How Apple flaunts precedents

If a market sector hasn’t seen a great deal of activity or customer engagement, after several attempts by respected companies, it might be deemed a bit of a risk for a business to enter the market. Why try where others – with the benefit of first-mover advantage – have failed?

For Apple, the opposite is the case. Sony was already trying to make laptops look beautiful with Vaio before the success of the iMac, Creative Labs and others had been selling MP3 players for years before the first iPod launched in 2001. Microsoft had tried its hand at smartphones with the Pocket PC before Apple wowed the world with the iPhone and Intel made a tablet in 2001 that saw little success. So it was curious to see the below quote yesterday from Ben Bajarin, analyst at Creative Strategies, on the eve of the release of Apple’s Watch device.

“There really isn’t a market for wearables yet… You struggle to find the value proposition and the reason for Apple to do it.”

The reason for doing it is precisely because so many of Apple’s peers and pretenders have failed to create a market for wearables, just as they failed to create a market for the tablet, the smartphone and the MP3 player.

HMV: If you don’t fix it, you’ll end up broke…

The name Margaret Anne Lake might not ring too many bells. But if you were in the UK towards the end of the twentieth century, you’ll be familiar with her alter-ego Mystic Meg.

Having made her name as an astrologer in The Sun, Meg was catapulted into the national consciousness when she was given a slot on the fledgling prime time National Lottery draw programme.

In an attempt to build excitement and pad out an event that took two minutes to complete, Meg was brought in to ‘predict’ the winners.

Her predictions were suitably vague.

The norm was something generally along the lines of “the winner would live in a house with a 3 in the number, in a town beginning with L or M and have bought their tickets from a woman.” with a sprinkling of astrological terminology for extra authenticity.

However it would seem that back in the mid-to-late 1990s Meg wasn’t the only one struggling to see what the future held. Far away from the glamour of TV, a number of well-paid businessmen were busy making decisions that would see their organisations squander their dominant positions.

And a couple of weeks ago, after struggling along for years, both HMV and Blockbuster UK, once leaders in their categories, hit the buffers and called in the administrators.

Bad Advice

The wisdom ‘If it ain’t broke, don’t fix it‘ is relatively modern – it dates from 1977 – and was attributed to businessman Bert Lance in the May issue of the magazine Nation’s Business.

The phrase caught on, partly because it made a point in a catchy way. But like many wisdoms, it doesn’t tell the whole story.

Just because something works now, doesn’t mean it always will. And those in position of responsibility have an obligation to future proof their organisation.

Back when Mystic Meg was in her pomp, the digital revolution that helped bring about the demise of both retailers was in its infancy. But signs of its potential were there, particularly for HMV.

The first was how people acquired their music.

Software that ripped files from physical storage, coupled with faster web connections, gave birth to peer-to-peer sharing. Programmes like Napster, Kazaa and Limewire removed the need for physical reproduction and distribution.

The whole entertainment industry never really came to terms with illegal downloads, opting to use legal threats and emotional blackmail, rather than adapting their businesses to meet the demand.

In reality, not all pirated content would ever  have been bought legally. Peer-to-peer applications offered users the freedom to sample new artists they would never have paid for and get digital versions of music they already owned physically, easily and without it costing them money.

One of the reasons people wanted their music digitally is the second reason the digital revolution helped bring about the demise of the likes of HMV – the way people consumed and stored music.

The emergence of the digital music player, culminating in the release of the iPod in 2001 meant that people also wanted their music in a new format. They could now store their entire collection on one machine.

When people had upgraded their vinyl to cassette, and then their cassettes to CDs, HMV had been in pole position and reaped the profits. However a digital format didn’t require physical stores and HMV didn’t react. Their model was suddenly ‘broke’, but they didn’t realise in time to fix it.

Avoiding failure

Can such demises be avoided? The future is notoriously hard to predict, but there are some guidelines that can help companies avoid suffering a similar fate to HMV.

1. Be alert to new and niche competitors

Back in the 1980s and 1990s, HMV may have considered their competition to be the likes of Tower Records, Virgin and Woolworths. When they all disappeared, it might have seemed that HMV had won the battle. In reality they were all killed by the same bullet. The game changed as companies diversified.

Back in 1981, following a dispute with Apple Corps, Apple Computing agreed not to enter the music business. Now, iTunes offers over 28,000,000 songs.

Just because someone isn’t a direct competitor now, doesn’t mean they never will be.

2. Keep an eye on the Path to Purchase

HMV didn’t suffer because people suddenly stopped wanting to buy new music or watch films. What changed was how people acquired their material.

Online downloads provided a new way to access digital music. For those who wanted physical media, Amazon et al provided an alternative way to buy CDs and DVDs. Now that nearly 80% of UK households have broadband connections, consumers can stream films at the press of a button or watch a dedicated Movies channel.

Sometimes people will still want physical media immediately, but just not often enough to sustain a business as big as HMV.

3. Understand the next generation

Many years ago, I worked in Woolworths. A large proportion of the music we sold was to youngsters spending their pocket money on their latest idol. While online might have been niche in the mid-to-late-90s, the youngsters of today have grown up with it. As a result, consumers under 35 won’t have had the opportunity to develop an engrained habit of buying their music in physical stores like HMV. Buying entertainment online is no longer an alternative, but the norm.

4. Play to your strengths

While online retailers can offer lower prices and a wider catalogue, physical retailers offer immediacy and have the opportunity to provide enhanced in-store engagement.

Shoppers want convenience, value and experience.

Browsing for and buying music, film and computer games ought to be a fun, pleasurable act. Online shopping will continue to grow across pretty much every category. Physical retailers need to understand their role in fulfilling shoppers’ needs. Sometimes it will be about delivering the product quickly and easily, but sometimes it will be making the act of shopping an enjoyable experience that merits a slight price premium.

5. Be prepared to change

Taking all of the above into account, it might be easier to spot how a business structure that is dominant now might not be so successful in the future. It is often said that defending a title is harder than winning it in the first place.

However, it can be done.

McDonalds have long dominated the fast food industry. Just over a decade ago, their restaurants were tacky red and yellow places with plastic seats.

Yet they saw that their competition was no longer just the likes of Burger King, but also other food outlets and increasingly the likes of Starbucks et al who offered a more pleasant in-store experience.

Now their outlets have all been refurbished with designer furniture and offer free wifi.

They also observed other trends that would impact them. From obesity to ethical sourcing of produce and packaging, they adapted their business to stay one step ahead.

Their menu still offers the old favourites, but also includes lighter options. Their burgers come from British and Irish farms and much of their packaging is made predominantly from recycled materials.

As a result, they are still thriving on the high street.

Sports journalist scores own goal with Twitter let down

Too much hype can be a bad thing if you fail to deliver.

You will no doubt already be familiar with the fable of the Boy Who Cried Wolf.

In it, the title protagonist is a third century BC Greek shepherd boy with a 21st century attention span.

Sadly, born in a time long before iPods, Playstations and Kindles the only way he was able to amuse himself on cold nights was to shout that an imaginary wolf was attacking his flock and so summon all the villagers from their warm beds to chase it off.

So amused was the shepherd boy by this early attempt at trolling that he repeated it, each time winding up the locals more with his false alarms.

How Aesop may have communicated his fable in 2011

Inevitably, as we all know a hungry wolf did turn up shortly afterwards and the villagers ignored the boys pleas for help, refusing to fall for what they assumed was another trick.

The tale has been told many times to warn children of the dangers of telling fibs and seeking undue attention.

It would appear from a modern interpretation of the story that the Guardian Sports Desk could urgently do with a copy of Aesop’s Fables (available for as little as £3.99 on Amazon).

At around 15:30 yesterday afternoon, respected Sports Editor of the Guardian Newsdesk Ian Prior tweeted that there would be a

Two hours was more than enough time for football messageboards to go into overdrive as fans hypothesised as to what the scoop could be.

Perhaps an announcement on the Olympic Stadium? Was Ferguson going to retire and Mourinho replace him? Could another Arab billionaire buying out a major club? Would Barcelona finally get round to offering a record breaking fee for Lloyd Doyley?

Or maybe as the other half of Zeitgeist prayed, Roger Federer’s defeat in the Australian Open had been misreported and he’d actually beaten Novak Djokovic – into a pulp.

As the deadline drew closer, F5 buttons were being smashed around the world and the Guardian homepage finally refreshed with the scoop.

It turns out that Inter Milan might make a bid for Tottenham’s Gareth Bale. For £40m. In the summer. No sources at either club quoted.

There didn’t need to be. Within minutes both clubs had denied the story.

A scoop. But not anywhere near as major as people were hoping.

The let down and collective fury at such a mundane story getting such a build up lead to a mass venting against Prior and many rivals taking the opportunity to put the boot in.

The Daily Mirror back page references Prior’s imfamous tweet

Theories began circulating that Prior may have sacrificed himself in order to then compose an article on the power of social media or that the whole exercise was a critique of the hyperbole that surrounds football, particularly during the transfer windows,  but it seems unlikely that a Sports Editor would embarass himself for such reasons.

To his credit, Prior has taken the stick with good grace admitting that he was

retweeting a campaign to get people to stop following him

before accepting defeat

and announcing the end to a long day with

Indeed his positive attitude and willingness to take it on the chin has helped deflate much of the ire and avoided prolonging the situation. Prior isn’t the first person to mess up on Twitter, he can add his name to an ever-growing list that contains the likes of Habitat, Stephanie Rice and Courtney Love.

Though his faux pas was not as bad as the others mentioned, the lesson however is clear. Social media is a powerful medium to reach people with an interest in what you have to say.

But let them down and they’ll leave you to the wolves just like a bunch of tired Greek villagers.

Promoting “Lost” farewells

Marketing a series finale of a hit TV show should be relatively easy. However, with “Lost”, just as with its storyline, nothing is ever as it seems, as Zeitgeist has previously reported. In that instance, the marketing team at Disney’s ABC network went to great lengths to introduce some clips, that they hoped would go viral, of the start of the final season, only to have the terribly web-savvy fans -whom it had been assumed were desperate for any crumbs falling from the “Lost” table – reject the clips out of hand, choosing instead to wait until they could see the episode in its entirety, and in HD.

Their ultimate gambit was to simulcast the show’s finale (for which, in the US, they charged advertisers $900k per 30-second spot according to Time magazine, “more than anything save the Oscars and the Super Bowl”) across multiple timezones, meaning it was at a comfortable 9pm PST (unfortunately those viewers still had to avoid any spoilers for the three hours after it was broadcast on the East Coast) and a bright and early 5am for those in the UK (with higher viewing figures than the show usually gets in its 9pm slot). Variety reports, “59 countries will air the final episode of “Lost” no later than 48 hours after the U.S. broadcast.” To Zeitgeist’s mind, this sort of thing has not been attempted before to such an extent. When we think of other broadcasts that are viewed live globally, we think of the Olympics and the World Cup; “Lost” hoped to piggyback on this aura of unity. By closing the viewing windows it also discouraged piracy, though Sky Player suffered unfortunate hitches, as did Zeitgeist’s Sky+ recording, which stuttered its way through the entire finale, leaving Zeitgeist to wonder why he paid a premium for corrupted content that he could have easily downloaded for free (albeit illegally).

However, what such synchronicity meant was that, at the time of its airing, there would have been a lot of buzz (facilitated by ABC’s “Lost” page that allowed users to sign in via the site to Twitter and Facebook to post their comments) about the show online, more or less simultaneously. What would usually have been a community of fragmented chatter that was localised by geographical region, with people talking about the same episode, at different times, suddenly became coherent. The official “Lost” Facebook page certainly did much to help promote the show, with regular status updates (commented on by hundreds, “like”d by tens of thousands), clips, as well as the obligatory Facebook event page for the finale, “attended” again in the tens of thousands. Conversely, a lot of people went into hermit-mode during the run-up to the finale so as to avoid any hint of a spoiler. The New York Times writes “The show’s time-bending storyline and layers of mysteries can mean that a single indiscreet tweet might ruin a whole episode for someone who has yet to see it.”

The simulcast was the last in a series of bold moves those in the marketing department had made for “Lost”. To promote the series premiere, bottles were wedged into the sand on the East and West coasts of the US. The doomed plane’s airline that the passengers fly, Oceanic, had its own, official-looking website (which now redirects to ABC’s “Lost” homepage). Variety continues “The Oceanic Web page idea morphed into a competing site claiming a conspiracy behind the plane crash; Find815.com was nominated for an interactive Emmy. The network posted Oceanic billboards in several international cities connected to series characters, then ‘vandalized’ them with conspiracy claims.” During the finale in the US, SMS messages that viewers had sent in were displayed, presumably during commercial breaks. A UGC competition was also run online to see who could create the best trailer for the show (see video below).

Further to this of course were comic books, podcasts and videogames – not to mention the fan-made wiki Lostpedia – that expanded the mythology of the show’s universe. Moreover, as Mashable points out, “Lost was among the very first series available on iTunes, giving the option to watch on-demand on your computer, iPod or iPhone… At the time of writing, seasons 1-6 are available in HD, all for free (with ads) on the ABC website.” Michael Benson, one of ABC’s executive VPs of marketing said that “viewers want to believe there really are people lost on an island somewhere.” By playing on this insight, Benson and his team have crafted a lattice framework of exciting, original promotions. The proof is in the pudding; six years on, “Lost” bows out as one of the most talked-about shows of the past decade.

Nintendo’s Nemesis & Evolution

“All is unceasing and rigorous competition in nature”, said the Marquis de Sade. Rivalries come and go, it is the victor who must with each success continue to innovate and ultimately change, enduring the onslaught of new competitors. Yahoo vs Google, Microsoft vs Google, WPP vs Google and more recently Apple vs Google and Apple vs Amazon vs Google; in similar circumstances, we have gone from Sega vs Nintendo, to Sony vs Nintendo, to Apple vs Nintendo.

Apple themselves have pushed beyond their preliminary battle with Microsoft to a place where they now court multiple rivals in all the different markets that they affect with products like iTunes, the App Store and Apple TV. Steve Jobs, in September last year, said that the iPod touch was being released with gamers in mind after having had much feedback from the public as to what they used the device for. This was part of the reason why the iPod touch was cameraless, unlike its smaller, cheaper cousin. Nintendo must have known it was only a matter of time until their paths would cross…

Zeitgeist has very fond memories of inadvertently reshaping the bones in his thumbs while playing the Mario Brothers trilogy for hours and hours back in the day. The Nintendo Entertainment System, their first console, was fantastically successful. Somewhere along the way, however, the company got a bit lost. The turnabout it managed thanks to the Wii (and to a lesser extent the DS) is extraordinary; Sony and Microsoft saw share of their respective PlayStation and X-box platforms gradually erode to give Nintendo a position of dominance, becoming the market leader less than a year after its launch; PSFK named it one of their top ten brands of 2010. In the last week though, Nintendo have reported an earnings drop – its first in four years – hurt by slow sales of the Wii and possibly effected by piracy as well, according to Le Monde. Just as Apple are encroaching on Nintendo’s sovereign territory, the reverse is also true, as Nintendo have been offering Netflix movie rentals for a while now. Will the DS soon be facing off against the iPhone, iPod and iPad? According to Le Monde, in 2008 Apple’s iPhone represented 5% of the gaming market, Nintendo 75%. Today the iPhone’s share is 19%, Nintendo’s 70%. It is the casual nature of its games that made the DS and Wii appeal to a market that other consoles never even considered. Now though, those casual gamers are equally at home playing on an app on their iPhone, as well as on Farmville on Facebook. Variety says, (emphasis added),

“More than 32 million people tend their virtual crops each day, and the game has a total user base of 80 million. That’s roughly seven times the number of people who play the online smash ‘World of Warcraft’.”

Of course, rivalries like this will become increasingly common in this sector, as technology platforms – what the great Lawrence Lessig calls “layers” – continue to converge, allowing for excellent, mutiple functionality on one product (look at the iPad as an example). Somewhat counterintuitively, customers may not readily embrace this convergence, as behavioural economics tells us that people put more trust in a product that performs one dedicated task well; they assume anything else will be somehow diluted. Neither Nintendo or Apple should fret, exciting times are ahead. There is speculation in the Le Monde article, among others, that Nintendo should take the fight to Apple by releasing its own phone. Zeitgeist would find that a real treat. Almost much as much of a treat as the original Japanese advert for Super Mario Bros. 3. Enjoy.

Futurology, DARPA-style

From the Winter 2009 Zeitgeist…

Zeitgeist face such an alarming amount of numbers, facts, figures and statistics every day that sifting through it all to find the relevant information has become something of a fine art. Did you know mobile advertising is up almost as much as newspaper is down (18.1% and 18.7%, respectively)? Wikipedia currently features over 13 million articles, (though as reported recently in Le Monde, the rate of growth is slowing). Did you know the average US teen sends 2,272 texts a month, that Nokia manufactures thirteen cell phones every second, that 93% of Americans own a mobile, but a third donʼt yet feel comfortable paying for items with it?

These sorts of facts can help prognosticators look to the near future with a vague certainty toward upcoming trends. However, Zeitgeist is not satisfied with merely peering into the near future. We are always looking beyond the horizon, into the depths of futurology.

Who would have predicted that space exploration would have precipitated the creation of digital hearing aids and cancer detection devices? Who would have predicted that a little-known DoD agency created in a knee-jerk reaction to the launch of Sputnik, would stumble across a way of communicating between computers that would develop into the Internet we know and love today? DARPA lists many of the projects it is currently working on, which aside from their military uses might also have intriguing applications for consumers in the future. Chemical robots that are able to change size and shape in order to fit into different areas and perform different functions and nano air vehicles “less than 7.5cm in size” are some of the more fascinating things in development.  Programmable matter could see brand comms with manipulative particles that ʻrememberʼ their position. Paint on your walls could change to a Guinness hue at happy hour. Micro power sources would give client Duracell new avenues of energy storage to explore, and tiny micro air vehicles could be sent anywhere to project video imagery or augmented reality functionality for a product.

Yet, as The Economist points out, despite manifest amounts of consumer products that are military derivatives, “lately some kinds of technology have been moving in the other direction, too”. Drones plaguing neʼer do wells in Pakistan are piloted using modified X-box controllers (it helps if the video feed is protected, however). Moreover, “soldiers in Iraq and Afghanistan are using Apple iPods and iPhones to run translation software and calculate bullet trajectories”. While the military has an enormous budget for R&D, little is invested in electronics, hence why the USAF recently bought 2,200 PS3s to form a super-computer. Zeitgeist has already placed an order for a nano air vehicle from GE.