Advertisements
 

Apple outsmarts its competitors

March 31, 2012

Unmistakable stress signs among competitors appear to herald a tectonic shift in the smartphone sector – to Apple’s advantage.

One rival RIM – maker of Blackberry – has retired hurt from the consumer ring. Another, Apple’s principal adversary in the field, is having to carefully rethink its ‘open-door’ strategy.

No surprise, perhaps, that the cracks are appearing at RIM, which has been heading for the casualty ward almost since the iPhone first appeared. After a disappointing financial year and downright disastrous Q4, new RIM chief executive Thorsten Heins has cleared out most of the old guard, including former co-CEO Jim Balsillie – still on the board – as well as the COO and CTO. And announced at the same time that RIM is all-but jettisoning the consumer market in favour of the business and public sectors.

At very least this means RIM will cease to develop content and music services. But the strategic review could signal a lot, lot more where that came from. Why exactly should business and government be interested in propping up the failing Blackberry brand, just because consumers aren’t? Even if they are, would RIM – so pared – still be a scalable global business? These are two of the questions Heins has, understandably, failed to answer so far. And yet, even at this stage, he has admitted that the future is “outsourcing” and possibly a trade sale. Echoes of Palm here, the PDA innovator which – despite a superior operating system – was eventually gobbled up by Hewlett-Packard.

More nuanced than Blackberry’s rout is Google’s response to worsening sales figures in the most hotly contested smartphones sub-sector, tablets. Here, Android-powered product is being squeezed by the exotically priced but more glamorous iPad (entry-level, $399) and the bargain-basement ($199) Kindle Fire, made by Amazon.

Reportedly, the search and smartphones titan is preparing to sell Google co-branded tablets directly to consumers through an online store.

That shocking, you say. So what?

Superficially, Google adding its awesome brand to the Android-powered tablet platform looks like a sign of strength. But that’s not what the techno-commentariat to a man and woman believes is behind the move.

On the contrary, they say, Google is attempting to shore up its position in a fracturing market. Unlike Apple, which maintains a dictatorial control over its operating system at all levels of innovation, manufacturing and distribution, Google has always favoured a laissez aller approach. By opening up its Android operating system to outside manufacturers such as Samsung, HTC and ASUS. This strategy has the merit of reducing development costs and potentially speeding up market penetration, with the corollary of making a killing in the apps field. If it succeeds, that is. But the downside is a lack of quality control; meaning that the Android brand and, indirectly, Google will be tarnished by the poor performance of its weakest collaborators.

It is this perception of fragmented user experience that has driven Google to intervene more directly in the market by taking over distribution.

With what effect we shall see. Commentators have been quick to point out that Google has tried this stratagem before, with the HTC-manufactured Nexus One smartphone.

And failed. The co-venture was shut down in mid-2010.

Advertisements

Why the IBM brand made a comeback but Kodak never will

January 16, 2012

The imminent arrival of Kodak at the bankruptcy court underlines a curious paradox about technology brands. They come about by, in some way, incarnating a bold invention. They end because they have become too brittle and resistant to precisely the process of innovation that made them great in the first place.

No doubt the Kodak name will survive Chapter 11 in some guise. But it will be as a zombie brand, entirely reliant on its 131-year heritage. It can have no purchase in our future aspirations which, I would argue, is vital to the ongoing success of brands in this sector.

How did such a catastrophic failure come about after generations of success? The simple answer is that Kodak was a legacy company too heavily invested in analogue print technology to be able to embrace digital photography when it arrived, clearly suggesting a monumental lack of corporate vision. However, the simple answer ignores an inconvenient fact: in 1975 Kodak was the first major brand to launch a range of affordable digital cameras.

It’s not so much that Kodak failed to respond to the digital challenge as that it failed to provide a full and satisfactory answer. Actually, it tried very hard with a number of solutions, which included chemicals and medical-testing equipment. Finally, it settled upon consumer and commercial printers but, unfortunately, long after Xerox and Hewlett-Packard had sewn up that market. Unlike one-trick pony Polaroid, which faced the same digital challenge, Kodak had plenty going for it. It just wasn’t enough.

Things might have been very different if Kodak had possessed the ruthless entrepreneurial culture to exploit its first-mover advantage in digital cameras. The sort of culture that drove its founder, George Eastman, back in the 19th century. But it did not. Not only had it to confront a cash-cow legacy (who ever found it easy to jettison money-making assets?), it also had institutional shareholders to placate. Publicly quoted joint-stock companies aren’t about strategic risk; they’re about steady shareholder returns. Why worry about the day after the day after tomorrow, when tomorrow looks just fine?

Ah, you say: but what about Steve Jobs? Apple was and is a joint-stock company, isn’t it? And it had the wisdom to take Jobs back on board.

Yes it did. But don’t forget that Jobs was entrepreneurial-drive incarnate – he wasn’t some whizz-kid corporate manager – and that by the time Apple took him back it was in such a mess that he was able to dictate his own terms. The right-angled strategic turn into streamed entertainment, the iPod and all that followed from it was a huge corporate risk. Even Jobs may have been a little surprised by its eventual success.

More analogous to the case of Kodak, though in a lesser state of decay, are RIM, maker of Blackberry (which has seen its shares drop 75% in value during the last year), Nokia and Yahoo.

What these companies share is a great past, present profitability but no visible purchase on the future. On present trajectory, they will end up like Palm, the PDA specialist: they will be bought, eviscerated then discarded on the junk-pile of corporate history.

An inevitable fate? Not necessarily. Rare though they are, not all turnarounds in the technology sector depend upon a messianic figure like Jobs – although they do demand pretty extraordinary corporate skills.

A good case in point is IBM. Like Kodak, IBM – whose roots go back to 1911 – found itself struggling with a destabilising transformative technology. It had grown great on the mainframe computer, which by the 1980s was obsolescent. Again like Kodak, it was not ignorant of the nature of, or need for, change. At one point it became the world’s largest manufacturer of the new game in tech city – the personal computer. What, unlike Microsoft, it failed to grasp was that the new technology was all about software control. Microsoft cleaned up the market with its PC operating system; IBM fell a prey to PC cloning, which cut its margins to ribbons.

It took an outsider to fix IBM’s cultural obsession with hardware. And not one from within the industry either. Lou Gerstner, who was appointed chief executive of IBM in 1993, hailed from tobacco and food conglomerate RJR Nabisco. Previously he had held a senior position at American Express.

The key to Gerstner’s remarkable 4-year turnaround of IBM was his realisation that the company had to harness its elite skills to not the current, but the next trend in digital evolution. Forget the PC, concentrate on the internet and make IBM the businessman’s natural friend with software solutions that embraced such issues as intranets and electronic commerce sites. While IBM prospered, Digital Equipment Corporation, its great mainframe challenger in the sixties and seventies, failed to embrace change and went under. Or rather, it was acquired by Compaq, which was acquired by Hewlett-Packard – itself now painfully struggling with its future corporate identity. Who now remembers the Digital brand name?


iPhone 4S launch highlights flaws in Apple’s culture of secrecy

October 5, 2011

The mountain shuddered in labour – and produced a ridiculous little mouse. The mouse in question is the iPhone 4S; the mountain, the hyperbolic rumour machine which would have had us believe, until the very last moment, that Apple was in fact launching the no-doubt-iconic iPhone 5, instead of a mere upgrade.

If the result has been widespread disappointment, the secretive folk at Cupertino, California, have only themselves to blame for their botched PR. Journalists, rather like Nature, abhor a vacuum. And when there is only rumour to fill it – owing to Apple’s paranoid obsession with controlling every detail of a launch – this is the sort of thing that results.

As far as I can tell, the foundation of these “iPhone 5” rumours was some cryptic remarks made by former US presidential candidate Al Gore at the Discovery Invest Leadership Summit in South Africa. Gore is an Apple non-executive director (which is why he was believed) and he let slip that Apple would imminently be launching two models, dubbed the 5 and the 4.5.

I have no idea whether this was simply mischievous misinformation, or Gore himself being ill-informed and indiscreet. Believe me, the latter would not be surprising, even at board level. Apple prides itself on a degree of internal information control, policed by fear, that would have been the envy of the KGB. It’s not your job title that counts in this corporation, but how much you can reliably piece together from your internal contacts just before a big launch. Under a supremely capable autocrat like Steve Jobs, this system of divide and rule has worked well for Apple. It remains to be seen whether his successor, Tim Cook, will be equally successful in manipulating it.

Early signs are not promising. The iPhone 4S, which will appear in the UK on October 14th, may not be the great technological leap forward that was expected. But it is a useful and innovative launch whose value will probably be dissipated in the flotsam and jetsam of deflated hype.

Point one: it embodies Apple’s latest operating system, iOS 5. This, among other things, will give Apple a better handle on technical elements of its Android competition, by allowing customers to access cloud technology that dispenses with the need for desktop computers when downloading music, photos and apps. Point two: the 4S launch will now allow Apple to start offering the older 3GS phone free with a contract. By making iPhones more attractively priced at the lower end, Apple may well be able to blunt Google’s growing stranglehold on the total smartphone sector.

And not before time. Recent research released by Nielsen reveals that, within the UK market over the past 6 months, 44% of smartphone purchases were powered by Android, well ahead of RIM/Blackberry’s 25% and Apple’s 18%.

Premium pricing and its “walled garden” operating system put Apple at a disadvantage when it comes to market share. Interestingly, however, Apple products seem to inspire the most loyalty, with 86% of iPhone users saying they were “highly satisfied” compared to 74% of all smartphone users.

Which is all very well, except you’ve got to persuade the blighters to buy your product in the first place before you can inspire such laudable brand loyalty.

UPDATE 6/10/11: Appropriately, perhaps, the pithiest epitaph to Steve Jobs, who died late last night, can be found on Twitter: “Three apples changed the world. First one seduced Eve, 2nd fell on Newton and 3rd was offered to the world half bitten by Steve Jobs.” Or minor alternatives to the same effect.


Flash Rob rioters hijack Blackberry brand

August 9, 2011

As if losing to Apple and Google in the duel for mastery of the smartphone and tablet markets were not bad enough, RIM’s Blackberry brand now has another problem to contend with.

Just as the upmarket Burberry brand was once appropriated by Chavs desperate for those trademark Rupert Bear scarves, so Blackberry’s slick image has been hijacked by rioters wreaking havoc across much of Greater London.

I don’t mean the phones have been looted from shops (though that may be true enough). No, this is far worse. The brand is now the communications weapon of choice for spotty hoodies texting their plans for countrywide mayhem.

The Telegraph notes laconically:

The BlackBerry phone, one of the first devices to offer mobile email, was once the preserve of business leaders and political aides but has become increasingly popular with members of urban gangs and teenagers.

And all because the BB Messenger service has a superior edge to other forms of social media. Twitter and Facebook leave a smoking gun for the police to pick up. Not so BBM, which can spread battleplans virally without them being traceable to individual perpetrators (apparently). RIM has always had a thing about security, now it’s obsession has come back to bite it in the bottom.

BBM is not the only marketing tool being turned to good account by rioters, however. Say hello to the Flash Rob, a pathological variant of the Flash Mob, in which sundry groups of delinquents meet up via social media to loot and burn specially targeted shops.

When it comes to social media, rioters are always going to be one step ahead of trundling Plod. After all, they’re the only ones young enough to really get it.


Blackberry and Nokia: Twilight of the cellphone idols

June 17, 2011

Nothing dates quite like fashion, and nowhere is this truer than the technology sector – as Blackberry-maker RIM and Nokia are finding to their cost. In 10 years’ time, it’s conceivable that Blackberry will be no more than an extension in someone else’s brand repertoire, and Nokia – still, if only just, the market-leading brand in handset manufacturing – will have no more resonance than Ericsson does today. They are the brand equivalents of Shelley’s Ozymandias.

Salience in the consumer technology sector is all about keeping abreast of the latest trends. And it is clear that Nokia and RIM have not. Nokia has failed to conquer the smartphone market, while RIM has failed to continue dominating it. Both companies are now beset by lengthy delays in product launches, increasing investor pessimism and, that natural corollary, plunging share prices.

At a technical level, both these companies seemed singularly blind to the two-pronged threat from the iPhone and Android operating system until it was right on top of them. Nokia has belatedly discovered, under its new chief executive Stephen Elop, that its smartphone operating system is not up to snuff and is having to broker a last-minute and doubtful marriage with Microsoft’s superior version. RIM, on the other hand, had grown complacent about its apparently unassailable position in the elite corporate sector, with the result that it failed to adequately prepare for the advent of the touchscreen phone and the 10in tablet.

A case of sclerotic corporate cultures fatally mesmerized by their legacy of previous success? Only up to a point. Nokia and RIM, looked at more strategically, are victims of haphazard technological convergence. Who, 10 years ago, could have seen that mobile communications would come to be dominated by a formerly ailing computer manufacturer and an ingredient brand dreamed up by the world’s largest search engine? And who, even once the trend had become established 3 years ago, would have had the corporate courage, or foolhardiness, to bet all their assets and legacy on it being the inexorable path of the future?

It’s a sad truism that companies spend billions of dollars every year on insight and trend-spotting. But usually lack the judgement or willpower to make proper use of it.

UPDATE 4/7/11: “RIM is the Wang of mobile phones.” That was how Charles Dunstone (CEO of Carphone Warehouse Group) referred to the Canadian Blackberry-maker at last week’s Google ThinkMobile conference. Wang was a classy corporate-oriented computer company that specialised in just one thing, word processing. But it was blown away by Microsoft’s Office. Wang filed for bankruptcy in 1992 and eventually disappeared into Netherlands-based Getronics in 1999, never to be seen again. I wish I had thought of that parallel first, Charles…


Are brand valuation tables simply telling us the blindingly obvious?

May 10, 2011

No surprise to see Apple’s topping performance in the annual BrandZ survey, put together by WPP subsidiary Millward Brown.

Or is it? If we are to believe in these league tables which regularly assess the brand values of some of the world’s largest corporations, we should surely expect a certain consistency between them.

This is far from always the case. Take Apple itself. For the last year or two is has been the world’s top, or near top, company by market capitalisation with a simply stunning profit record. No one in their right mind would argue that branding, through Steve Jobs’ long career, has not been a salient feature of the technology company’s success (even when some elements, such as profitability, were clearly lacking). Put the two together, and you would surely expect it to be near the top.

But that’s not so when we turn to BrandZ’s principal rival, the longer-established Interbrand Best Global Brands, owned by Omnicom. Curiously Apple comes in at a sickly 17, up from 20, in the Interbrand rankings for 2010, published last September – the latest available.

Apple may be the most conspicuous anomaly, but it’s certainly not the only one when we compare the two league tables. Why is Disney so highly regarded by Interbrand (it’s ninth), but relatively lowly by BrandZ (it’s 38th)? Why is Samsung only 67th in the BrandZ charts, while it is ranked 19th by Interbrand? Doubtless there are other glaring disparities, which the more eagle-eyed will spot.

Such mis-attention to detail, you say. It’s the differing methodologies isn’t it? A bit of capitalist differentiation in the brand valuation market. You pick the one you trust more and go with it.

Well, not exactly – despite the anomalies, there’s plenty of consensus too. Technology companies, however ordered, now overwhelmingly dominate the top ten (and in BrandZ’s case, the second ten as well); mostly the same names crop up as well. Louis Vuitton is clearly the top-ranking French brand: both tables have it in their top 30. Even some of the valuations are pretty similar. Coca-Cola’s brand-worth, for instance, is estimated at $74bn in BrandZ (just out); and $70bn in the Interbrand rankings. While BMW is valued at at just over $22bn by both.

Admittedly, Interbrand tends to be a little more economical with its overall valuations, in dollar terms. Then again, the real importance of these tables is not the absolute, but relative values conveyed: it resides in the dynamic interaction of the brands contained therein.

And yet it is precisely here that their biggest difficulty lies. Amusing though it may be to pick out the winners from the losers and also-rans, are we any the wiser once we have done so? True, such tables serve an important function as a marketing propaganda tool within the investment community – helping to prop up, or knock down, share prices. But many of the conclusions they reach seem blindingly obvious rationalisations after the fact.

So, in the case of BrandZ, Blackberry is down 20% and 11 places to number 22; while Nokia has tumbled 38 places to 79th and lost 28% of its value (now $11bn). Well strike me down with a feather. Nothing of course to do with the two brands well advertised failure to crack the current consumer smartphone market I suppose?

Mind you, at least the BrandZ analysis is consistent, attributing due weight to the two phone brands’ nemeses, Apple and Google. Which is more than you can say for the Interbrand picture.

On the subject of which, expect a major brand revaluation this autumn. Here’s a fairly safe prediction. If not actually top, Apple will be one of Interbrand’s top-performing brands this year.

NOTE: BrandZ table here. And Interbrand table here.


Former Sun and NoW boss Mike Anderson launches smartphone apps company

May 19, 2010

Mike Anderson, former managing director of The Sun and News of the World, is launching a company specialising in building and marketing mobile phone applications for smartphones. Handheld Company, based in Chelsea, opens its doors this month.

Anderson believes that with smartphones – such as the iPhone, Blackberry and Google-spawned Android handsets – becoming cheaper, more efficient and popular, the mobile platform is finally coming of age as a commercial opportunity. And that the way ahead is to be found in the development of apps that work effectively across platforms.

Anderson tells me: “Most brands, and agencies, don’t yet understand that there’s an opportunity beyond Apple and the iPhone, which account for most of the 200,000 apps currently available. This business is just taking off, with a lot of smarter apps about to come on stream. But the rhythm of publishing, the model, isn’t yet established. There’s a shortage of good developers and lots of ‘garage’ moms and pops out there. Few understand how to go to market, fewer still how to make money. And no one yet has grabbed enough land to be a significant player. There’s a lot of consolidation coming in the next 18 months.” Anderson sees the business evolving along the same lines as the record and computer games industry, with successful developers and labels commanding “rock star” status and fortunes.

Handset Company is based in a converted warehouse, dubbed the Chelsea Apps Factory, and has an initial staff – comprising designers, software and marketing specialists – of about 30. Much of the start-up capital has been provided by Anderson and his partners, but he is now initiating a private equity funding round.

Anderson has had a long career in the newspaper industry, punctuated by short spells in commercial television and as a media buyer. Before joining News International as managing director of News Group Newspapers in 2005, he was md of The Standard, and before that founding md of the successful freesheet, Metro – both at that time owned by Associated Newspapers. Anderson finally stepped down at News International in autumn last year, after tragedy blighted his private life. His wife, Jane, died of cancer, leaving him to bring up three children. In his own words: “It was a difficult time – it is very different being a single parent… When I came back, News International couldn’t find a role for me. They tried to find something, but I thought the best thing to do would be to get out and do what I believe in.” Initially, he set up a consultancy, Frank Business – one of his clients being The Sun.

At Handheld Company, Anderson’s partners are Mike Spencer, former marketing director of QVC Shopping Channel and the Disney Channel Europe; mobile content specialist Gordon Robson; Jo Rabin, former chief technical officer of Reuters Mobile Flirtomatic; and communciations and brand specialist Jane Allan.


%d bloggers like this: