How Apple can weather mounting iPod threats

If you’ve ever worked hard on something and watched someone else brazenly copy it, you probably have some idea how Apple Computer must be feeling right now. Throughout 2004, at least five different major companies tried to knock off the iPod’s interface, business model, and/or marketing strategies, but none had the gusto or product that could derail Apple’s bullet train.

In recent days, however, legitimate threats to the iPod’s momentum have appeared: knock-offs and clones on the low-end, aggressive new multimedia challengers on the high-end. So now more than ever, Apple needs to take actions – some quiet, some loud – to prepare itself both for what’s happening today and about to happen over the next several months. To that end, iLounge humbly offers the following suggestions as to how the next stage of the iPod’s evolution to ubiquity could best be managed.

Stay on Message, Call Sony Out as a Pretender: The single strongest theme Apple enunciated in 2004 was one we editorialized on twice during the year (1, 2): the iPod is the de facto successor to Sony’s Walkman. It’s a powerful message, and a winning one – so much in fact that we hear it’s now basically taken for granted even on the streets of Sony’s native Japan, which would have seemed impossible only three years ago.

We continue to believe that this theme is Apple’s single best rhetorical weapon, as it has a simplicity that has resonated in popular and media circles. Now it bears further repetition and emphasis – with a new twist: even if you pack hundreds or thousands of songs onto another device, you can’t get the iPod’s awesome user interface anywhere else. Period.

pic The reason this is necessary, of course, is that Sony’s PlayStation Portable (PSP) is rapidly gaining popular mindshare as a multi-function device that plays games, music, movies, and photographs – and Apple really hasn’t responded. We have numerous guesses as to why, but none of the explanations (including, most improbably, hopes of a post-Kunitake Ando Sony/Apple alliance) are compelling enough to justify Apple’s silence at a critical juncture in the iPod’s history. And all Apple has to say is one thing that most PSP owners (and critics) already know: other than games, the PSP doesn’t do anything, particularly music or photo organization, especially well. You can buy a memory card and put a bunch of music or pictures on it, but sifting through and enjoying anything is a surprising chore for a device with two joysticks and a screen.

Sony’s trying very hard to look like an iPod competitor. In late 2004 and early 2005, the company showed itself willing to buy the respect from fashion designers and reporters that Apple had built from grass roots with the iPod. Like so many of the company’s ham-handed PR efforts, Sony’s embarrassingly brazen Pret-a-PSP fashion show in March tried to create out of whole cloth a PSP fashion buzz resembling the spontaneous development of iPod fashion cases by top designers over the past few years. Similarly, Sony has done everything short of inventing a fake critic to build media praise for the PSP, delivering boxes full of free PSPs and software to well-read critics and offering to fly the best-known of them on expenses-paid junkets to test upcoming products.

That’s why we weren’t at all surprised to see all the media excitement over the $249.99 PSP – even when its music, movie, and photo functionality are so weakly implemented. It’s easy not to mind paying $120 for a Memory Stick to store 1GB of your music or movies when you didn’t have to cough up $250 for the PSP, and even easier to overlook the $40-50 game and $20 movie price tags when you get them for free. That might even explain why virtually no one has commented on the absurdity of buying $20 UMD movies (instead of, say, $20 DVDs) that can’t be viewed on televisions. But it doesn’t explain why Apple hasn’t said anything – and we think now’s the time to speak up.

Thanks to its pricing decisions, Sony didn’t achieve the PSP sell-outs it expected and boldly promised, and thanks to its use of proprietary memory cards and discs, it hasn’t yet won over the skeptical masses it needs in order to sell tens of millions of anything. In other words, Apple has an absolutely prime opportunity right now to deliver the message that millions of people want to hear them say:

pic “We have something coming. It’s going to use a hard disk, not proprietary memory cards or discs. It’s going to integrate with your computer and the rest of your home A/V equipment. And for 90% of the population, it’s going to be better than the PSP. Save your money.”

And someone has to call Sony out for what it is: a well-financed but perpetually confused pretender that is already preparing to antiquate the PSP with something better, just like it did with three different models of the Network Walkman HD in the last 12 months. That someone should be Apple. At this point, no one else has the incentive or the cohones to do it.

Apple’s Public Relations, Re-thought: Marketing and public relations should be two of the most critical aspects of any growing business’s strategy. They’re separate, but heavily intertwined. Marketing is how you make your product appealing on a macro level – to the masses. Public relations is how you get the word out on your product at a micro level – to individual journalists, local and regional level events, and generally “to the streets.”

pic You need both in order to have mass-market success, but most companies go heavy on the marketing while ignoring the equally important PR side – and its sometimes overworked, underappreciated human resources. Any company with cash can blanket the airwaves with catchy commercials, but if the word on the streets isn’t positive, you’ll have problems. The public relations department is a company’s front line for generating and maintaining positive word of mouth. That’s exactly what happens when you have good relationships with journalists and the public at large.

It’s easy to scale marketing efforts upwards; Apple has done this extraordinarily well, and it has clearly yielded sales dividends. However, while it’s obvious that the company is also making efforts to reorganize its public relations efforts, more is needed here: specifically, more PR personnel and a different attitude as to who and what is “important” for PR purposes. iLounge’s editors frequently hear stories from journalists – including some very noteworthy ones – who can’t get Apple to respond or provide assets they need for iPod-related articles. Some decide not to write those articles. Others offer their editors stories about other (competing) devices. Who benefits? The iPod’s competitors. And for no good reason.

As one last comment on marketing: though Apple doesn’t need this reminder, we underscore (for those readers who missed the company’s days of management-by-sugar-water-salesman) that great technology companies go rotten when they are driven by marketing concerns rather than making great products and using marketers to figure out how to sell them. The brilliant technologist should always be the master – or at least, the truly equal partner – of the marketer, rather than the servant.

Finally, Re-invigorate Your Fans (and Refocus Your Legal Efforts): At the end of the day, the single biggest key to the iPod’s past success – and Apple’s continued survival in a PC industry full of laser-equipped sharks – has been fans; individual people who have in recent months spent $99 to $599 of their own money to buy iPods. These are people who feel as if they have a stake in the iPod’s success, and we dare assume that most of them love their iPods. Their positive feelings help give life to the Mac-selling “halo effect” that we don’t just believe to be true – we know it’s true – and the street-level word-of-mouth that turns new people every day into iPod owners.

pic Releasing new iPods keeps journalists excited and is great to attract new people to the party, but the existing huge iPod userbase now has a life of its own. Keeping these 15 million or so people happy – whether through iTunes Music/iPod giveaways, frequent software updates, or progressive customer service policies – is the key to creating sales of the next 15+ million iPods, all of which could easily take place in the next 12 months. There aren’t 15 million people singing the praises of the PlayStation Portable or any competitor – yet – so leveraging this base will yield commensurate rewards.

As a final note on this point, it should be blatantly obvious by this point that there’s a buzzkill effect in both journalistic and public circles whenever Apple has mounted legal threats against any of its fans – even ones the company thinks are deserving. More than any other company, Apple has benefitted tremendously from the passion, support, and – yes – occasional overenthusiasm of its fans. They should be appreciated, and never scorned. Fans aren’t parasites; they’re the ones who pump cash and optimism into your products and stock prices, turning your ideas into history book-class icons and your executives into multi-multi-millionaires. Love your fans and they’ll love you back.

There are much smarter ways to use the budget you’ve allocated for legal resources. Go after the people who are cloning iPod shuffles. Draw up the contracts for a worldwide iTunes Music Store where American customers can buy Japanese music and Chinese customers can buy American music. (At the moment, Japanese customers might be satisfied with an iTunes store where they can buy Japanese music.) Better yet, create the first iTV Store where people can download any TV show they want at 99 cents per half hour. Wasting your time and energy on comparatively trivial lawsuits and threats is beneath such a great company, especially when there’s a world waiting to be conquered.

Agree with this editorial? Disagree? As always, we love to hear your opinions. Post them in the comments box below.
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