Friday, October 27, 2006

what would you do if you were battling Apple?

Apple has just announced record profits of US$ 546 million for the quarter. What a difference an iPod makes. When it was launched, in 2001, Apple shipped 125,000 iPod units over two months and 746,000 Macs on that quarter, with a profit of $38 million. Five year later, on the fiscal fourth-quarter of 2006, Apple shipped 8.7 million iPods and 1.6 million Macs. I don't want this blog to become another Mac-fanatic blog. It's just so happens that there's so much going on with Apple at the moment. While reading these latest news I couldn't help but wonder that being at the other end of the rope must not be much fun these days.
Apple behaves as a challenger brand (to borrow Adam Morgan's concept), but in terms of brand perception it is actually much bigger and it has much more clout than the typical challenger brand. Its entry into the music market helped to generate a momentum that has spread to its computer division. They've just entered the movie distribution market, and there are rumors that they are about to enter the mobile phone category (if they ever figure out a way to control the whole distribution channels, i.e. telcos, which seems to be the biggest obstacle now). While they still have a small (but growing) market share in computers, the perception is that they're on a roll and can do no wrong at the moment. And what about the competitors?
Microsoft, while still big, seems to have lost its focus and is now all over the place: they're losing their grip on the browser arena (they've just launched IE7 after years of delay but Firefox is rapidly gaining ground); they have a search engine to battle Google; they'll launch Zune mp3 player to battle the iPod; but more importantly, they still have to figure out their strategy in this open software economy. The only thing hot at Microsoft now is the Xbox. But what's Microsoft's positioning in consumer's minds?
Dell, the largest computer maker in the world is facing problems with their low-cost strategy having recently stated declining profits. In perhaps a surprising twist in their strategy, they have started talking about, of all things, design, as if trying to steal a page out of Apple's book.
Creative Technologies, the maker of Zen mp3 players, brazenly declared "war on the iPods". That was about two years ago. After several quarters in the red, the company sued Apple for a copyright infringement (settled for US$ 100 million). They're now one of the official "Made for iPod" accessory makers.
RealNetworks also launched its own music downloading service (not available for Macs, apparently).
Sony is going through a reorganization process, trying to end its siloed culture (not to mention the flaming batteries problem).
The biggest threat to Apple seems to come from Google nowadays. With the recent purchase of YouTube, Google has a firm grasp of the growing video distribution business, which clashes with the iTunes+iPod video player. There's one detail though: Eric Schmidt, Google's CEO just joined Apple's board, proving once more that Steve Jobs is a very shrewd man.
So, what would you do if you were battling Apple? That's the billion-dollar question.

Burton, John. 2006. Creative surges on $ 100 million Apple payment. Financial Times. August 24, 2006.
de la Merced, Michael. 2006. Recall wipes out Sony's profits for latest quarter. The New York Times. October 26, 2006.
Evangelista, Linda. 2005. Creative expands the war against Apple and iPods.
San Francisco Chronicle. August 1, 2005.
Flynn, Laurie J. 2006. Apple profit rises 27%. Stock jumps. The New York Times. October 19, 2006.
Gunther, Marc. 2006. The Welshman, The Walkman, The Salaryman. Fortune. June 12, 2006.
Kirkpatrick, David. 2006. Microsoft's New Brain. Fortune. May 15, 2006.
Kirkpatrick, David. 2006. Dell In The Penalty Box. Fortune. September 18, 2006.

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