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)

Quote unquote

Talking of questionable quotes, there’s one I have seen cropping up over the years that has been ascribed to Sir Hector Laing, who was Chairman of United Biscuits, a UK cookie conglomerate, in the 1970s and 1980s. He is supposed to have said sometime, somewhere:

“The most important assets are brands. Buildings age and become dilapidated. Machines wear out. Cars rust. People die. But what lives on are the brands.”

A quotable quote if ever there was one, but did he say it? I have tried to establish its provenance various times without success. Anyway, like many quotes that were not actually said, it has lapsed into myth. Even though Walter Landor never said “products are made in the factory, but brands are created in the mind,” and just as Archimedes probably did not shout “Eureka” jumping out of his bathtub, people would rather believe they did.

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.

 

Google? What kind of name is that?

The subject of names and name origins has always been good for a quick article to fill a few column inches of newsprint or five minutes of air time.

ABC News ran such a story recently. It was the fairly desultory stroll down the well-trodden paths and naming byways of Accenture, Uggs, Wii and Google.

“Imagine what life was like before Google”, the reporter began. “Worse yet, imagine if there was no Google and we had to look everything up on BackRub”. Gasp. Just imagine.

BackRub, so legend has it, was the working name for search engine before it became Google, which is itself an unwitting misspelling of the word Googol, a mathematical term.

Few people know or care what a Googol is but it’s interesting how a familiar name, no matter how obscure, can seem so perfectly apt to this reporter; and how an unfamiliar name like BackRub can be so weirdly cumbersome and inappropriate.

One of the greatest challenges in naming is helping people to get beyond initial gut reaction to unfamiliar words (that’s how names start life) and think of them as successful, familiar brands. In this facet of human nature lies the essence of a brand: people like what they know, they are uncomfortable with the unfamiliar.

Juliet had it so wrong. Hubert Humphrey, the Democratic warhorse from Minnesota,  said it better if not as prosaically :  In real life, unlike in Shakespeare, the sweetness of the rose depends upon the name it bears. Things are not only what they are. They are, in very important respects, what they seem to be” .

Time Warner’s naming twavails

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When it comes to name changes, the Time Warner organization has had more than its fair share of unfortunate miss-steps.

Time Warner’s misbegotten merger with AOL produced the behemoth ‘AOL Time Warner’ in 2000. It was a fractious marriage and the promised synergies never materialized. When Time Warner executives regained their senses and control of the company they dropped AOL from the corporate name in 2003 before finally ridding itself the business in 2009.

In this case the name was the least of Time Warner’s problems, however humiliating the unraveling may have been.

Its offspring, Time Warner Telecom, has made much heavier weather of its naming challenge.