sports companies we think of as huge are pretty tiny in this new sandbox we play in. It?s either audacious or maybe humorous to think about some of our companies

competing against Nike or at least in the market they are in. But if you believe you are or might be, you?d better spend some time asking how (and maybe why) exactly you?re going to do that. I?m guessing the skate shoe people have been doing that for a while now.

Related to this is the breakdown of Nike?s revenue. Their total footwear, apparel and equipment sales for the quarter were $4.777 billion (Nike has revenue of $655 million from ?other? businesses). Of the $4.8 billion, only $318 million, or 6.7% came from equipment. Footwear was 55.6% with apparel accounting for 37.7%. Just for fun I went back and reviewed their last annual report (10K) to see if they told us their gross margin or pretax profit on equipment. Doesn?t seem to be there. Too bad.

My point is that equipment seems to be the tail that wags the dog. Isn?t that where we?re going, too?

Jeff Harbaugh is a consultant for the action sports industry and works with companies to identify and focus on critical business issues and opportunities fundamental to the bottom line.

For more information, visit www.jeffharbaugh.com.