Tag Archives: apple

Three Secrets of Apple´s Social Media Strategy

Apple does not have particular social media strategy.

By being quiet, they are one of the most talked about brands in social media. It naturally helps that you make iconic products with almost religious following. They have social media channels though, because they have realized the importance of social media as a reach driver. Apple does a lot of social media advertising to help to sell more of their products. What they are not doing is “joining the conversation”. Social media is eyeballs, not likes or tweets.

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Therefore Apple´s Instagram account is refreshing detour for their muted social media presence. They are actually posting things!

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But again, it is not about Apple starting a conversation or begging for engagement. They are highlighting photos that iPhone users have taken. They are tapping to existing behavior (#shotoniphone-hashtag has nearly million photos in Instagram). They are not telling about themselves, instead they are showcasing people using their products. Instead of talking about popular culture, they are popular culture.

The odds are that you are not working with iconic brand, so you might need to approach your social media strategy differently. Still, these rules might serve as the golden standard to which you should aim for:

  1. Make products people want to talk about.
  2. Use Social media mainly as a channel for reach, secondly to engagement.
  3. Showcase your users, not your brand or products.
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Why Apple Watch Is Crucial For The Future of Apple?


“Premium branded phones are the culmination of decades of research in wireless technology, computing, materials, and design. Shitphones are the culmination of decades of research in wireless technology, computing, materials, and designminus a year or two.”
John Hermann-Shitphone A Love Story

After Apple doing the best quarter ever (for any company), it does not really seem that company is in trouble. However if you investigate the Apple revenue breakdown, there are some things to watch out for. iPhone contributes to almost 70% of Apple´s revenue. iPad (which is declining) is only 17% of iPhone sales and Mac 13%. Services contribute to 0.6% to Apple´s revenue.

Launching the phablet-sized iPhone 6 was brilliant business move in China. The sales soared over 70% in Greater China region.

1.Smartphones will be commoditized
Xiaomi is a great example of this: the phone works ok, but sells in aggressively lower price (thus low margin). Like John Hermann wrote, many technology brands are in situation where “genuine novelty rapidly reduced to thankless anonymity” Apple is more secure than other premium phone brands, as it is guarded with its lock-in ecosystem, but nothing in this world lasts forever.

2. Smartphones will eventually be no longer status symbols
When I got my first mobile phone at the tender age of 12, I was the king of hill in schoolyard. First iPhone was a conversation topic for weeks. New bigger-screen iPhone was a topic for a short question around “does it bend” and that was it. iPhone has already been around eight years, mobile phones even longer, it is getting harder and harder to excite the audience. Same will apply to China, which currently brings huge parts of Apple revenues. Technology status symbols are fickle as the status comes from constant innovation.

3. iPhone eats the other parts of Apple ecosystem
Who normal person needs home computer any more? As our life has become more dominantly mobile, the need for laptop has radically decreased. iPad was the first substitute for your home laptor. At the same time iPhone 6 is killing it, iPad sales have dropped 20%. That is not necessarily worrying; maybe iPad was transition product for something else (such as the bigger mobile). Although you are committed to single device, the previous Apple ecosystem with multiple devices working seamlessly acted as a bigger barrier to switch. Not to mention that the former clue to that ecosystem iTunes does not really do anything at the moment. Streaming services have pretty much killed that business and what will become from Beats acquisition is yet unknown.

This brings us to the watch. Apple Watch is hugely important for Apple because of the following reasons:

1. Opportunity to highlight premium innovation
Apple is a premium technology brand so it needs to be constantly innovating. The recent innovations in mobile phones have been tepid at best (making your phone big require more innovation for jeans makers). Apple watch is an opportunity to showcase their innovation, which entitles them to ask premium price.

2. New behavior
Apple Watch is also an opportunity to teach a new behavior for consumers. If any brand can do that, Apple can. Using iTunes, downloading apps or using iPad were new behaviors for the audience. Jury is still out, have these behaviors become permanent (app downloading seems to still go strong).

3. Stronger lock-in to ecosystem
iPhone is currently the crown jewel for Apple. As Apple Watch requires iPhone to work properly, it is great fit to Apple ecosystem and will increase the time spent on it.

4. Bragging rights
Apple Watch will spark much more lunch hour chatter than previous iPhone models combined. It remains to be seen, do you appear cool or douche when dabbling with your watch.

Apple Watch can be success or not (we will now more when it hits the store April 24th). It is risk because it involves new behavior and wearables have not yet been that succesful. However it is necessary risk for Apple to stay relevant and continue charging premium from their products.

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Why Xiaomi is The Future of Smartphone Industry?

What is the world´s fourth and China´s biggest smartphone company?
Hint: It is not Nokia.

It is actually company called Xiaomi, four-year old Chinese company, who does really affordable smartphones and has been dubbed as the Apple of China. it has taken China by storm and is now eying for world dominance. So forget the usual players for a moment and take couple of lessons from the new rising star of mobile:

1.Smartphone market will be commoditized, be cheap
Smartphone is not a status symbol anymore or anywhere in the world. The latest innovations in smartphones have majorly been in terms of size. Xiaomi´s operating margin was only 1.8 percent compared to 28.7% Apple and 18.7 Samsung. Part of it is due to their aggressive growth strategy, but other part is the commoditization. Profits will definitely shrink in smartphone category. Especially when the main source of growth will come from developing markets.

2. Copy with pride & style
One of my colleague ordered new Xiaomi phone. When I tested it out, it was quite a revelation for a devoted Apple user. Actually it was probably the first Android phone I thought of actually, so striking was the similarity with iPhone. Whereas many other copycat products I have seen, it did not feel cheap or shady at all. The package was nice and the phone felt way more premium than its price. So it would be unfair to categorize Xiaomi phones only as copycats, but it would be unfair not to mention that aspect either. It is not coincidence that Lei Jun, the founder of Xiaomi, rocks black turtlenecks and jeans in their product unveilings. Technologic innovation is expensive, so Xiaomi bypasses that one and innovates in other areas of their business.

3. Innovate the business model
Xiaomi is not technologically innovative, that is true. From business perspective, they have been really disruptive. Xiaomi keeps their phones longer in the market than other competitors (even to 18 months compared to 6 months of Samsung). Apple has to come up with new products constantly to keep up their margins. Xiaomi is more betting on component cost drop-off during those two years and prices their product initially close to the component cost. Selling phones (they also have tablets and tvs) is just one side of the coin; their main goal is to actually sell services and apps through the phone.

Next year will be important litmus test for their approach as they are rapidly expanding beyond China. They concentrate on markets with large populations, e-Commerce infrastructure and weak telecom carriers. The initial response from India was great, although now the sales have been blocked because of potential patent infringement. The focus on India, Indonesia, Brazil & Russia is wise strategy, but there might be actually some opportunities in more developed markets as well. My colleague was not the only Singaporean who has bought their new phone. During this Christmas season Xiaomi phones have been more popular lucky draw prizes than iPhones. At least for a while, the slick design and renegade attitude has certain aspirational cool factor, not normally attributed to budget versions.

4. Innovate the distribution
Xiaomi has a digital-first approach to the sales of their phones. They partner with big e-Commerce retailers (like Tmall in China and Flipkart in India), and sell their phones through them. They never sell through brick & mortar stores. By selling directly to consumers, the company can collect and administer all the feedback and built it into the next generation of their phones.
They are also well known for their flash sales, which resemble more of buying rock concert tickets than traditional mobile phone sales. In China, during Single´s day, they sold over 200k smartphones in less than 3 minutes. In India they sold out in their flash sales in 4 seconds. Flash sales work both from branding and business perspective. They create demand and buzz around the phone. Flash sales are not just solitary transactions; they are actual events. One of the main reasons why they sell limited quantity of phones each week is to keep costs down by having smaller inventory.

5. Being cheap does not mean that you do not have brand
Xiaomi phones are entry-level phones, but creating brand affinity with teens is not necessarily a bad strategy. Xiaomi is not just a cheap phone for their devoted fans. It resembles more like religious cult. Part of it is that Xiaomi is probably the first technology brand, that Chinese can really be proud of. It does help to have charismatic leader to go with it as well. Xiaomi launch events are real festivals and people even buy tickets to attend them. Over 60 million watched the livestream and some even took 15h ride to attend those launch events. The events, flash sales and the product serves as marketing. Xiaomi does not really do conventional advertising and uses only 1% to marketing. Their devoted fans and devoted leaders are the best marketers. When Lin Bin (Xiaomi co-foudner) had a “planking” competition with their management team this December, the photo was shared over 3000 times. Not necessarily something that would happen with more traditional companies.

Although you would not necessarily switch to Xiaomi phone, their disruptive business model is something to follow and watch out for in 2015.

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Who Will Be The Master of Internet Universe?

Web is dead.

That is the title of one of the greatest articles ever written about digital revolution four years ago to Wired. The main points about that brilliant piece are still valid, although speed of mobile revolution surprised many of the players for a while. The main idea of the story is that web starts to resemble more and more traditional industry with handful of players. Web is oligopoly and certain verticals almost resemble monopolies.

If you simplify the consumer-facing web business (so I am excluding infrastructure and other boring things which is where the real money is), it is about three things: products, commerce & advertising. Products enable you to connect to the Internet: smartphones, computers, watches, television sets, fridges and whatnot. Commerce is about being able to buy things from Internet and advertising is what it is: bombarding you with messages to buy more stuff.

Product category as we know it will eventually be commoditized. If you want to remain premium, you have to innovate constantly. That is the only way to remain luxury brand in this realm. Cheap smartphones will eventually beat the premium ones. In the future you are able to connect to Internet in whatever device and you do not really have to pay that much of that privilege.
Where the growth will come? Wearables can be the future winner product category, although they have not really yet taken off. The changes are rapid though. iPad was launched only four years ago, created totally new category and is currently at risk of vanishing because of the phablets. So is the life.
 
Current champions: Apple, Samsung
Challengers: Xiaomi and other cheap manufacturers
Disrupters: Luxury brands (Would connectivity enhance Rolex? I say not, but I might be wrong as well)

Commerce will become even bigger and you are able to buy pretty much everything online. Will all the physical retail vanish? Not necessarily, but the point is not about that. It is about that you are able to buy everything online, and majority of people will do exactly that, because it is more convenient and affordable.
Commerce is the biggest opportunity and a space I follow most closely. Strong brands will definitely start to create their own online retail experiences, which would enable them to bypass the more traditional retail channels. In the next decade there will be lots of turmoil in this category and many big players will fall and new challengers will arise. Biggest challenges are not that much about technology (lots of payment innovations happening), but about logistics.
Second interesting point is that idea of commerce has changed with shared economy. Both Uber and AirBnB are selling physical service, which would not be possible without digital channel. How far collaborative economy can be stretched remains to be seen. It can potentially be really big disruptor to the way we do business in general.
Last point about commerce is the ecosystem approach. Apple makes money constantly through App Store by enabling others to make money. Facebook is building app ecosystem with the acquisition of Instagram, WhatsApp and Parse. Both Amazon and Alibaba are enabling developers to build things on their platform.
 
Current Champions: Amazon, AliBaba, Ebay
Challengers: Google, Facebook, WeChat, Line, Apple (Apple Pay) 
Disrupters: Brands, FMCG brands, Collaborative economy players (Uber, Airbnb…)

Advertising will be important, because people will keep on buying stuff. Stuff makes us happy. More stuff makes us even happier. How are you able to buy that stuff if you do not know that it exists?
Will advertising become smarter in the future? Yes and no. In last decade or so, we have had one revolutionary advertising idea. That is SEM. You show people ads when they actually want to see ads. Contextual advertising and retargeting have been nice inventions, but mainly advertising is still based on interruption (some of it being more relevant like app install ads). One of the most innovative companies in the world, Facebook, makes most of its money by interrupting its users in various ways.
The advertising business is relatively simple: it is all about reach. All of the most successful advertising platforms are based on firstly to reach and then secondly the quality of those who you are reaching. That is unlikely to change. However, the biggest task is to try to narrow the gap between the interruption (advertising) and purchase (commerce). The monetary exchange is the only tangible KPI we have and less you have to travel to do it, the better.

Current Champions: Google, Facebook
Challengers: WeChat, Line, Twitter (was tempted to leave it out completely, but I give it a shot still), “Traditional media companies”(although I do not really have high hopes for their complete digital transformation, but they will remain influential on this space as well)
Disrupters: Amazon (the closer you are to the actual transaction, the less you have to interrupt), Content owners (although none of them has done any major moves and have mainly milked the status quo)

The lines are naturally blurry. The quote from Eric Schmidt summarizes the whole situation:

Many people think our main competition is Bing or Yahoo. But, really, our biggest search competitor is Amazon. People don’t think of Amazon as search, but if you are looking for something to buy, you are more often than not looking for it on Amazon.”

That is also the reason why these big companies are testing weird things and buying obscure companies. Internet has made it easier to disrupt a category and also connect categories in new way. Facebook & Google test drones, so it can bring Internet the people who don´t have it yet. Thus increasing the reach. Amazon tests drones, because shipping is the biggest bottleneck of eCommerce. When your business can start to flourish rapidly, it can also vanish rapidly. There is no time to sleep, because sleep is the cousin of death.

What do you think, who will become the master of the Internet universe?

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Nuttin But A Beats Thang: Apple to The Next Episode

dredaystickers
It has been a real Dre Day, although it is not February 18th.
After long rumor mill, it is finally official. Apple acquired Beats headphones.  The deal has cause quite a lot of buzz around the globe, but I think the deal makes sense from many perspectives:

1. Beats is a good buy.
Buying Beats is not a speculation. Apple is buying a company, who is dominating premium headphones market with over 51% market share (some estimates have it even higher). As Beats is private company there is no public revenue numbers, but there are estimates of 1B of revenue with probably quite high profit margin. Buying 1 billion business for 3 billion is not a long-shot (like WhatsApp acquisition, which had significantly higher price tag) it is pure mathematics. You are buying market leader with an already established business and fast growth.

2. Beats gives Apple a headstart with music streaming service.
Yes, Apple could build their own streaming service, no one doubts that. Having Beats streaming service gives them great launchpad to go into a territory they have neglected. And I would not also worry about negotiating about the rights again. Apple has been quite effective in doing that in the past. Apple CEO Tim Cook stressed the importance of music in the recent interview:

This is all about music, and we’ve always viewed that music was key to society and culture. Music’s always been at the heart of Apple. It’s deep in our DNA. We’ve sold Macs to musicians since the beginning of Macs. And we accelerated the music industry with the digital music revolution with the iPod and the iTunes music store.

When we talk about Apple today, the music has not been on the focus compared to the heyday of iPod & iTunes. This deal makes Apple´s music offering again interesting. The future of music is streaming (although as an avid record collector, the future and past will forever be on vinyl) and that is something where the almighty Steve Jobs was wrong. This acquisition enables Apple to get on the parity with competitors and on the other hand provides Beats Music immediate increase in interest. It is probably no coincidence that Tim Cook mentioned Beats Music as the streaming service which has “gotten it right”.

3. Beats will be an important part of the Apple´s wearable tech puzzle.
You seldom buy companies because of their current state, but because of the current potential. That is where I think this gets really interesting and I am quite sure that Apple will be having some tricks on the sleeves and not just concentrating on music with this acquisition.
iWatch has been rumored for a while. It will probably arrive when you least expect it. It is certain that Apple will enter to the wearables and they will probably do it right as well. Although the wearables have not yet really taken off, believe me eventually they will. We overestimate technological disruption on a short-term and underestimate it on a long-term. Apple has also been massively successful in fulfilling needs of the people, they do not even realize they have.
Beats headphones have been one of the best examples of wearable tech, because they have really nailed the lifestyle aspect. Sound quality is one thing, but you really want to be seen with your Beats headphones. This is something the first wearables have not really grasped. When wearable tech looks ugly only the geekiest early adopters will wear them. And no offence to geeks but they do not start trends. Wearable technology is even more fashion than technology.
Apple has definitely understood this as they have also been recruiting fashion specialists from YSL and Burberry. I don´t believe that is an isolated strategy from the Beats acquisition.

4. Buying beats is getting the right talent
You are hiring Dr. Dre, one of the most legendary music producers ever and Jimmy Iovine, who knows the ins and outs of the music business. Iovine has been also key partner with Apple during the launch iTunes Store. Both are visionaries and can definitely help Apple to shape the future of music and wearable offering. Will they fit in Apple corporate culture? Who knows, but at least you could not hire more capable talent to help you in your future endeavors.

Also I do not really get the talk about how uncharacteristic this acquisition is for Apple.
Yes, they are usually buying smaller and more obscure companies (at least for mainstream audience). Nevertheless they are buying companies.
If you have loaded cash reserves, I don´t understand why you should withdraw from buying other companies. If it makes sense and in this case it does.
Necessary part of evolution of a company is to know when to do something surprising. This was surprising move (initially, not necessarily today because it pretty much just confirmed the rumors), which showcases that Apple does not sway away from being bold.

So put on “The Chronic” on your turntable or your favorite streaming service and:

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Why Google is Struggling with Mobile?

The future of the business is mobile.

Or so they say. Currently it seems more that future business of companies is ruined by mobile. Zynga has lost 85% of its value, because the mobile adoption has been faster than expected. Facebook has been stumbling with mobile advertising, although its recent mobile ad revenues beat the industry estimates.

Even the traditionally steady high-performer Google has been showing signs of slowing down. The problems have their root cause in mobile: Motorola acquisition has not yet paid off and mobile advertising has driven average click prices down.

Here are five other reasons why Google (like many other companies at the moment) is struggling with the mobile:

1. Status Quo Bias
For years the AdWords has been the hen that lays the golden eggs for Google. As humans, we are more likely to believe that things remain the same and are more likely to select to stay in status quo whenever possible. Every company encounters status quo bias at some point. AdWords are still selling like pancakes, the main difference is that the average click price has dropped for four consecutive quarters in row.
Although no one accuses that Google is not doing mobile innovations and investments, there has apparently not been pressing need for them to roll them out faster.
2. Android Ecosystem does not pay off (expect for Samsung)
According to certain estimates, Google makes about $6.50 through ads on Apple devices, compared with under $2 in Android. Google makes roughly the same amount of profit selling Android ads & apps in year that Apple makes selling iPhones a week. Google has regarded Android ecosystem more of an extension of the advertising. Currently it seems that it only benefits Samsung (and maybe to some extend users).
3. Mobile advertising ecosystem is currently broken.
People are not yet ready to make purchases with mobile. That is likely due to change in the future. Meanwhile, the mobile ads generate less revenue than traditional ads on average. Mobile has been thus far more about duplicating the web experience for Google, than regarding it as a center of the advertising innovations.
4. Consumers are even more unpredictable with mobile
Who would have predicted that texting will become popular? Or that tablets will become hits? Consumers are always fickle and surprising, but especially in mobile. Consumers do not really know (or at least articulate) what they want, but they still act quite fast to get it.
5. Google is not (yet) producing phones
Although Google bought Motorola, there has been a strict separation of church and state between Android and Motorola. Apple and Samsung have proven that the money in mobile lies in hardware. Microsoft has returned to hardware game as well. Facebook will probably enter the competition soon. Can Google stay away from the phone game?

I am sure that Google has certain tricks up on their sleeves regarding the mobile. Until those tricks are revealed, there will be more growing mobile pains ahead.

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iPad Mini and The Future of Mobile

Despite the surprise launch of the next generation iPad and the brouhaha that followed it, the most important launch of the yesterday´s Apple event was still the iPad Mini. According to late Steve Jobs that tablet should never been launched:

“This size isn’t sufficient to create great tablet apps in our opinion”

The point is not that Apple is ruining the grand vision of iPad or dancing on the grave of Steve Jobs. The launch of iPad Mini is just a reflection of the current market situation. People do not necessarily want to have great tablet apps, they just want to read e-books with the tablet. Kindle Fire and Nexus 7 have shown that there is a great demand for smaller tablets which are designed mainly for content consumption (such as text, videos, audio and basic casual games). Judging by the strength of Apple´s content ecosystem (iTunes, iBooks), it is likely that iPad Mini will be successful. The biggest concern is the higher price, but that does not really have stopped Apple buyers before either.

The launch of iPad Mini is a good indicator of where we are moving in the mobile sphere. Here are four predictions what will happen in the near future:

1. Apple will release bigger iPhone.
If (when) iPad mini will be a hit, we are quite likely to see bigger iPhone. The success of Samsung Galaxy S III has proven that the traditional heuristic of “it has to fit the pocket” do not really apply. We have the need to communicate and consume content. For those whose urge for the latter is bigger, would want to use bigger smartphones. And they just put it in bag instead of trouser pockets. Or get bigger trousers.

2. The Tablet+Dock hybrid will be the laptop of the future
There has been flood of new device announcements with Windows 8 OS that are not traditional laptops. Instead they are hybrids, merging tablets and laptops. These devices might not be the future yet, but the thinking behind them will be. It is odd and inconvenient to carry around smartphone, laptop and tablet with you. I would presume that the separate bigger tablet would be the one to go. Smartphone would be the urgent communication vehicle; the separated tablet for mobile content consumption and that powered with the dock would be for work.

3. Mobile is the driving force in technology usage of the consumers
Also with the launch of Windows 8 OS, there has been quite a big surge of touchscreen laptops. The way we use mobile is shaping how we use other devices. Mobile is all the times with us, so we expect the same user experience with other devices. That is also reason why companies are struggling with mobile. They view it as an add-on, when it should be the core of what they are doing.

4. Forget the different devices, it is about integration of screens.
In the near future, we will not talk about mobile, tablets or laptops. We will just have different screens, which are integrated together and serve different purpose. The company who will master this integration most fluently will be the winner of the technology race. We will have screens for home, work and mobile (enabling both work&entertainment) and certain devices that enable us to use these screens. What devices those will be, remains to be seen. One certain consequence will be that there will be renewed interest to TV screens, which have and still are the default home screens for the majority of households.

iPad Mini will not be the last interesting technology launch in the near future. There is still plenty of white space to discover while consumer technology usage is changing. The one who understands the consumer experience and “the integration of screens” most thoroughly will be able to find and conquer that white space.

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