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The Street: Features can't sway Apple customers' trust

Jason Schwarz over at TheStreet has written an article analyzing Apple's current position in the marketplace and what Apple's competition needs to do in order to catch up.

The article focuses mostly on Apple's iPhone/iPod + iTunes ecosystem, which isn't surprising. Though Mac sales bring in a fair amount of cash to the company, Apple's handheld market is the company's most current success story, and everyone from Microsoft to Palm to Google has spent the past several years trying (and failing) to duplicate that success.

Schwarz notes that Steve Jobs's recent claim that, "We see no signs of the competition catching up anytime soon," doesn't necessarily apply to the feature set of the iPhone or its integration with iTunes, but rather Apple's financial success and brand impression. He has a point. Recent ads have been trying to sell the Droid on its feature set, telling us all the things that Sega does that Nintendon't - er, I mean, all the things Droid does that the iPhone doesn't, but trying to sell the Droid on features hasn't exactly toppled the iPhone's dominance quite yet, and all indications are that the Nexus One isn't likely to take a big chunk out of Apple's smartphone sales, either.


Schwarz argues that more and/or better features don't mean a thing if the public has a poor impression of your product. For supporting evidence, look no farther than Windows Vista. Vista may or may not have deserved all the rabid criticism it received, but even if it had been the best thing to ever come out of Redmond, the damage to its reputation sealed its fate in consumers' minds. Meanwhile, Schwarz writes that "Apple currently holds a monopoly on brand trust," a claim borne out in numerous consumer satisfaction surveys. Google's phones may not have a Vista-esque reputation, but they definitely have a very long way to go before they can approach the success of the iPhone in either marketshare or mindshare.

All of that having been said, even though Apple finds itself at the top of the music player market and within spitting distance of the top of the smartphone market (not to mention atop a gargantuan heap of cash), all it takes is one botched product to tarnish a formerly sterling reputation. That's why I feel a slight trepidation about Apple's supposedly forthcoming iSlate. Pundits the world over have been hyping this product and claiming it'll be the Next Big Thing, that it'll revolutionize the industry the same way the iPod and iPhone did for their respective markets. For Apple's sake, I hope they're right, because if the iSlate bombs, there's every chance Apple could experience the inverse of the vaunted "halo effect" that brought increased Mac sales thanks to positive impressions of the iPod.

Brand loyalty is indeed crucial to Apple's success. It is for any company, of course, but in Apple's case, where it sells its entire product line as a tightly integrated ecosystem of products, it becomes even more critical. It seems highly unlikely that any of Apple's competitors will catch up to or surpass Apple's success in the near term on their own merits, in which case Apple's only real threat to continued prosperity is Apple itself. It's had a spectacular run over the past decade, but if Apple stumbles now, the company has no one but itself to blame.

Jason Schwarz over at TheStreet has written an article analyzing Apple's current position in the marketplace and what Apple's competition...
 

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Lucas

Out of the box, the AppleTV is a bit "boring"... but once you load 3rd party software on there, the thing absolutely rocks!

Check out Xbox Media Center for Apple TV, Plex, and Boxee.

January 12 2010 at 10:51 PM Report abuse rate up rate down Reply
Andy

I agree with Average White Boy. Jobs isn't thinking about retaining brand loyalty, or playing it safe. He still wants to change the world, and the slate has the potential to unlock a whole new way of how we use computers.

Of course, Apple aren't infallible, and they could screw it up. But while everyone is still playing catch up, you know that they're aiming to change the game again, and you've got to applaud that.

January 12 2010 at 4:17 PM Report abuse rate up rate down Reply
Rego

Sorry but I say BS to the ideas expressed in the article. Specifically if the slate isn't great that it will tarnish Apple's reputation.

You said: "all it takes is one botched product to tarnish a formerly sterling reputation."

Of course botched is a relative term.

Let's assume the slate is not perfect out of the box. The key will be how Apple handles whatever needs to be fixed.

In my experience they will jump on the problem(s) fix them and if need be give customers credit, a gift or accept returns. That would enhance Apple's reputation not tarnish it.

If it turns out to be less popular than expected Apple will either backseat it like Apple TV or in a worse case senario allow it to fade out of existence.

In the meantime it will continue to improve the slate, the iPhone, iPods Macs and software. Those sales will continue.

Apple will be full steam ahead regardless of the slate results, although I am optimistic about the slate. If, as rumored, Steve is happy with the slate that would bode well for slate sales and the user experience.

January 12 2010 at 3:54 PM Report abuse rate up rate down Reply
SIP

If Apple does intro a tablet, I hope it is a 10" Macbook Air with the screen on the face of the device, running OSX with a seamless (updateable) iPhoneOS emulator able to run iPhone Apps.

Now that *would* kill the market for everyone else.

January 12 2010 at 1:39 PM Report abuse rate up rate down Reply
Yung-Jyn

This reminds me of Macworld 1997 when Steve Jobs came back to the company and mentioned that the brand loyalty was one of the most important assets to the company.

January 12 2010 at 7:18 AM Report abuse rate up rate down Reply
Average White Boy

Sometimes a company needs to take risks especially if they want to keep moving forward. You think that Apple should just play it safe to protect itself from making mistakes. That in itself is a big mistake. There is always a chance of a product failing but Apple is going to do everything possible to make this tablet a success. Since it's probably going to be a more powerful Touch, I wouldn't think Apple is jumping off into some void.

How long should Apple wait to introduce a tablet? Or maybe not introduce one at all? That's crap. I think Apple has something to prove. There are probably plenty of indications that they can do well selling the tablet where other companies failed. I think Amazon took a larger risk than Apple with the Kindle since it doesn't have nearly the marketing clout and no retail stores. I give Amazon credit for going up against the naysayers that think tablets are a waste of time or have a lousy form factor. I believe if Apple can build a decent product and offer applications and content for it, it should do relatively well and move the whole publishing industry forward. Currently the publishing industry is not doing all that well and is at a crossroads. Stagnate or go digital. At least the Kindle and Apple's tablet gives them a chance to go digital. Get the consumers excited about reading again.

Let the consumers decide and ignore the tech pundits that already have their minds made up that no tablet can be a success mainly because past tablets failed or somehow a tablet doesn't seem quite right to them. Thank goodness Apple didn't listen to braindead idiots when it announced the iPod or iPhone. If Apple fails with the tablet, then that's the breaks, but at least they'll give it their best efforts.

January 11 2010 at 11:26 PM Report abuse rate up rate down Reply
John.B

"Apple currently holds a monopoly on brand trust..."

But Google currently holds a monopoly on stabbing their hardware vendors in the back, does that make them even?

January 11 2010 at 10:01 PM Report abuse rate up rate down Reply
1 reply to John.B's comment
Dan Woods

No, they share that market with Microsoft.

January 11 2010 at 11:18 PM Report abuse rate up rate down Reply
Dan

Well, when all else fails, the competition might as well as have their CEO or head PR person wear a turtleneck sweater and try to maintain a veneer of visionary erudition yet with that 'everybody-could-love-this-person' appearance. :-)

Imitation is the sincerest form of flattery and all that jazz, after all.

Seems like that's a tough thing to duplicate. An overexcited man with sweaty armpits doesn't quite seem to convey the proper imagery to excite the masses. And so it goes...

January 11 2010 at 9:45 PM Report abuse rate up rate down Reply
Ron

Using feature-by-feature comparisons may work in a commodity market, but the iPod/iPhone marketplace isn't really a commodity market.

If it was, the Creative-series music players, and the Zune would have been a huge success.

The reason they failed to capture the market is three-fold:

1 - The market has already adopted the iPhone (having sold many millions of phones) with a satisfaction rate unheard of in the cell phone market.

2 - Apple's user interface designers obviously have a lot more experience and are much more talented than most of Apple's competitors.

3 - Apple's customer support is second to none.

4 - The Google phone/apps needs to have new features that aren't possible on the iPhone. Currently, there aren't that many new innovations on the Google phone that couldn't be accomplished with a software update to the iPhone.

For the Nexus to be successful, they will have to make sure they take care of points 2 to 4 to make up for ground lost in point 1.

Initial indications are that Google and HTC are failing in the customer support area - each sending customers to each other in order to get support.

HTC hasn't had a steller record when it comes to supporting basic cell phones, and these phones are much more feature laden and will require much better support than HTC has become accustomed to.

They have a long way to go. That's not to say the Google Phone is a bad phone, just that they will have to go beyond being a good phone to get people to take notice.

Many reviews I have read say that the Google phone is good, but nothing special. With reviews like that, for an innovative new product, they are already starting off on the wrong foot.

January 11 2010 at 9:25 PM Report abuse rate up rate down Reply
Jeff Weitzman

The advantage Apple has in this case is that nobody has figured out what a tablet computer is for. The attempts so far have served to show us the possibilities, but everyone is pretty clear these incarnations are not what the product needs or wants to be. It's similar to where mp3 players were pre-iPod or smartphonse pre-iPhone: the players gave us a glimpse of what might be, and started the consumer conversation. Apple waited until it could define the experience. They've gotten pretty good at this, and the stage is pretty well set for them with a tablet. If they've still got their Mojo, they won't announce anything until they can define the marketplace, and thereby their own measurement of success.

January 11 2010 at 8:53 PM Report abuse rate up rate down Reply
1 reply to Jeff Weitzman's comment
Danny

Hey Jeff,
I couldn't have brought this better to the point. And while I agree with the article I also believe (and hope) that Apple will not just release a tablet like Steve Balmer did last week.

If the rumors are somewhat true and that Steve Jobs has been talking to various publishers, then maybe there will be an "experience". We also saw the first steps in iTunes LP and if such a mobile computer will run the iPhone OS then there is an AppStore. All this could give the device a special experience and I hope this all will come. If not and if they just show us a little tablet to compete against netbooks, then this will fail.

But I trust Apple on this one and like you said: they have become REALLY good at this. And developers trust Apple, too. Which is a huge advantage. Why is it that most "big" developers make their games etc. available for Apples AppStore but are rarely seen on the Android Marketplace? They probably trust Apple more when it comes to "establishing" a platform.

just my thoughts on it.

January 12 2010 at 6:38 AM Report abuse rate up rate down Reply
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