Wednesday, April 25, 2012

What Would It Take to Beat Apple? - Mashable

Apple Logo

Apple is such an influential brand today that just calling it “iconic” doesn’t really do it justice. The company’s reach goes far beyond tech, with its methods, philosophies and products studied and imitated worldwide in the hope that acting like Apple might bring with it some of the company’s tremendous success. Sometimes that approach even works.

But what if a company didn’t want to settle just for a piece of Apple’s pie? What if they actually wanted to beat Apple â€" to become the next “superbrand?” What would it take for a company to achieve a level of success that would leave Apple in the rear-view mirror?

Looking at Apple today, the question itself strains credulity. Apple is currently the most valued company in the world (occasionally trading the top spot with ExxonMobil), its stock price appears to have no ceiling (hitting $600 for the first time this year) and its iPhone, iPad and iPod devices are so popular they’re practically synonymous with the product categories they compete in.

It’s tough to imagine a scenario where another company repeats those achievements, let alone surpasses them. However, it’s important to remember that things didn’t always look so rosy at Apple. When Steve Jobs first returned to the company in 1997, it was in serious trouble.

Jobs himself admitted that the company was about 90 days from bankruptcy. Its core computer products had been diluted by uninspiring designs and bunch of sanctioned clones, Mac operating system software seemed perpetually buggy, and mobile devices were still a faraway dream.

Yet Jobs famously turned the ship around, simultaneously cultivating a culture that emphasizes creativity, loyalty and focus on the customer. The rest is (recent) history.

The Apple Equation

iPhone Image

So what can others learn from the Apple success story? Is there a way to reverse-engineer what the company has done to somehow replicate its success? Or is the answer to act completely un-Apple-like, venturing into territories unknown to leapfrog the world’s most influential tech company?

“I don’t think there’s any trick to it,” says Daring Fireball author John Gruber. “Apple’s success is based on a few obvious factors: a) they make great products; b) they sell them at compelling prices; and c) they explain, through marketing and advertising, what these products do and why people might want them. Any company that wants to beat Apple in any product category must do the same things.”

One thing that most observers agree on is that any company that wants to overtake Apple shouldn’t try to beat the company at its own game. Once Apple releases a new product, it tends to either take over or at least redefine the category. Trying to beat Apple by coming up with a device that’s better than iPad, for example, is not a winning strategy. While a company can still do well with a comparable product (witness Amazon’s Kindle Fire), it’s practically a guarantee it’ll be destined for second place.

“Look at the smartphone companies that are coming out with iPhone competitors or iPad competitors,” says Jim Dalrymple, CEO of The Loop. “They’re trying to market them and say that they’re basically just as good, when in fact what they should be doing is coming out with a product that leaps those. And they can’t do it.”

While Dalrymple’s point is certainly true about the iPad, the iPhone does have a competitor that’s arguably just as successful, if not more: Android. Google’s open-source OS is now the smartphone platform with the greatest market share, and the first Android phones came out more than a year after the iPhone’s debut. Doesn’t that show another company can beat Apple at its own game, as long as it has the resources?

Not quite. Android is an operating system and platform, not a product per se. Google, its recent acquisition of Motorola notwithstanding, doesn’t really make hardware (and it doesn’t make a dime from device sales). The whole point of Android is to have it run on as many phones as possible, but that’s led to “fragmentation” â€" where the overall experience can vary widely from device to device.

“Integrating hardware and software in one product is an enormous advantage for Apple,” says Jason Snell, editorial director of Macworld. “Android is an example where Google controls the software. If Google took its ball and went home â€" if it said, ‘We’re going to leave this open-source stuff out here, and we’re going to take a version of Android forward on our own, and it’s only going to run on Motorola’ â€" I feel like that would be a way better product.”

The iTunes Factor

Besides just making devices that tightly integrate software and hardware, Apple provides much of the content for those devices. Every iPhone, iPod, iPad and even Mac has a big pipe that connects it to iTunes, whose name is a relic of its origin as a music-only store, but now also ferries books, TV shows and movies to any and all Apple devices â€" for nominal fees.

For a time, iTunes was really the only place online that consumers could download music legitimately, and everybody knew it. If you wanted a song for your iPod, you forked over your 99 cents and got it. iTunes was a huge reason why no competitor could market a viable answer to the iPod

The iTunes factor â€" with its convenient storefront offering all kinds of media â€" is also why many others struggle to match the iPhone and iPad. Apple’s rivals have begun to emphasize their own stores (such as Google Play and the Samsung Media Hub), and the early success of the Kindle Fire is clearly thanks to Amazon’s emphasis on content. Still, the mind share that iTunes commands is a hard thing to match.

“Samsung, HTC and all of these companies that are trying to compete with not only Apple’s hardware, but the 10 years of infrastructure that they built up with the iTunes store,” says Dalrymple. “That’s something these companies just can’t compete with. Apple has so much depth in its services that the consumer thinks, ‘Okay, I can sync all my data, I can get my music, I can get video â€" why wouldn’t I get the iPhone?’”

There are areas where iTunes is not the be-all and end-all of media, however, and one of them is TV and movies. Companies such as Netflix and Hulu have established themselves as go-to services for video content, which appears to open up a path of attack. If a competitor could come up with a device that offers a seamless end-to-end video experience, it might be able to out-Apple Apple.

The logical choice for such a product is a TV, something Apple is rumored to be well on its way to making. In the meantime, a host of other companies are tripping over themselves to innovate in the TV space, introducing apps, smartphone integration and content services into TVs themselves â€" essentially trying to end-run any Apple TV.

“If you could figure out a bridge both for real-time visual media â€" so you could pick up news events â€" and a broad enough collection of TV programs and movies, you could probably create something at least as compelling as the original iPod was,” says tech analyst Rob Enderle. “It’s not a trivial task. Even Sony who actually owns much of this content, hasn’t been able to figure it out.”

“I don’t think [competitors] are thinking about [Apple TV] in the right way,” says Dalrymple. “When Apple finally does come out with a TV set, I think they’ll look at it and say, ‘Oh my God, we never expected that.’ It’s hard to compete with something you can’t even envision will happen.”

Enter Tim Cook

Tim Cook Image

Like many of Apple’s plans, the Apple TV was instigated by Steve Jobs â€" he said so to his biographer, Walter Isaacson. Of course, Jobs is no longer with us, although it’s clear he left a product pipeline in place that won’t be fully realized for years.

What happens after that, though? Although Apple has seen continued success under new CEO Tim Cook, the man is clearly cut from a different cloth. Apple is obviously more than just one man, but so much of what Apple was under Jobs stemmed from the fact that the man in charge was, at heart, a product guy.

The fact that Jobs is no longer there raises the possibility that Apple may not be able to sustain its unprecedented success from the last decade. And that presents opportunities for rivals.

“What made Apple unique is that Jobs was a unique CEO,” says Enderle. “He not only had the loyalty of the Mac customer base, but he also ruled with a combination of two skills: fear, and a willingness to do whatever it takes to win. In the end, it’s a lot of what made Apple unstoppable, and Cook isn’t that guy.”

However, many of Jobs’ top men â€" design guru Jonny Ive, marketing chief Phil Schiller, and iOS master Scott Forstall â€" are all still moving the company forward. Apple’s executive team and board read like a tech company dream team, and it’s hard to see the company stumbling badly in their charge.

“Now that Steve Jobs is gone, will Apple continue to create new industries and redefine existing industries that are ripe for disruption?” asks Gruber. “I’d bet on ‘yes,’ that Apple will continue to find new ‘next big things,’ but that’s far easier said than done, and Steve Jobs had an astoundingly acute sixth sense for identifying such opportunities.”

How to Beat Apple in 5 Not-So-Easy Steps

So where does that leave us? How can a company â€" big or small â€" put itself on a course where it could realistically become bigger than Apple? After looking back at the rise of Apple over the past decade, some guidelines start to emerge:

Lead, Don’t Follow. Any company that tries to take on one of Apple’s successful products is destined to lose, or at least settle for second place. To surpass Apple, an innovator must identify the areas of consumer technology that the world is moving toward, and get ahead of Apple (and everyone else). Just like the iPhone succeeded the iPod, and the iPad succeeded the iPhone, there will be something after the iPad. Whoever figures it out has the best shot at being the next Apple.

Focus on Things Apple Doesn’t Have. Apple has a powerful platform, but it’s far from perfect. Rivals should target its weak points â€" no subscription services and non-comprehensive video selection, for two â€" in building a product that could potentially challenge it.

Solve a Problem. It’s easy to build a product, but does that product serve a need that today’s consumers have? Much of Apple’s success has been due to a laser-like focus on consumers’ needs. And not just any consumers â€" influencers. A potential path toward finding the next iPhone or iPad is to take on a problem influential people need solved, solve it, and let them be your advocates.

Do Whatever It Takes. When Steve Jobs first returned to Apple, he made a pact with arch-rival Microsoft that helped save the company. Years later, he famously killed off the iPod Mini â€" the most popular digital music player at the time â€" and replaced it with the iPod Nano, leading the line to even greater success. These are unthinkable moves to a more conservative CEO, but they emphasize a rule of thumb so often lost on corporate boardrooms: Tremendous success often requires tremendous risk.

Strike Now. Apple’s winning streak is unprecedented, but it’s been over two years since it last released a game-changing product, and with Jobs out of the picture there’s a legitimate question about whether it still can. Consumers still have needs, and they’re evolving. Sooner or later, someone will release the next big product that eclipses everything else. But given the pace of technology today, it will probably be sooner.

Is Apple Unbeatable?

It’s somewhat unfair to say the past decade has been good to Apple, since it implies the success it’s experienced is due more to random chance than design. It’s more accurate to say Apple put itself on a course for success, then executed a series of brilliant moves that saw its position climb higher and higher.

The digital world of today looks a lot different than before the first iPod was released, however. The emphasis on mobile devices and platforms has established Apple as the clear leader, and it’s built its products to instill loyalty. Customers keep coming back for more.

Challenging that self-fueling formula for success is the ultimate challenge of any wannabe usurper. As Gruber observes, “When you’re coming from behind, history shows it’s usually not enough to be merely ‘just as good as’ â€" or even merely ‘a little better than’ â€" the market leader. You’ve got to be ‘way better than,’ like an order of magnitude better, to overcome the momentum of the leader.”

Look at, say, the relative chaos among Android tablet designs compared to the iPad, and it’s hard to disagree with the statement. That’s not to say there aren’t many companies with competent competitors to Apple products â€" there are. But Apple’s immense influence suggests that any future success story about the rise of a company that beat it probably hinges less on innovation and more on Apple simply screwing up.

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