By APNWLNS payday loans
May 14, 2013
To dominate or not to dominate. That is the non-rhetorical question.
Being a former IT guru, I hang-out virtually with some of my former peers in forums where we argue about everything from driver code to global warming. Many years ago I announced to that cabal that Android would dominate the smart phone market due to its business model. iPhone fanbois who littered this clan insinuated I had lost my mind – that Apple’s elegance, simplicity and market lead would forever overwhelm Android’s then 3% market share.
This week Gartner announced Android makes up 75% of all new smart phone sales.
My prognostication was based on market mechanics while my techie chums were enamored by Apples early technology differentiation. But like Microsoft before them on the desktop, Google decided to use the ecosystem to spread an operating system, which is a good way to get a lot of companies to drive sales and share. Google’s goal was to dominate the market and gain profits by means other than hardware sales.
Which was never Apple’s objective.
There are many ways to make money. In smart phones Apple and Google have different objectives based on how they plan to grow richer. Google wants to be the center of people’s online universe and to sell advertising. Theirs is a low margin, high volume end-game. In order to make mega money in mobile, Google had to dominate the market to drive tangent revenues.
Apple makes money via margins. Recent studies of the PC market show that Apple has insanely high margins, allowing them to be vastly more profitable on a per PC basis than every other vendor. The same strategy is at play with smart phone and anything else Apple sells. The only thing Apple has to do is maintain and extend the impression that they provide the slickest and easiest to use technology on the planet (this was their brand until the infamous Apple Maps fiasco and the seemingly interminable wait for a much more clever iPhone 5).
Marketers often lose sight of corporate objectives. Marketing strategy exists to achieve corporate strategy. Yet many marketers spook when confronted with seemingly superior competition using different business models. Google measures their success differently than Apple because they have different objectives. I’m sure hands are being wrung at Apple given the rapid market dominating success of Android, and there are temptations to fight Google on Google’s turf. Rumors abound that Apple will release a cheaper iPhone just to stem the bleeding (even though their sales are rising despite people delaying handset upgrades, awaiting an updated iPhone 5). Apple’s strategy – to invent, create insane brand loyalty and charge obscene prices – is good and remains sound. But Apple has to stick to it and not chase Google’s model.
All marketing actions – in Apple or your organization – must drive the corporate objective. Only when those objectives prove flawed and are changed should marketing change their strategies. Measure your success against metrics that make sense for your corporate objectives. HP measures PC unit volume (the highest in the business) and because of that is less worried about their low margins. Apple measures success by margins and less so by units. Always avoid using your competitors’ measurement of success … doing so causes failure.
July 17, 2012
Launching a late-comer product into a maturing market is like pushing a salmon up Niagara Falls.
Some folks (with perhaps a bit too much time on their hands) have estimated that about $450 has been spent marketing each Nokia Lumina sold … which currently retails for $49 (with the ubiquitous two-year contract). You don’t need an MBA to see that this is not an entirely profitable go-to-market plan. The Lumina was the first serious attempt to lift Microsoft’s mobile market share, and managed push fewer than two million of them into users hands (though it is uncertain if this includes the number of devices Nokia gave to AT&T employees in an attempt to evangelize in-store sales staff).
There are about as many Android activations each day as Luminas now in use.
The marketing puzzle that Microsoft failed to solve was getting consumers to believe that WinPhones were better gizmos than iPhones or Androids. Like their server operating systems, WinPhones were presented via old school press releases, analyst product demos and lifeless online videos. Consumers, busy sharing notes about Android and iPhone apps, were not distracted by Microsoft’s “marketing” because they never heard it (or if they had rebooted their laptop 20 times that morning might have thought that a Microsoft phone would be equally frustrating).
The smartphone market is maturing in industrialized countries, with Android and iPhones thumping all competitors (have you seen anyone carrying a new Blackberry or Symbian phone lately). The smartphone market has become a two party system, and like in politics, cracking it is a challenge. For consumers to not instinctually gravitate toward one of the two major options, they have to:
Know: People need to know there is a viable alternative. The Libertarian party brags about being the most popular third party in America. Yet they have no widespread brand recognition even among the politically aware. WinPhones, even if the technology is great, have no mindshare in the market.
Believe: Knowing there is an alternative is insufficient. Buyers must believe that an upstart offering will be good enough if not great. WinPhone has not made anyone leap out of their office chair to proclaim its grandeur. Without belief there can be no evangelists.
Bet: Every action involves a risk/reward analysis. Even when I ponder the reward of eating a candy bar, I evaluate the risk of an expanded waistline. Adopting a mobile operating system for two years requires believing the experience is relatively risk free. When iPhone and Android users are constantly showing off their devices and apps, betting on WinPhone seems as risky as eating two candy bars.
The failure herein is not Nokia’s or AT&T’s. Perhaps they made poor strategic decisions, but Microsoft committed poor marketing. Entering late, offering nothing significantly different or better, and saddled with their reputation for BombWare, Microsoft could not generate anything remotely resembling buzz. This forced Nokia to cut the price of Luminas in half in hopes of moving as many units this year as Android moves this afternoon.
The marketing lesson herein is that customers now drive all markets, and traditional marketing approaches – though still important – pale when compared to creating differentiation, awareness and belief among buzzy buyers.
June 5, 2012
When was the last time you heard somebody use the word “crackberry”?
I recall a Southwest Airlines flight attendant uttering that abstraction when comically ordering passengers to turn off electronic gizmos. It was a period in history with Research In Motion (RIM) was, well, flying high. Their email push technology was new, hot, addictive for road warriors and earned a share price that startled even Silicon Valley investors.
RIM stock has fallen 94% since then.
RIM was a one-trick technology. It certainly filled a need, but offered something that was cloanable, and eventually obsoleted by mass adoption of wireless data plans. Today a cheap feature phone can make IMAP connections to any email server and deliver the same degree of digital addiction that once made RIM famous.
Some analysts claim RIM is now worth nothing except the value of their patent portfolio.
Success often breeds failure. Incessant laurel sniffing leads organization to ignore, or worse yet deny, what is happening to their markets. The first smartphones appeared over a decade ago, showing how very portable computers would change what people could do on the run. Instead of watching, extrapolating and taking action, RIM milked their cash cow until it died from dehydration. Nokia passed them. Apple passed them. Hell, even Microsoft passed them. RIM only recently reacted (as opposed to acting) and have yet to bring competitive products into the smartphone market. Nothing RIM has created in the past few years challenges market leading Apple and Android handsets.
Companies in general, but technology companies in particular, have to watch two things simultaneously. They have to see how to continuously extend their differentiations into new offerings and features. Success should breed more success. Secondly, and more importantly, they must carefully watch how their markets are changing, and leapfrog at the first instance of a threat. Waiting is deadly when your competitors are innovating.
Markets are always moving. You must too.
December 20, 2011
Intersections cause collisions, but also opportunities.
A basic marketing strategy is practice to find the intersection of what customers want to achieve (expected outcomes) and where the market is not providing that solution. Alternately, one can look for places where different technologies can, for the first time, be combined and create previously unavailable value.
Smart phones are now ready to facilitate SoLoMo.
The three raging factors in markets and marketing today are SOcial, LOcation-based apps and MObile. The real-time enabled combination of these three may well be the next major moment in consumer technology and marketing. The ability to reach people in tight geographical clusters, who are sharing an experience or looking for one, will be an exciting market in which to pitch.
Social is about sharing. As witnessed by Facebook posts, it is the moment in which the user has the impetus to share that is important. What one is thinking, feeling and experiencing is what they wish to share. To a limited degree Facebook and Twitter enable such sharing since you can Tweet and post from your handsets. But it lacks location services that enable bridging the people in or near a location (after all, why not share what you and another 25,000 people at the Rolling Stones concert are experiencing).
The other weakness is the asynchronous nature of current social media. Most people open Facebook during lunch or after a day’s work. Some folks browse Twitter weekly (which rather defeats the purpose). Real-time enablement of interaction between near-by individuals, especially when it pulls people in from slightly larger distances (say drawing people into a hot night club from the competing bars on that block) creates new interaction potential (mostly pleasant).
More interesting yet to marketers might be the ability to pool information about people clustered geographically. Merging big data pools of demographic and psychographic information, combined with location identification of individuals could provide real-time promotional opportunities (which will take a real-time arbitrage so the demo/psychographics enable the right advertisers). What if in real-time a common profile of a particular Rolling Stones concert attendee was a 70 year old man (this time is coming) that prefers bourbon? No bother selling ads space to Dr. Pepper.
Like social media a few years ago, this is a largely undefined area for experimentation. On the marketing end, the ability to create highly local participation, or to market to people sharing a location at the same instant, offers the marketer some unique targeting opportunities.
Which means Google (local, Android, Plus, ad trafficking) has all the necessary tools to make this happen now.
August 23, 2011
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I would not want to be an HP employee this week. Well, actually I have not wanted to be one since Bill and Dave went to the big database in the sky.
Last week, in rapid fire, HP said they will likely get out of the PC/laptop business (either through an Agilent-like spinoff or outright sale), killed their newborn webOS phone and slab business, and bought a relatively obscure software company for a huge premium. Their stock dropped about 30% and HP aficionados are still staring, jaws agape, in disbelief.
Change is the only thing of permanence, and that applies doubly in the high tech business. Tech companies are the most agile known, and many have completely reinvented themselves when faced with undeniable market shifts. Others change because better opportunities exist. HP’s newest CEO, Leo the Lively, knows that software companies make significant margins (Oracle has an overall margin of 30%) on peddling well organized electrons. Leo wants HP to change in that direction. Reportedly, HP’s PC business has profit margins of 7%, though their volume through retail channels makes them the #1 vendor. Though HP’s PC volume and revenues were impressive, sales of consumer PCs and laptops have been plunging (around 23%) and the profit HP earns from PCs and laptops would soon enough be unworthy of staying in that business. So like IBM before them, they seek to exit the soon-to-be unprofitable.
They’ll continue gigging consumers for overpriced ink cartridges, which appears to be a damned (and) good business.
Oddly, they are also scrapping their webOS product line, dumping Touchpads and “Palm” phones. Though they never received respect or respectable reviews, the main catalyst for declining consumer PC sales are slabs and smart phones. HP is wisely shuttering the declining PC business, but have simultaneously aborted their newborn in the one consumer market that has growth potential. Combined, it makes Leo look like a consumer luddite, lacking desire to peddle products to the proletariat.
Which likely makes Steve Jobs smile. He knows how to market to mobs.
Change for change sake is a rarified form of idiocy. I don’t accuse Leo of blindly altering HP’s fabric, but the timing and lack of commitment to product lines makes Apotheker look like a banana republic dictator, changing rules, laws and strategy at personal whim as opposed to long range product planning and revision. Given that HP’s Touchpad was introduced a mere 53 days ago, it was never given a complete chance in the market — no version 1.1, no second generation, nada. It is bizarre for a first entry into a relatively untapped market to be a sacrificial lamb on the altar of ambition.
Today’s market strategy lesson is a two-fer. First, any strategy should not be implemented in ways that cause people inside and outside of your company to lose faith. Stockholders bailed and HP employees, on a private discussion forum, are confused and a bit ashamed. It is better to build your new strategy and have it well-anchored before you jettison the old one. Secondly, it is bad policy to display executive knee-biting as part of the transformation process. For HP execs to bravely proclaim that killing off a seven week old product line based on a $1.2B investment (the Palm acquisition) was wise is unwise. To do so while paying an 80% premium for a software company that is not destined to become a center post of a software strategy simply begs for Leo to don a clown nose.
Change has to have a purpose and a plan. You may not be able to disclose the plan, but causing investors and employees to doubt you have one while hacking away parts of the current strategy is like a politician saying “Trust me, I’m with the government.” It lacks faith-building substance.