Great story (and even better comments) today in Gizmodo via a post entitled "Why we hate change"
I have been dealing with change a lot this week in my day job and witnessing first hand how we humans deal with any lack of stability. Apple, and other great marketers, have long realized that strong brands are like life preservers: in times of doubt, people reach for the thing they believe will provide them with a safe choice. It is hard to gain a customer, but even harder to change a customer's mind - especially after they committed their own time and energy to a product - like an iPhone - that they use every day.
But there is another thing going on here. People remember their lives before owning "life-changing" device like a computer or an iPod or an iPhone. They become connected to the transformative power that brand provided them and a little bit more dependent on the next jolt of energy a new product can infuse in their lives. (not unlike a drug, eh?) 9 Million iPhone 5s (sold mainly to existing users) simply underscores our innate desire to believe that by buying "our most forward-thinking phone yet" there is yet another life-changing surprise in store for the owners.
BTW, there are two surprises in store. Keep your eyes on that TouchID that will render passwords and credit cards obsolete in 3 years. But don't forget to watch that M7 chip...soon everything you do, every place you've been, and every square inch of earth and sky you move through will be mapped for you wherever you go. See the need for digital privacy and security growing exponentially? I do.
Good story today in Discovery News about this topic that seems to be constantly asked. The answer is simple: People expect Apple to change their lives because they've done it many times before.
Sometimes you simply have to give credit where credit is due. Apple remade the computer, music, and phone business by making complex technology more accessible to more people. Yet sometimes pundits want that last "more" to be "all" - but Apple isn't aiming for everyone.
In much the same way that Henry Ford revolutionized the "getting from here to there" industry, the advent of his inexpensive 'horseless carraige' made transporation accessible to more people than just those who could afford to own and maintain a horse and buggy. Today's automobile industry provides something for everyone - from race cars to electric cars - yet no one company addressess all the needs of the market. Apple is trying to maintain its position as a premium brand while offering something for more people than ever before.
Remember that the same was true for computers, music players and tablets. Apple focuses on making it so much easier to use technology that people who never were in the market for a solution suddenly find themselves drawn in. In many ways Apple has democratized innovation and it is probably rewarding to them when others copy their designs and thereby reach many more users. Apple may have popularized the use of mice, icons, and windows but now everyone uses a computer because of it, and because of Windows, Linux and more.
Why do we think that Apple failed because they might never own 100% of the market? I think we should applaud the fact that Apple made the market and are content to own the slice where the money is. I hope that money is right now fueling creative minds at Apple to reinvent yet another industry. We're all waiting.
Hi folks. Hard at work updating my new eBook about The Secrets of Apple’s Retail Success as a follow up to my existing eBook: MarketingApple, The 5 Secrets of the World's Best Marketing Machine. Expect to be able to download that here soon. In the meantime, here is much of the first chapter. Enjoy!
By any measure, Apple is unquestionably one of the world’s most successful retailers.
Even though Apple never sold directly to consumers before they opened that first store over ten years ago in a mall in Tyson’s Corner, Virginia, Apple boasts some incredible bragging rights for its retail channel. Apple operates nearly 400 retail stores which employs over 42,000 people and plays host to more than a million visitors every day. Apple’s retail operations generated nearly $19 billion in 2012. Amazingly, Apple’s stores average over $6,000 per square foot which is more than twice the former gold-standard Tiffany & Company. It is estimated that Apple’s Fifth Avenue store generates over $35,000 per square foot making it the highest grossing retailer in New York - ever.
Apple Stores are now the highest performing stores in retail history.
It wasn’t always this way. Apple experienced massive failures in the 1990s when selling its products through retailers such as Sears and CompUSA. Its computers were muscled out of view and its brand so weakened that many retailers refused to properly market or stock Apple’s computers.
Even though Apple entered the retail business largely as a defensive move to gain more control of the customer experience, the climate then was anything but welcoming. Gateway was operating direct-to-consumer retail stores and failing fast. Apple had to learn how to do things differently.
Less than two years after Apple opened its retail stores, Gateway shut down all of its shops and laid off more than 2,500 workers. Three years later CompUSA shuttered its 23 year-old chain of stores. So while there was little expectation and no guarantee that Apple might succeed selling its own computers in this miserable retail climate, amazingly, somehow it thrived.
But how? How did a company with no experience in retail become the fastest in U.S. history to reach annual sales of $1 billion during the worst financial crisis in modern times? How did a company with only four products become the most profitable retailer in history while creating an experience that is now the standard by which all others are measured? Why did a company that was losing money decide to enter the retail market against the recommendations of every expert and “where the only other retail strategy was going out of business?” How did Apple entice millions of people to visit their stores and pay full price when all their products are readily available at other retailers and even tax-free online at Amazon.com? Clearly the answer to these questions is that Apple had to think different about retail and make their stores more than just a place people go to buy things. They had to devise a way to enrich the lives of the people who shop at the Apple Stores and do more than simply deliver a transactional experience.
In short, they had to reinvent retail.
Keep coming back for more.
One of my favorite Steve Jobs interactions concerning the iMac happened while we were working hard on the first of those five suggestions which helped turned Apple around: reconstituting the Apple University Consortium (AUC).
In the late 1980s, shortly after Steve launched the original Macintosh he faced a similar problem to the one we were facing ten years later. Very few developers were interested in building software for a platform that was much smaller than the standard at the time (in 1987 it was MS-DOS, in 1997 it was Windows). Steve’s answer was simple: encourage higher education institutions to build software for the platform and hook students on the Macintosh, which they would later bring to their jobs after graduation. The AUC worked exceedingly well then, and so I suggested to Steve that we rebuild a similar program, and he emphatically agreed.
We invited the CIOs or CTOs of 28 leading universities across the United States and Canada to the new Apple University Consortium. These representatives traveled to Cupertino every four months and met in closed-door sessions with Steve in order to secretly help us design and even build some of the software for the new computer. We knew that if we opened the kimono to these individuals, who had a real hand in creating the software, then they might commit to buying these computers for their schools. It was a great partnership as the education market had an unspoken vested interest in seeing us survive. Apple’s death would have been very challenging for many major schools like Dartmouth College (my former customer), who had not only standardized on the Mac but who would face a very tough and expensive (not to mention embarrassing) future if they would have to replace the Mac.
During one early morning meeting with the AUC members in our Executive Briefing Center in Cupertino, Steve arrived pushing a cart with a shroud covering a bulging object on top of it. Steve started by asking the audience about their ideas for the ideal computer for education (even though he already had a pretty good idea.) He asked a bunch of questions, and he let each one linger in the air before allowing anyone to respond.
Would it need wireless networking?
Did it need a handle to move it from lab to office?
Did it need more than one headphone jack so that students could share language lessons?
Did it need to be beautiful?
After dispensing with the warm-up act, Steve pushed the cart into the middle of the u-shaped conference room table, and he immediately pulled off the sheet to reveal a crude yet heavy Styrofoam model of an early iMac (known then as P1 or Prototype One). Then he did something that I’ll never forget, and in retrospect it was quintessentially Steve Jobs. He picked up the prototype, he refused to let anyone touch it, and he walked to the first person seated at the end of the conference table. Then he made an impromptu physical presentation exclusively to that person. He turned the model around 360 degrees; he showed the top and the bottom of it, and then he rotated it back another 360 degrees in the opposite direction as he described each intricate detail of his prototype. Then, while holding the model chest high and with its front facing out from his body, he took a half sidestep to his left in order to face the next person at the conference table, and he repeated the exact same presentation! There were probably 30 or more people seated around that conference table, which included some Apple employees, for whom Steve Jobs did that little dance.
He spent exactly the same amount of time, about 45 seconds, and he acted just like a proud father as he clearly showcased the merits of the product even though it was still a crude Styrofoam model. While he convinced all of us, it seemed to me that Steve was also convincing himself that this was the computer that would save Apple. It was an object with which everyone, even these staid IT professionals, could fall in love.
That was the beginning of the current age in which great design and great marketing can make computers, music players, and phones the objects of our lust and desire.
Right now, Apple can purchase Facebook twice over and still have money in the bank. But why would they do so?
Ping is a failure. Apple doesn't have a social network. Right now every startup has to come to market on the back of Facebook's social graph. Instagram, Zynga, Buddy Media have all seen near billion dollar valuations simply by coupling to Facebook's social graph.
It is remarkable that many large brands no longer run marketing campaigns to drive traffic to their own websites. Instead they drive them (lazily, if you ask me) to facebook.com/companyname and leverage the social tools (like, share, post, etc.) that exist there. All this does is drive more traffic to Facebook which creates a virtuous circle - benefitting Mr. Zuckerberg.
Apple gets this (so does Google, btw). It is the same way the iPod begat iTunes which made the iPhone and iPad the dominate players in their market. It is about critical mass - getting people to spend more time, money, and effort in your own walled garden than anywhere else. Will Apple make iTV (or Apple Television) a social experience - sharing with others what you are watching, on what device, and what people think, chatting live together - if so, they will need a (BIG) social network.
Today's launch of Airtime.com is just another example of a well-funded company without even a website - all the heavy lifting is done at facebook. And Apple, uncharacteristically, is left out of the equation. How long until Apple marketing fixes that omission?
Following on to last week's post about Apple's retail strategy making them the most successful retailer - ever, comes today's news that for the first time, Apple's stock price is higher than Google's.
A pretty big milestone considering that Google hit $700 some 4 years ago and has not seen that level since while Apple as we know has grown from sub $200 share price to reach today's milestone. Here's a handy graph for those playing at home:
Even though Apple never sold directly to consumers before they opened that first store ten years ago in Tyson’s Corner, Virginia, Apple now boasts some incredible bragging rights for its retail channel:
Amazing what great Apple marketing and great customer experiences have done for Apple...Apple Stores are the highest performing stores in retail history!
Just as Apple used these 5 secrets of marketing to become the world's most valuable company, Apple used 5 other secrets of retail to become the world's best retailer. I may reveal those secrets here soon so stay tuned!