Leapfrogging phone war

Melbourne Herald Sun, Friday December 2, 2011

If there’s one thing the advertising industry loves it’s a war. Oh, not the “bang bang you’re dead” kind - the “my product is better than yours” kind.

Once the companies don their war paint and charge into the streets, they will stop at nothing - and advertising is one of their cheaper options.

As I predicted 18 months ago, the mobile phone companies weren’t going to lie down and let Apple steamroll the market. They have billions of dollars of investment to protect and they have been working with fury on all fronts: the product development, bells and whistles, retail deals and of course the flood of mobile phone ads we see.

The combined marketing onslaught must be working. Despite the impression that everyone who sits near to you on a train or a café has an iPhone, these days it’s hard to tell the difference between the real Apple and the many similar fruit around.

In fact, Samsung last month proudly declared that their S2 phone had hit top spot in Australian smartphone sales. This follows a year that saw Apple knock Nokia off its perch, now they are under attack themselves.

HTC is another fast-growing phone. The Taiwanese company has startled American analysts by snatching the lead from both Apple and Samsung. Two years ago the company only sold its phones under the stickers of other companies. Now it is selling one quarter of all smartphones in the US.

This leapfrogging looks like the way of the future in the volatile market. Most of the contenders are taking advantage of Google’s Android operating software, highly praised by the critics and allowing the phones to perform new tricks.

Android is an “open code” software. In other words, it is made available to anyone who wants to use it for no fee. Apple’s code, by contrast, is strictly proprietary - and not allowed into anyone else’s hands.

Except, that is, for the bit that allows external developers to attach their applications to the iPhone. The apps market has been the secret to the phone’s success. The last figure I heard was that there are now half a million of the little programs available for iPhones.

However, the developer has to pay Apple a royalty of 30 per cent for any he sells. Whereas Android’s will be royalty-free. So you can bet that all those apps will quickly be edited to fit the Android space.

The Australian phone wars are making world news too. Determined to throw a spoke in Samsung’s wheel, Apple has tried to ban Samsung’s new tablet, the Galaxy Tab 10.1, arguing that it will take away iPad 2 sales - so far they have sold 500,000 iPads in Australia.

Then, just two days ago the Federal Court overturned an injunction and the Galaxy could be selling by next week. So expect another flood of advertising to pour out of the fortresses of the rival corporations. Their advertising agencies must be rubbing their hands in glee.

A new ad in the US is delighting in poking fun at the devoted Apple fanboys. It features a round-the-block line waiting to buy the newest iPhone release. The camera eavesdrops on the Apple corps.

"I am so amped, I could stand here for three weeks," says one.
"Only seven people stand between us and meaning," says another.
"If it looks the same, how will people know I upgraded?" wonders a third.

Doubts start creeping in - the Samsung has a bigger screen, the Apple has battery problems and isn’t 4G. But one determined fanboy sums it up:

"I could never get a Samsung. I'm creative."
His friend chips in: "Dude, you're a barista."

Expect to see a lot more fireworks from Roman candles to bangers to mortars as this war gets progressively more bang-bang.

ray@ebeatty.com

The mobile phone wars are far from over - they’ve only just begun.

Herald Sun 26 June 2010

The mobile phone wars are hotting up with a new intensity of competition. The reason, of course, is the Apple iPhone. And the question is, has Steve Jobs given the sector a shot of adrenalin - or is he vampiring all of the blood for himself?

You see, last year because of the Greedy Financiers' Cataclysm (GFC) the mobile phone market took a sharp dip. The junk bond traders and barrow boys could no longer afford a new phone a week so sales and turnover declined.

But by this year it has recovered, globally up by 22 per cent in the first quarter, selling nearly 300 million units. The impetus has come from smart phones. After all, who wants to be seen with a dumb phone these days?

In the US it's still Blackberry in the lead with iPhone, the newcomer, hard on their heels. Already between them they have nearly 60 per cent of the market.

Here in Australia, Nokia is still the king. But market research analyst IDC predict that Apple will knock the Fin off its throne by Christmas.

The claim has some credence in the street. One phone store was asked, "Are the iPhones selling well?" Their reply, "We haven't been selling anything else all month." There is a definite swelling momentum at work here that could sweep all before it.

So I wondered, well the other companies aren't dummies, they're hardly going to pack up and go home, they must have some strategies up their sleeves. What's the plan?

Nokia were tight-lipped about Apple’s predicted triumph, but they did declare they have the lion's share of the smartphone market in Australia - without nominating a figure.

Their hopes are resting on the new model N8, to be released October-December. This has more bells and whistles than a theatre organ: 12MP camera, high definition video, web TV - and a big graphic screen just like the iPhone's. They have obviously been burning a lot of midnight oil in Helsinki.

The other big hitters are also slugging away. Google's Android operating system is fuelling new magic from the likes of HTC and Motorola, while Microsoft are about to launch their new Windows Phone 7; their current customers include Samsung and Palm.

Where iPhone has won big-time is in the apps race. Two years ago Blackberry had thousands of apps yet Apple had but a handful. Today Apple claim 150,000 apps while Blackberry App World has 15,000 at the most. What went wrong?

"Blackberry didn't focus on apps, Apple did," explained a BB observer. "Also, they don't do their own above the line advertising, just leave it to the carriers, and Apple swamped them." Not controlling your own advertising is like driving from the back of the truck.

This is where good marketing counts and as I've often said, there's no better marketer than Jobs. He has sold iPhone directly to the public, creating a sucking vortex that the resellers can't ignore.

"Resellers hate iPhone, they don't make money out of it," explained the observer. "Jobs put all their money into marketing and has given the guys in the middle nothing."

Nokia also took a swipe at Apple. "We're not a one size fits all company," sniffed a spokeswoman. "We're able to deliver a range of handsets across different price points to different customers."

As if to prove the point, Nokia recently released its Bicycle Charger Kit, like a bike light generator you plug your phone into. It’s aimed at the Third World, one of the biggest growth markets. In South America or darkest Africa, even if they don't have electricity, they can charge their phones as they ride to work. Try that with an iPhone.

Mobile phones and confusion marketing

Melbourne Herald Sun, 20th March 2010

They always call when you're about to eat dinner or your favourite TV show is starting. Now I'm not a nasty person and I don't like being rude to someone who's only doing their job, so sometimes I make the error of answering a question.

"How much are you paying on your telephone bill Mr Beatty?" And then: "We can give the exact same service for $50 cheaper plus a free Nokia XYZ phone - would you like your phone bill to be $50 cheaper?"

Well who's going to say no to that? Next thing you know you are repeating the legal agreement for recording purposes and you have made the switch. Next morning you wake up and recall - what the hell have I done?

If the deal goes through, in a month or two you will compare your new bill with some old ones and find there's no difference - it may be even worse.

Did you just get a bit confused? Well that was quite deliberate - I have only recently discovered that there is a genuine science at work here: confusion marketing. That's now a real phrase in the dictionary. I'm sure they teach courses on it at Harvard.

The point is to get the consumer so confused by varying rates, plans, offers and deals that it becomes near-impossible to make a true comparison between companies.

Banks and credit card companies love the deals. They trumpet their low-rate terms, credit at only two percent interest! Now that will make a difference to your monthly bills. You transfer the debts over. And it's amazing how quickly six months pass, after which the interest jumps to 22 percent.

Electricity and gas companies have now been chopped up into providers and retailers, who all have teams of sales people selling contracts. Wonderful, competition. At one stage I had a sales call almost once a week, each with an irresistible offer that slashed my power bills.

Once or twice, I confess, I did chop and change. But you know what? My power bills kept growing and are higher than ever before.

A new version has appeared in recent years on the Internet. This happened recently to my wife. She found a book on a topic that interested her and bought it on-line. Now all these offers have pages and pages of sales pitch, testimonials, and how great your life will be once you have that book.

What she didn't notice, buried in the spiel, was a line that says: "And you'll become a member of our Philosophy Discussion Group, receiving pages of fascinating information every week." Which went on, "Membership is only $29 a month, automatically deducted from your credit card account, unless you decline the offer within 10 days."

So there's the confusion hook. By ordering the book, she also gave them the right to deduct money for ever. Fortunately she spotted it a few days later and stopped it. Not easy to do, as nowhere on the site was there an "I quit" button.


Of course the masters of confusion marketing are politicians. The easiest way to kill your opponent's policy is not through sophisticated argument. It's by making the issue so muddy and confused that the voters throw their hands up and decide it's all too hard.

It's very difficult to counter-attack. All you can do is get very simplistic yourself and hope you can hit your opponent with a better slogan than the one he is using. Does this all sound very familiar to you?


ray@ebeatty.com