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.

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Why Joel Ewanick’s Apple comparison is just pie in the sky for General Motors

August 24, 2011

“Feisty” is the word that most often comes to mind when describing General Motors global chief marketing officer Joel Ewanick.

Since arriving from Hyundai (where he held a similar position) last year, the man seems to have barely slept as he implements a whirlwind catalogue of changes. This month alone, while others absent themselves on their summer vacation, Ewanick has reorganised his marketing department and called a review of the $3bn GM global media account.

But restless energy – commendable though it is – should not be mistaken for vision. The limits of Ewanick’s intellectual rigour, although not his soaring ambition, were also on display earlier this month – at GM’s second annual Global Business Conference.

In it, Ewanick made the extraordinary declaration that his goal is to transform GM not into a better car company, but a future Apple.

Nor was this just a rhetorical trope dished out to a friendly audience. He’s deadly serious. “It’s time,” Ewanick said, “To clearly differentiate our brand and align closer to a true global brand like Apple. It’s time for an automotive company to step out and address consumers and their needs in a way that’s never been done before.”

Admirable sentiments of course. But just what does he mean? Technological innovation is integral  to selling cars, but that doesn’t mean the motor sector is in any way comparable to Silicon Valley. And even if it were, rust-belt Motown marques, with their high social costs and Chapter 11 legacy, are not where you would start. Ironically, in fact, the US car brand with the most potential for eye-catching product innovation and design is not American at all: it’s one whose marketing Ewanick has already captained – Hyundai.

But if the future is elsewhere, Ewanick has, in a curious way, scored a debating point about the past. GM is comparable with Apple: but only in the past tense. Back in the fifties, when Americana and US global power were at their height, a new Chevvie or Cadillac was a potent symbol of the consumer dream. It encapsulated the freedom to travel anytime, anywhere worth travelling to, on the interstate highway. So potent was this dream that GM – like Apple today – was the world’s biggest company by market capitalisation. It even became a mantra in US foreign policy: “What’s good for GM is good for America.”

No chance of recapturing that distant eminence, now or in the future. Cars are simply not the must-have consumer products they once were; even in fast-growing economies like China’s – where they may well be viewed as status symbols, but not on the level of fifties America. Who, on the other hand, would not break their neck to acquire the latest Apple iPhone?

It’s possible, of course, that I have misunderstood Ewanick’s apparently ludicrous aspiration. All he was really talking about was the much more modest goal of creating brands with universally accepted global appeal. I don’t think so, though.

What’s certain is that neither Ewanick nor his boss, GM CEO Dan Akerson, is the next Steve Jobs – despite the superficial brand-turnaround comparison.


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.



Murdoch and Jobs – Frenemies of the Internet

November 22, 2010

Now we know why James Murdoch, heir apparent at NewsCorp, has been so messianic about the iPad recently. The Times/Sunday Times “apps” experiment is merely part of a bigger picture – perhaps a small one at that.

It has emerged – rather curiously via US fashion industry journal Women’s Wear Daily – that Murdoch Sr is working closely with Apple chief executive Steve Jobs on launching an entirely new, exclusively apps-driven newspaper (there will be no website or print ancillaries) that can be purchased on an iPad. Other tablet formats may follow (though Jobs’ views on this egalitarian gesture are unknown). What we can say is that the news vehicle will be called the Daily, that it will appear as early as the end of this month, that it has an upmarket skew, that it will cost 99 cents a week, and that it will probably be edited by NewsCorp’s blue-eyed boy Jesse Angelo, currently managing editor of The New York Post.

For the fuller implications of a personal alliance between these towering giants of the media and technology worlds, turn to Tim Berners-Lee. Spookily but – so far as I know – entirely independently, the founder of the internet has just published in Scientific American a searching critique of what he regards as internet abuse. Unwittingly, it provides considerable insight into why Murdoch and Jobs are batting in the same team.

Berners-Lee casts his net widely. He sees the internet – once a kind of communitarian brotherhood in virtual space – as increasingly under siege. The attack on its ‘inalienable’ freedoms comes from a number of sources, many of which are themselves firmly rooted in web culture. High on his list of targets, for example, are social networking sites such as Facebook and LinkedIn. To these he adds Google and US telecoms carrier Verizon, which earlier this year struck an agreement to exempt mobile access to the internet from web neutrality; that is, from the accepted principle that no web service may be prioritised over another by a pricing structure imposed on its delivery. And finally, he rounds on mobile and desktop applications – Apple’s in particular – which operate behind a walled garden of restricted access.

Berners-Lee’s wider point is that these forces have something in common. Each in its separate way is parcelling out the freedom to communicate on the internet by hiving off “silos of content”. Berners-Lee believes this development is a Bad Thing, because it will eventually choke off innovation by creating a more fragmented internet.

There is, however, another way of looking at Berners-Lee’s argument – and one likely to find far more favour with Messrs Murdoch and Jobs: turn it on its head.

While the internet remains a free, or “near-perfect” (in the economist’s jargon) market, no one can enjoy a lasting commercial advantage. Look no further than the record industry, or the media itself. This is good for internet joyriders, who want their news, views and music free, but unsustainable in the wider capitalist economy. Without a carefully managed investment programme and the principle of reasonable investor returns, innovation on the internet is just as likely to be stunted as it is by the dark forces of silo monopolies that Berners-Lee sees gathering on the virtual horizon.

Murdoch and Jobs have every reason to cooperate. The internet may, in the longer run, have much to lose if they do not.


The conundrum at the core of Apple

July 21, 2010

Look on my works, ye mighty, and despair! Apple’s awesome quarterly results have made ‘Antennagate’ – the obscure controversy surrounding iPhone 4’s wraparound aerial – a storm in a teacup.

Sales up 61% to $15.7bn, $1bn ahead of expectations; earnings up 77% to $3.25bn; all product categories performing well, most breaking new sales records: these are the kind of things that Wall Street wants to hear. And which have enabled Apple – having lost ground to Microsoft after the iPhone  crisis ‘press conference’ last week caused a share-price dip – to recover its status as the world’s largest tech company, estimated by market capitalisation.

Most gratifying for the company will have been the success of the iPad tablet computer, launched during this reporting period. With 3.27 million units sold (worth $2bn in sales), Apple has once and for all disposed of the vociferous nay-sayers, who claimed it was launching into a non-existent market niche.

And yet, and yet. Quarterly figures, however good, are the rear-view mirror. The Antennagate controversy has revealed to the wider world a worrying chink in Apple’s corporate armour. Steve Jobs, the wayward business genius at the heart of Apple’s success is also its Achilles’ heel. “Control freak” does not do justice to his paranoia about the competition or his obsessive secrecy. Apple is a cutting-edge corporation powered by an old-fashioned command-and-control culture. One which proved pitifully inadequate in dealing with adversity.

If you haven’t already, read David Jones’ post on Pitch: ‘Why Apple needs some social media duct tape’. The light touch belies a serious purpose. For all its immersion in the white heat of consumer technology, Apple simply doesn’t “get” 24/7 media.


Holy Moses and the patience of Jobs

February 2, 2010

Last week, I imagine Apple supremo Steve Jobs must have felt a bit like Moses when he descended Mount Sinai armed with a top-secret new rule book for life in the Promised Land only to discover that the idolotrous Israelites were going to have none of it.

Jobs’ own version of the Mosaic Tablets, iPad, seems to have been greeted with irreverent scepticism. When so much hype, based on so little verifiable fact, has preceded a launch – even an Apple launch – disappointment is the inevitable result. Nerds carped about the lack of a camera and a less-than-revolutionary departure from the technology of the iPhone. Analysts, noting the high price points and the low number of announced deals with content owners, quickly marked down the Apple share price.

What a difference the perspective of a few days can make, however. With the iPad not yet rolled out, Apple has already won a famous victory against the world’s greatest e-tailer Amazon in the field of virtual books.

Briefly, Amazon has been attempting to establish primacy for its own Kindle product in the growing land-grab for ebook readers by heavily discounting book downloads, much to the consternation of publishers and authors alike. Once there was some credible competition in the field, things changed almost overnight. Macmillan, publisher of among other things Hilary Mantel’s bestselling Wolf Hall, has said it will have no truck with Amazon’s bargain $9.99 and has gone for Apple’s recommended $12.99 upwards per download instead. Presumably other book publishers also signed up with Apple – Penguin, HarperCollins, Simon & Schuster and Hachette – have been adopting the same kind of brinksmanship. Whatever, it’s been enough pressure to make the mighty Amazon climb down with humiliating alacrity.

Here we come to the nub of the matter with Apple’s product launch. In itself, the iPad is not all that remarkable. For sure, it’s likely to do its job well, looks beautiful and is easy to use; but technically superior e-readers-cum-netbook-computers are no doubt in the offing. And yet, in this respect iPad is no different to other recent turn-key Apple launches. Neither the iPhone nor the iPod which preceded it were technically cutting edge. What made them truly disruptive products is their relationship with iTunes, the software platform that, in various ways, underpins them. Pulling the focus back a little, one way of looking at Apple over the past decade is as a brand that has metamorphosed from computer-maker into provider of mobile entertainment – the bridge being a software platform.

iBooks, the e-book reading software that dovetails into that platform, is streets ahead of Kindle and Sony’s Reader technology (or so the experts say). Thus the debate about the iPad being no more than a glorified iPod Touch is ultimately sterile since what really matters is whether Apple, through this device or its successors, will come to dominate the burgeoning market in electronic books and newspapers.

And we’re not going to know that until consumers have had a chance to sample it. For some time to come we’re also going to be in the dark about just how much of an appetite exists for the e-reading phenomenon. There are many more boulders strewing the way to market success than inadequate e-reader battery power and unsatisfactory legibility. Here’s Richard Wray of The Guardian on why iPad won’t be iPod II:

“The book industry has a couple of advantages over businesses in other areas which have seen the internet wipe out their profits. The companies trying to sell ebook hardware need the involvement of publishers. When Apple launched the iPod, buyers could take their existing CD library and digitise it. Downloading music from the web came later – the iTunes store was launched two years after the first iPod appeared.

But readers cannot easily digitise their books for a Kindle or iPad. To sell their devices, the likes of Apple and Amazon need publishing firms to agree to make digital versions of bestselling titles available on the same day as the printed work is published. The technology firms recognise that demand for ebook readers will be limited if readers have to wait months to get the latest books.”

This is going to be a longer haul for Steve Jobs. I hope he’s got the patience for it.


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