MarketTrip - The REAL iPod Challenge (and Why the Business Press Has it All Wrong)

A couple of years ago, I spoke at a business conference on the topic of “How to build a brand through advertising” and to introduce the discussion, I presented the top 5 truisms of advertising as I defined them. My number one truism was and still is to remember that advertising can’t make you something that your not. The same thing can be said about products. In both cases, and interpreted another way, it's to remember your core business and especially if you've been successful, respect why you are who you are.

Fronting that you're something else - either through your products or your advertising just makes you look at best, clueless and at worst, it can alienate your bread-and-butter customers and isolate your core business. Boardroom coups are characterized by the ouster of execs who tried to be broad without remaining focused on being deep.

This week, Apple reached the milestone of 100 million iPods sold. And once again, as happens with the tic-toc of clockwork every couple of months, the business press is abuzz with stories about what competitive offering, if any, can dethrone iPod as king of the personal music player space. It's a familiar story line but these days, if you read between the printed lines and examine what competitors are putting out there, it seems to have a new twist.

Their focus seems to have changed from “dethroning” to “dislodging” iPod from it ~75% market share. Competitors seem to have acknowledged that iPod is the 800 lb gorilla and iTunes is the archetypal interface for distribution. Look closely and what you'll see is that everyone in the marketspace is clamoring to offer up not an "iPod killer" but an equally compelling (and perhaps stealthily superior) combo of product and service with hopes of chipping away at iPod/iTunes share.

They'd like to do what the Japanese automakers have done to GM (and in a larger sense, Detroit) over the past 30 years.

Competitors clearly believe that “better” technology is the best possible way to weaken Apple's full-nelson on the market. And it's logical to assume that offering "better" technology (read: more bells and whistles) is a way to achieve this. It's a premise time-tested and proven in the technology world…digital cameras, flat screen TVs, notebook computers are just a few examples.

The business press mistakenly assumes that "better" technology is aimed at the old goal of annihilation...perhaps because failure or conflict makes for a better story. Or perhaps because they assume that the digital music landscape is governed by the same black+white, quantitative, specifications-based decision-making that drives the PC business.

Unfortunately for Apple's competitors, music players and distribution (unlike cameras, TVs and computers) have not yet achieved commodity status. And as such, from a brand perspective, they're not interchangeable. Why? Because music (and in modernity, the means to play it), anthropologically, has always been highly personal and basely emotional. In short, there's more to consumers' decision about which player to buy and music service to use than technology or pennies on the dollar.

Microsoft’s Zune bested the iPod with a bigger (and bi-directional) screen and the ability to wirelessly share songs between Zunes. And now the latest heir to the title “potential iPod killer” is SanDisk’s Connect player which pairs with Yahoo’s music service to offer wireless downloads of songs at any hotspot. On paper, all three technologies seem "covetable" and appear to put iPod at a disadvantage. But Zune flopped by almost all market definitions. Will the Connect suffer the same fate?

Only time will tell but I'll go out on a limb here and say that it will... And why am I willing to say this now, having never touched our used the Connect (or Zune)? Because it's made by SanDisk.

Is this brand prejudice? Am I exhibiting product snobbery? Am I being paid by Apple? The answer is "no-way-Jose" to all. What I believe is that Connect will fail where Zune did and several iterations of Sony's Digital Walkman before that because sometimes, in some product categories, consumers DO buy the brand as much as they buy the product. That doesn't mean brand is more important than the product experience...it just means sometimes they're darn near (gasp!) equal.

And when consumers do buy the brand, the brand they buy is the brand they best associate with the role they expect it to play in their lives. Apple is music. SanDisk is memory (boring). And Microsoft is…well just about everything unglamorous about computing. Sony is...who knows, these days? But it's not personal, portable audio...which is ironic since they invented the market with the original Walkman back in 1979.

"Life role" is largly a factor of people's perception about how they will use something. Where one brand gains an advantage over another is where the perceived motivations of the maker seem to elevate a brand and the assocatied product. People develop relationships with some types of products...music and cars are two of the most personal pruchases because both speak volumes about the owner. It's why people carry their "iPod" and not their "music player"...or drive their "Mini" and not their "car."

Apple makes money hand over fist from the iPod and iTunes…but it doesn't feel like dollars and cents is their motivation or the reason for iPod/iTune’s existence. We can picture Steve Jobs playing air guitar to Steppenwolf...try that with Bill Gates and it makes your head hurt! Apple as a brand is all about the emotional and tactile experience and hundreds of millions of consumers believe that if you want a pure music experience (just like if you want a pure computing experience*) Apple has the edge over everyone else.

With Microsoft for sure and SanDisk by extrapolation, the motivation for their attempt to crack the music player market feels motivated purely by business. Everyone knows that Microsoft’s MO is to come in and overtake the innovator through unabashed emulation and market presence. Consumers don’t like that. It feels evil and dirty. Evil and dirty clash fundamentally with music...we feel good vibes from and attached to our music collections (even if the music is Marilyn Manson!).

The same can be said for SanDisk…they’re a memory and storage media company…what could they possibly know about music and hope to get from entering the market…other than an uptick in their bottom line. Maybe they do know something about music but the average consumer doesn't think so...

Unfair characterizations? Most likely...but consumer belief trumps corporate line any day of the week and twice on Sunday. And consumer belief is only influenced by advertising so far. iPod ads grew out of Apple's own exuberance for the music. Not to seem "cool" or as a ploy to tap the collective yearning for commercials you can jam to!

One of the cold, hard truths of business is that you are who you are. And that’s followed closely by the fact that it’s damn near impossible to change how you’re perceived after years of business. I challenge you to name two brands who’ve radically reinvented themselves to the extent that they can lead in a whole new market?

My point? Microsoft, SanDisk, Sony and everyone else including Creative, Samsung, etc...can and should continue to work in this space. Innovation lifts all boats...and if they really do understand that they're unlikely to defeat iPod/iTunes, the evolution of the technology and increased choice will be great for consumers. But for the business press, get over iPod and iTune's dominance...seems like everyone else has. The true challenge for companies and the real story for the press will be whether the new technologies that manufacturers roll out resonate and if, how and why (or why not) they're adopted by consumers.

*Disclaimer: I own an iPod but I'm a PC guy.

MarketTrip: Perpetual Product Optimism

I have a 2 year old iPod. I have a 6 month old Motorola Razr. I have a 27 inch flat screen CRTV. All work flawlessly, look good, totally fit my lifestyle and are paid for. And yet I want to replace all three.

As such, I habitually read the Sunday circulars from Best Buy, Circuit City, CompUSA...grabbing them first as I sip my coffee. As a new dad with precious little "me time," I know that this is unwise. I should spend my quiet time with World News, Living/Arts, Ideas or even the Magazine...but I don't, I can't.

Frustrated, a bit ashamed and eager for an answer that indemnified me of my own behavior, I came up with the following:

Humans are, I believe, more optimistic than pessimistic, which makes us really truly want to believe that this product is exponentially better than that product. Combine that mindset with mankind's innate belief in compounding betterment and you've got what I call "perpetual product optimism" (d. unending assumption that newer gadget = better gadget). It's "assumed obsolescence" and it's the yang to the yin of "planned obsolescence"...the human nature flip side to corporate retail strategy (and it's the 93 octane that fuels our economy).

It's what causes me (and my brethren*) to incessantly read the Sunday circulars, wander around Best Buy for hours and plot our next technology purchase over the course of many, many months.

So, using the classic "it's human nature" argument, mission accomplished. I'd successfully applied this new consumer psychological concept - perpetual product optimism - to my life and simultaneously a) eradicated my feelings of guilt associated with coveting gadgets I know I don't need and b) excused my newspaper reading habits.

And in doing so, I've aptly demonstrated another impressive aspect of human nature - the power of rationalization!

* men aren't alone, women demonstrate similar behavior with handbags and shoes.

POSTSCRIPT:

Thinking about this a bit more...

From a marketing perspective, that this mindset exists in the modern marketplace should come as no surprise. And yet desire based on PPO is something that any marketer would be hard-pressed to manufacture for a given product. Consumer desire is elusive…and you can’t force people to want something.

In fact, there’s ample (although not conclusive) evidence of an inverse relationship between corporate hype and consumer interest. Palm’s Folio is one of the most recent examples. Classically hyped technology offerings that failed to captivate consumers include WebTV, the DiVX movie rental service, Apple’s Newton, email appliances, Iridium…etc.

So what then? How can marketers leverage PPO? How can they position their product as the antidote to consumers “assumed obsolescence?” Most likely they can’t. “This is better than that” arguments don’t really gain much traction in the marketplace these days…consumers have learned to mistrust corporate lines when it comes to technology.

Really, the best approach seems to be to ignore (or avoid addressing directly) the competition or even your prior products and to make your play either on an emotional level (like Apple with iPod) or on straight features/benefits (like Blackberry). With fickle, web-savvy consumers, you really have to hope your product development team got it right and hope that consumers assign the kind of value to what you’re selling that will make your launch a success!

Where the Heck is My Diebold AccuVote?!

I just voted. And in a nostalgic nod to the 1980s that I can appreciate on some levels, I used a pencil to color in ovals next to the candidates of my choice. But this means of doing my civic duty was completely unexpected and the whole process, decidedly underwhelming. My wife summed it up perfectly on our way out of the polling place when she exclaimed to me "that was it?"

In the months and weeks leading up to this day, the media and punditocracy was awash with grave concerns and vast theories about the extent to which electronic voting machines would wreak havoc on today's results. Rampant fraud, technical glitches and votes lost, unrecoverable because of a lack of paper back-up...or at least the specter of the potential resulting mayhem added an incremental (and badly needed) level of "interestingness" to this mid-term.

But not for me...at least not this election. I voted with the tried and true paper ballot and filled-in bubble for which the potential errors are limited to those human and analog. Wowee. Relieved to a small degree, I mostly feel like I got hosed - I know that some guy in Iowa just had more fun voting than I did!

Back...to the Future?

Logical and safe? Sure. Futuristic and inspiring? No. NASA chose Lockheed Martin to build Orion - a bell shaped "crew delivery vehicle" which will replace the Space Shuttle as the primary exploration vehicle for the next "decade" (read "quarter century" judging by the lifespan of the Shuttle). It may get the job done but who's not just a little bit disappointed that Orion looks just like Mercury, Gemini and Apollo? Weren't we promised more?

X33 wasn't all that exciting (it was a plane, it even looked like the Shuttle) but at least it didn't feel like backward motion. Huge booster rockets with astronauts crammed into a cone atop thousands of pound of liquid fuel seemed like a logical first step back in the 60s but everyone THOUGHT that our technological achievements would accelerate and that space exploration would evolve. That's what drove, in part, the Shuttle program – it was the next evolutionary step.

True, space exploration is a hugely complex undertaking and NASA has been plagued by problems – failures and loss...but isn’t space the final frontier? Aren’t the risks inherent? Shouldn’t how we get there evolve (or at least look cooler) over time? So with Orion, is NASA playing it safe or was the original thinking about how to ferry people and stuff beyond Earth’s atmosphere truly the best? Is this exploratory conservatism or back to the future for a reason?