– John Foley (Peloton Founder, HBS 2001)\u00a0<\/strong>\u00a0[6]<\/p>\n Peloton has digitized the traditional studio business model by building a highly technologically advanced operating model around a subscription concept. Despite the $2,000 price-point of a Peloton bike, the company has emphasized that \u201cthe hardware, while key, is not where the money will be made\u2026 cash will come through subscriptions.\u201d [7] Therefore, the company is investing heavily in its digital streaming platform and the software engineering team that supports it. Whereas traditional cycling studios focus on developing instructor talent, 20% of Peloton\u2019s team consists of software engineers, while a majority of the rest work in Operations, Customer Experience and Production to improve rider experience with 24\/7 customer service. [8, 9]<\/p>\n Furthermore, Peloton\u2019s software engineering team has continuously introduced technological improvements to the tablets on Peloton bikes, which feature high definition video and audio, an interactive user interface that allows riders to easily engage with other riders (video chat, sharing statistics, etc.), and even heart-rate monitoring capabilities that connect to other third-party devices. The key to Peloton\u2019s success is really the high quality, fully immersive, extremely interactive, and all-around fun nature of the cycling experience that it offers, which is enabled by the platform\u2019s innovative technological superiority as well as first mover advantage in the digital streaming fitness space.<\/p>\n \u201cPeloton has inspired a deep and loyal global community to share their passion for fitness, camaraderie and cycling though beautiful hardware, immersive content and robust community.\u201d – The New York Times [10]<\/strong><\/p>\n Looking Forward<\/strong><\/p>\n Peloton has certainly captured the first mover advantage in digital fitness. However, the barriers to purchase are high at $2,000 \/ bike, and I expect competitive pressure from companies like SoulCycle and FlyWheel as they consider digitalizing their business models as well. I think in order for Peloton to continue to grow and increase rider-share, it will need to drastically bring down the price of its bike through increased R&D and manufacturing efficiency. Moreover, over the last year, Peloton has significantly increased its brick-and-mortar presence from 1 to 20 showrooms nationally [11]. While the showrooms do serve as brand ambassadors that bring more riders onto the platform (and thus enhance Peloton\u2019s network effect), I would have expected the firm or its private equity owner Catterton to focus more on the software infrastructure instead of traditional brick-and-mortar offerings. Finally, as a factor of continued growth and innovation, I expect Peloton to expand its current offering to adjacent machines and workouts in the future to bring in added optionality for consumers.<\/p>\n \u201cI used to say we want to be the Apple of fitness. I\u2019ve stopped saying that.\u2009\u2026\u2009We\u2019re going to make Apple look small-time.\u201d <\/strong><\/p>\n – John Foley<\/strong><\/p>\n <\/p>\n Word Count: 798 (excluding sources)<\/p>\n <\/p>\n References<\/u><\/p>\n Peloton has revolutionized the cycling studio experience, putting significant competitive pressure on trendy powerhouses like SoulCycle<\/p>\n","protected":false},"author":2598,"featured_media":17748,"comment_status":"open","ping_status":"closed","template":"","categories":[],"class_list":["post-17671","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/digitization-challenge-2016\/","yoast_head":"\n![\"[](\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/gallery_woman_1_desktop_2x.jpg\")
<\/a>Peloton offers a new business model that utilizes digital technology to transform the cycling experience by enabling in-home access to the high-intensity cycling community of SoulCycle at lower cost, eliminating the traditional barriers to entry and access ailing competing cycling studios. Similar to SoulCycle, Peloton offers cycling classes through traditional brick-and-mortar stores at $30\/class. However, what differentiates Peloton from the competition is that riders can purchase a Peloton branded bicycle for their home and subscribe to the company\u2019s media platform for $39\/month in order to stream classes straight into their homes. The bikes are video-enabled, equipped with waterproof tablets powered by Google Android and specifically built to host Peloton\u2019s full inventory of recorded classes. From the comforts of their own homes, riders can virtually join live classes, post statistics after the class as if they were physically present in the studio, chat with Peloton friends through the platform, or choose to work out on-demand with a pre-recorded class [5]. Peloton allows riders to participate actively in the cycling community, even if they are pedaling remotely.<\/p>\n
\n<\/a>\u201cWe are more than just a class, a cycling studio, and a bike. We deliver a fully engaging experience with the technology to make every workout effective, and the social connection to make every workout addicting.\u201d<\/strong><\/p>\n<\/a>\n