Monday, November 30, 2009

Apple Overtakes Nokia

Apple overtakes Nokia. Ok, Apple hasn't really overtaken Nokia in terms of units sold. But I guess that was never Apple’s intention.

By now, Apple's success has been well recorded and written about by media, marketing gurus/analysts, bloggers and authors.

So, I may not have anything new to say. But am recording my thoughts anyway.

When Apple announced the launch of iPhone, one of my colleagues wondered if the company would ever succeed and be able to beat the existing players. Mobile phone market is extremely crowded. We could very well say that mobile technology is definitely in the Tornado phase. There are Gorillas, Chimps and Monkeys. Oh, wait a minute. Mobile industry is actually commoditized market, meaning the switching costs are lower. So, we have King (Nokia), Prince(s) (Sony Ericsson, LG, Samsung...) and Serf(s) (anybody other than those previously mentioned).

It was a valid question. Apple, which has roots in computing, could be classified as Chimp in that industry. A specialist who could never win the battle against the IBM clones. But if there was one advantage that Apple had was its brand image. Apple was supposed to be cool. It was supposed to be a favorite brand of the famous. It was always aspirational. But because it defied the rules prescribed in Geoffrey Moore's Crossing the Chasm, it became a niche Chimp, trying hard to knock the pins in the alley.

But things were taking a different shape in the technology and consumer behavior. With the rapid innovations in the mobile handset and telecom industry, mobile phones were fast emerging, if not replacing PCs, as the mode for communication, computing and entertainment. Probably, it is the first true Convergence device. Today, there are more mobile-phones vis-à-vis the PCs and laptops.

Apple would have diminished and been wiped out if it had continued to stay in the PC industry. Despite bringing in newer technologies and being aspirational, lack of partners would have killed any chances of gaining dominance. And as it is said and shown in Pirates of Silicon Valley, Bill Gates and his Microsoft would have done a Fast Second.

I guess it was but natural for Apple to move into this space.

Oh btw, I very recently watched Pirates of the Silicon Valley. Do watch it, if you like Steve Jobs or Bill Gates or the PC industry.

Then something happened after the mercurial Jobs was back at the helm of affairs at Apple. He changed the fortunes for the company and waged a battle that has become a legend. And his weapon in this war – Apple’s brand equity.

This brand image not only bailed it out but also catapulted Apple to a leader in the new areas. Like a phoenix, it rose. While, everything that Jobs touched turned gold.

But we cannot say that brand image was the only reason for Apple to succeed. Philips is the best example which despite being associated with electronics industry could not cut ice in the handset industry, but it is not the only one example.

I think Apple made a strategic (conscious or unconscious) decision of first releasing iPod. Or maybe iPod happened and it was extended to iPhone.

Or I could say iPod set first the rules of the game and received an overwhelming response to its initiative to transition from desk and laps to the palm. While, the software and the iTunes did its magic, it was the show value of iPod which won the hearts and thus the desire amongst targeted users. As Naru would say the value is captured by what is visible and iPod, a sleek device, did a fantastic job. Apple with a slew of variants from Nano to Shuffle not only demonstrated dominance but also expanded market share.

Until Apple’s iPod arrived, the ubiquitous MP3 songs were heard mostly on computer. And, maybe on mobile phones. iPod revolutionized listening to music, the same way as Sony’s Walkman did, ages ago. Ah yes, Sony took the cue around the same time and launched Walkman series of mobile phones which also became popular. Later, the same series was rechristened W Series.

iPod had its own challenges. Microsoft launched Zune but failed miserably. Poor Microsoft, it has become so big and has to fight battles on so very many fronts.

Of course, other formidable challengers were Mobile handset companies themselves. Almost all built strong music features within them. Then, of course, other electronic players like Transcend, Creative, Samsung, Sony, and Philips…who brought their own music players. And not to forget, the unorganized/unbranded products, which were shells sold for peanuts.

There is a rule in technology marketing which says that the market leader has to continuously challenge itself. Which Apple did, pretty well.

Finally, an Apple product which retained its desirability quotient but transitioned Apple from a niche PC maker to a mass-market premium music player.

And it was this success and acceptability, which laid the foundation for the launch of iPhone. Now who could have imagined that Apple’s reincarnation? The biggest achievement for iPod was that it made Apple’s software be used by a much larger audience, something which weighed heavily against it in the PC market. What is important, it became the leader and rewrote the rules.

Persistence pays! Investing in brand repays more!

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