Losing first-mover advantage

When Apple introduced the iPhone, Steve Jobs was hoping for 1% market share. And while the audience coo’ed about the original iPhone, it wasn’t nearly as smart as it evolved to be with the app store which came a year later. Apple invented the smart phone/computer in your pocket- and is once again about to lose it’s first mover advantage.

Go back to 1984 to learn a lesson Apple. When the Mac was introduced and there was “the computer for the rest of us” there was nothing else in the category (except maybe the Amiga). The enemy was Microsoft- a company that didn’t even make a computer. Apple has seen its fortunes rise and fall with the all important market share- and the battle has taken it close to the edge of non-existence. Now, sitting on $54 billion in cash, once again- Apple is taking a huge gamble- fighting the Android operating system from Google- a company that tried to make a phone and failed (the Nexus 1).

As of this week- Android operating system, which is FREE, took third position in smart phone operating system market share. That’s third with a bullet- in a little over a year, it’s passed the iOS which has been out for 4 years.

Android is now larger than the iPhone on the world stage, analysts at Gartner said today. Google’s phone platform jumped to 10.6 million phones sold, or enough to overtake the iPhone and take 17.2 percent of the market. The researchers believe Apple sold more iPhones than it shipped, at 8.47 million, but the higher number was still enough to put it at fourth place with 14.2 percent.

via Gartner: Android has overtaken iPhone worldwide | Electronista.

The Google Apps store is quickly catching up with Apple’s in number of titles as well- and this is where the real money is for software. This is where Apple has to learn that no matter how great their hardware- the money is in Software- especially when every single iOS units buys an average of 5 apps- which Apple makes money on.

The market share in the US would be much larger if Apple ended their “exclusivity” deal with AT&T early. In fact, right now, paying AT&T off to allow the iPhone to come to other carriers before the Christmas buying season would be a smart move. Offer AT&T the profits on every Verizon app store sale through Jan 1, 2012, offer a lump sum for every AT&T switcher between now and Jan 1, 2012, but don’t continue to not be available to so many who are making moves to Android because of lack of competition. Winning that market share is infinitely more expensive in the long run.

Apple also has to look at each iOS device now as a part of its iAd strategy- which will pay more for every user connected, the revenue from AT&T will pale in comparison very soon- unless iOS gets marginalized again by Android. Smart phones are the most important data gathering devices for martketers that we know of. Google is a master at this game- and will be increasingly harder to beat.

If Steve Jobs- or anyone at Apple has the smarts to look at their own history, they’ll know that market share by having more carriers is worth more in the long run than anything else. It’s bad enough we have 2 year contracts and early termination fees to battle- now, the enemy is giving away software- and if you think it’s not dangerous- go ask Marc Andreesen what happened to Netscape once Microsoft started giving away Internet Explorer.

When it comes to marketing efficiency and software sales- market share is everything. Letting your competition leapfrog you because of stubborn business models is insanely stupid. There is no rational reason not to end the exclusivity deal with AT&T early- even if it costs Apple in the short run.

Transforming the marketing formula

There is a reason we’re not “The Next Wave Advertising” or even say we’re an ad agency (unless forced into a corner so that people know what little mental box to check off). It’s because back in 1988 we knew advertising was already dying.

What they taught us in “marketing” and in “advertising” was that it’s all about deliver a product to match up the consumers needs with our products and services. Only one small problem in our eyes- consumers who had unlimited choice and the entire globe to buy from- and an abundance of information aren’t rational- they are emotional.

The nice science of the “4p’s” didn’t work. It wasn’t Product, Place, Price, Promotion” - it was what makes me happy. Selling was out- stories were in. People activated when charismatic leaders put on great performances- just look at what Steve Jobs did with Apple- and has refined over the years.

That Apple computer had a position called “Evangelist” was the writing on the wall- not a VP of sales- but a fracking Evangelist. Which would you rather have on your business card?

We thought the most cogent explanation of business to date was one from Peter Drucker- that business only had two tool- marketing (in the broad sense) and innovation- hence our name.

But our methodology was all Apple- it was style with substance. It was stories and sales. It was more about “In Search of Excellence” - the first mega-business best seller book by Tom Peters and Bob Waterman, than about marketing and advertising- we wanted customers to delight in the process of buying things.

One of our hero’s is still David Ogilvy, the founder of Ogilvy advertising- and even though he died in 1999, with the epitaph “I’d like to be remembered as a copywriter who had some big ideas” his firm lives on- and is still generating big ideas for big clients.

Recently, they posted their new take on the 4ps- which they believe as given way to the 4E’s- and we concur:

from Product to Experience

from Place to Everyplace

from Price to Exchange

from Promotion to Evangelism

EXPERIENCE Discover and map out the full Customer Journey on your own brand – in your own country.

Develop your knowledge of new media and channels the way a chef masters new ingredients. Try new things – do something that doesn’t start with TV or print.

EXCHANGE Appreciate the value of things, not just the cost. Start by calculating the value of your customers – and what their attention, engagement and permission are worth to you.

EVANGELISM Find the passion and emotion in your brand. Inspire your customers and employees with your passion.

via The 4Ps Are Out, The 4Es Are In | Ogilvy & Mather.

The reality is that even the best advertising only brought customers to your door- you still had to do the final sale. The best ad agencies in the world now tell their clients- we’re not only going to do your ads- but we’re even going to tell you how to ask for the sale- how to answer the phone. It’s why Burger King has finally found an ad agency in Crispin Porter + Bogusky that’s delivered the kind of growth that BK hadn’t gotten out of the traditional agencies they’d worked for previously. Pull through the drive thru- and the voice on the speaker will say “nice order” after you finish. Crispin has even helped with product development- typically not a part of what an ad agency does.

The move from a media creation and buying agency to one as partner and consultant has been difficult for many agencies and clients alike. With the overload of media and messages that the typical customer experiences everyday- there is one thing that will always outperform any ad: an amazing experience with your product or service.

So before the next meeting with your ad agency- instead of asking what the next ad is going to look like- maybe it’s time to discuss what the next customer should experience- because that’s where the money changes hands if it’s done right.