How the power of the Apple brand is reshaping entire industries

2011 will surely go down as the year Apple changed the face of the communications industry.

Wall Street Journal, April 1, 2011

In the space of just a few weeks, industry giants Nokia and T-Mobile have both crumpled under the Apple tsunami. Now Acer, the world’s No. 2 PC maker by shipments, is the latest to feel the pain.

Yesterday it was reported that Gianfranco Lanci, Acer’s CEO, resigned as part of the company’s efforts to reorganize its operations to tackle the rising challenge from Apple’s iPad.

The management change comes after Acer revised its first-quarter earnings forecast downward last week amid increasing concerns about sluggish demand for notebook PCs globally. The iPad is beginning to eat into the notebook and netbook markets, in which Acer has strong positions.

Three weeks ago AT&T announced its plan to acquire T-Mobile, the 4th largest wireless carrier in the United States. Most of the news focus was on AT&T and it’s need for spectrum and network quality to stem the dropped calls for which it has become notorious.

What had made T-Mobile so amenable to the merger was the advent of the iPhone.

The Game Changer

Customers weren’t having any problems with the T-Mobile network. The problem they had was that they wanted the iPhone and T-Mobile couldn’t offer it to them. So they left in droves.

T-Mobile’s reported a net loss of 318,000 customers in the last three months of 2010, which is more than twice as bad as the 117,000 customers lost during the same time period in 2009. It followed the 60,000 customers lost in Q3 2010.

T-Mobile failed to convince subscribers that it had a phone worthy of consideration over the iPhone and paid dearly for it. When Verizon started carrying the iPhone on February 11 the game was evidently over.

Coincidentally, on that same day, the CEO of cell phone giant Nokia announced a deal with Microsoft to use its Windows 7 software in an attempt to get back into a game it once dominated.

In a now famous “burning platform” memo to employees CEO Stephen Elop identified the cause of Nokia’s problem: Apple.

“The first iPhone shipped in 2007, and we still don’t have a product that is close to their experience. Android came on the scene just over 2 years ago, and this week they took our leadership position in smartphone volumes. Unbelievable.”

Nokia’s share price has fallen by two-thirds since then as it tried, unsuccessfully, to produce an iPhone killer. In the meantime, low-cost Chinese manufacturers, using Google’s Android software, have eaten into Nokia’s sales of basic handsets in emerging markets and are moving up the value chain quickly, commoditizing the entire industry in the process.

Where Nokia and Acer (and Motorola) see devices, Apple sees creative connections.

Apple has blurred the distinction between phones and computers, integrating them both into a mobile computing platform which is wrapped and delivered in the Apple brand experience.

The iPhone is a full-blown computer with touchscreen technology that turns the mobile Internet into a user-friendly experience. The apps that began appearing in 2008 enabled people to customize their iPhones to suit their lives.

It was the precursor of the iPad, which in itself has moved the game forward (as Acer would affirm). Both are natural expressions of the Apple brand ecosystem – form and function are seamlessly linked and forged into objects of desire. Expect to see news about Apple TV soon.

The power of the Apple brand is in its ability to create desire, to generate demand and to open new markets. Others can only follow, chasing market share with me-too products sold through low grade, third-party retail experiences.

Apple has already revolutionized the music industry with the iPod and iTunes store. One year ago the store served its 10 billionth song download; a milestone was reached in just under seven years of being online, making Apple the largest music retailer in the world.

This communications revolution is just beginning.

This video of Steve Jobs is always worth a view, if only as a reminder of the foundational philosophy behind the Apple brand.

Related articles

• The iPad’s effect on rival companies’ CEOs (tuaw.com)
• Heads roll at competitors as Apple continues to churn out hit products (9to5mac.com)
• Acer CEO forced out (news.cnet.com)
• Acer Sets Sights on Apple, HTC After Lanci Chase of HP Stumbles (businessweek.com)
• Nokia Execs Go On Vacation When iPhones Start Shipping (thenokiablog.com)

The iPad: context is everything, ladies

Is a legal pad an item of personal hygiene for female lawyers? How about a launch pad – is that a contraption for applying Maxipads? What about ink pad? Or mouse pad…

Pardon the puerile analogies. Of course you know what these kind of ‘pads’ are. So, to force such interpretation of their meaning through association with a feminine hygiene pad would be perverse. But that’s no worse than what happened this week with Apple’s iPad.

Within seconds of the unveiling of the iPad by Steve Jobs, Twitter lit up with women complaining and/or joking that the name immediately made them think of …iTampon.

Experts who should know better fanned the flames. “It’s an unfortunate name choice,” contended Michael Silverstein, senior vice president at Boston Consulting Group and author of “Women Want More: How to Capture Your Share of the World’s Largest, Fastest-Growing Market.”

“They needed to do a research protocol and testing for a product that would offend no one while making clear its technical, functional and emotional benefits,” he said in the Pittsburgh Post-Gazette.

Are you experienced?

That may be the way they think in the literal world of management consulting. What he clearly does not understand is that, when it comes to names and naming, experiential context is everything. Just is we do not suppose a cell phone is for making calls in jail, that Virgin Atlantic is an airline for the sexually inexperienced, or indeed Apple is a company that manages orchards, the iPad will create its own context and it will be become just as familiar and accepted as iPod.

The trap to guard against with new names is the natural tendency of people to associate an unfamiliar name with something that it is familiar. The statement that begins, “It reminds me of…” has led to the premature dismissal of many a good name candidate.  Associations are important, but focus should be on whether the the product or company that is being named could create new, positive meaning around the word, rather than rear-view association.

There’s nothing that can be done with plain bad names, such as the Ford Probe. But just imagine if iPad had been called the iTablet, which some bets were on before the launch. Would alarmed physicians be advising us not to use one more than a twice day, and then only after meals with a glass of water? Of course not. They know what hypochondriasis is.

What was that name again, Steve?

 

Peeling the Apple

Buried in the article mentioned in the previous post [Google? What kind of name is that?] there is an inevitable reference to Apple.

In the article Paola Norambuena, who runs the naming division at Interbrand, said: “If you took the Apple name away and sold all of its other assets, they wouldn’t be worth as much”.

As with many things in the branding industry, there is an overwhelming amount of unsubstantiated received wisdom that is accepted as truth. This line of thinking about Apple seems to be a variation of a quotation, beloved by namers everywhere, which is attributed to John Stuart, former CEO of Quaker Oats. It goes something like this:

“If this business were split up, I would give you the land and bricks and mortar, and I would take the brands and trademarks, and I would fare better than you”.

This is probably so in the commodity business of breakfast cereal in which oats are oats are oats. Quaker did a great job of processing oats in their brick and mortar assets and getting them into the breakfast bowls of the nation. Apple, I would argue, is a different kettle of fish altogether.

Feb 5, 1996

Apple as a business has not always been the shining success it is today. As the BusinessWeek cover tells, the company and the brand were nearly managed into oblivion by a succession CEO misfits after Steve Jobs left Apple Computer in the mid-1990s. They viewed the business’s core product as manufacturing beige computers that fewer and fewer people wanted.

The Apple brand was rescued by Steve Jobs on his return, first through product revitalization and marketing and then by new product innovation. Today the brand is inextricably wound around the intangible capital of design, functionality, retail environments, product integration, content convergence, the Internet, marketing and the brilliance of Steve Jobs and his team.

What other assets does Apple have to sell? The company does not own its manufacturing plants. The brand is everything.