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.

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WHAT iPAD MEANS

Apple’s iPad tablet device is shipping April 3 and already it’s looking like another hit for Steve Jobs…yes, in spite of initial reaction to the name.

I must admit, I am bemused by the continuing name controversy. Admittedly, for women of a certain age it is entirely understandable they would connect the word ‘pad’ to a hygiene product in free association. In context, however, that association would be drastically minimized.

When we speak of launch pads, legal pads, bachelor pads, ink pads or pad locks we know exactly what is being referred to. There are no jokes, snickers or shudders when someone asks for a note pad. In such contextual instances, association of the word ‘pad’ to a feminine hygiene product is not only unlikely, it is perverse.

So it will be with the Apple iPad. It will come to mean the computing platform of the future without anyone blinking an eye (see Walt Mossberg‘s comments in the Wall Street Journal).

In naming, context is everything.

Oddly, the prevailing negative views about the iPad name are coming from men. For some reason have assumed the banner of female disdain and just can’t get beyond the tampon. How their minds work is a matter for them and their psychologists.

After the Apple iPad, stand by for the Dell Streak

If people had problems with the name of Apple’s iPad, they are going to have a high old time with Dell’s entry into the touch screen tablet market.

Engadget has posted two slides from an internal Dell document that purports show color options, sizes and the new name for the tablet referred to as “Streak”.

Streak is troubling for a couple of reasons. By definition, a streak is a line, mark or smear. Apart from the open invitation it offers to toilet humorists, Streak is a hard name to love if it is anything more than a code name. More problematically for Dell, it is yet another ‘brand’ that has to fight for attention alongside OptiPlex, Vostro, n Series, Latitude, Precision, PowerEdge, PowerVault, PowerConnect EqualLogic, Inspiron, Studio, Studio XPS, Alienware and the pretentious Adamo.

For all the issues some people have with the iPad and Apple’s iNaming convention, at least it has a logic that helps you to understand the family of products within an Apple-centric system.

From Pampers to Pontiacs

Where is Dell going? Regrettably, the company seems to be heading down the same P&G-style consumer product branding path that Ron Zarella pursued a few years ago at GM at the behest of his Board mentor, John Smale. A former chairman of Procter & Gamble, Smale hoped to introduce the marketing skills of the packaged-goods business to cars. What worked for Pampers will work for Pontiacs was the logic.

Zarella, president of GM North America, duly obliged and poured marketing money into individual vehicle models at the expense of the core ‘divisional’ brands (Pontiac, Chevrolet, Oldsmobile, Buick and Cadillac).

No new dawn for Oldsmobile

He even went so far as ‘de-badging’ Oldsmobile cars and promoted models such as the Aurora as brands in their own right, removing all trace of Oldsmobile on the vehicle. The problem was you still had to walk into an Oldsmobile dealership to buy one, an experience not for the faint-hearted. It was sleight-of-hand brand marketing logic devoid of any consumer buying psychology.  An already weak brand was effectively killed by this strategy which provided another expensive lesson in why classic consumer branding techniques cannot be applied willy-nilly across different industries.

Dell should look to its brand laurels. As innovative as its products might be (and I’m not sure they are technically), Dell is not a product marketing company. I don’t think it knows what it is anymore, but this much is certain: Dell needs a strong brand under which it can introduce new products and a nomenclature strategy that supports the brand. Fighting a war of product brands in now obligatory bright colors is killing the goose that laid the golden egg.

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?
What was that name again, Steve?