I’m channeling Steve Jobs this week, and it is clear that he really doesn’t think very much about his largest competitors. Why? He thinks the firms are being run by idiots – even though he doesn’t lead the market in share – because he makes more profit and his company has proven to be a vastly better investment over the last 10 years. Moreover, he was CEO of the decade, while Mark Hurd, HP’s CEO, was just fired, and most everyone else is chasing each other’s tail for the low-profit end of the market.
This week, let’s look at the market through Steve Jobs’ eyes, and think about why he thinks powerful competitors like HP are a joke. This is kind of a heads up to those interviewing over the next few weeks for the CEO job at HP, because I’d bet the HP board will want them to describe in some detail how to take the grin off Jobs’ face and put it on theirs.
Consumers buy products with simple names. Look at the car market: The affordable sports cars from Ford and Chevy are the Mustang and Camaro, for luxury and performance you want a Cadillac STS, or for pure performance you want a Corvette. If they use designations like Audi, they have a method like S5, which is a hot A5, or TT which is a sports car. Even the complex names are easy to remember, and the car folks seem to be chasing at the moment is the Hyundai Sonata. I did all of that without having to look up a single name.
Now, look at Apple. Its small computer is a Mac Mini, its notebook line is all MacBook and comes in two screen sizes, its workstation is a PowerMac/MacPro. Once again, I can name entire lines including the iPad, iPod (Touch, Mini, Shuffle, Classic), and iPhone. If I like one, I can easily communicate what to buy, and it doesn’t take a 60-page manual to figure out what I’m talking about.
Now, name a single product from any vendor with enough specificity to get you to the product. There are a handful: the HP TouchSmart, HP Envy, Dell Adamo… and that’s pretty much all I’ve got. The rest are a daunting mess of letters, numbers, and versions that not even the vendors can recite without some kind of a cheat sheet. Lenovo is actually one of the best, with series products that go back to when IBM was running the division named T for general purpose business, and X for extremely light. Coincidently, Lenovo is also the fastest growing PC vendor at the moment.
Steve gets that if you want to sell to people, and not walking calculators, you have to have names that can convey the core values of the related products. That is a meeting that most Apple competitors evidently missed.
Revenue and Market Share Don’t Matter, Profit Does
Apple doesn’t care about market share. While it is fun for us pundits to pit one vendor against another for the dubious title of who can sell the most unprofitable hardware as each attempts to buy the market, the real test is how much money you actually make. Apple’s profit is unmatched by any vendor short of Panasonic, and they do this by focusing like a laser on building a Lexus-like product and leaving the battle for the lower margin Toyotas to everyone else. HP tried to address this with its Voodoo products, but these were based on a gaming brand that didn’t transition to luxury, and largely failed as a result.
Apple succeeds by providing a store experience in the Apple stores that is unmatched, products that are perceived to be of higher quality, and a marketing effort that focuses consumers on their advantages. It took the Japanese car market a couple of years to get that the Lexus model worked, and respond with Infiniti and Acura – and we think that market is slow compared to tech. No other PC company, again with the possible exception of Panasonic, has understood the Apple lesson, and Steve must think these guys are blind.
HP at least bought Palm to address this problem, but Apple started moving on this market over four years ago, and there has yet to be a credible challenge to its position by any PC vendor. The company Apple worries most about is likely HTC, a relatively young brand and still small compared to the big players in both the cell phone and PC space.
In both the case of the iPad and iPhone, Apple didn’t really come up with anything new, it simply executed better, with the most complete eco-system and a well-managed, premium user experience. The company still gets lines to buy its relatively expensive devices. Everyone else seems to be on the “build it and they will come” wagon; even Nokia should be wearing a large pink dunce cap over this.
The formula is simple: Build something compelling, then wrap it with a well-funded, well-designed demand-generation program that drives people to the unique advantages of the product. Evidently, this is still too difficult for anyone but Verizon, which has, with the Droid, demonstrated it can execute at near-Apple levels.
Steve Jobs Shouldn’t Be So Happy
Apple is far from perfect. In many ways, companies like HP build products that equal Apple’s. However, they don’t name them, market them, or wrap them with equivalent experiences. So, from Steve Jobs’ perspective, they are mostly fighting for a part of the market that he has no real interest in, the part that has the lowest profit, the lowest customer loyalty and the highest risk. Were I HP’s next CEO, I think I’d work to fix that, because Steve has been too happy for too long, and maybe my own investors, employees, and customers need to get a couple of chuckles on their own. Or put another way, the winning candidate for the HP CEO job should be able to describe how he or she will enjoy the tech market more, and make sure Steve Jobs enjoys it less.
The views expressed here are solely those of the author and do not reflect the beliefs of Digital Trends.