2012 7 25 splendin isolation
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1) Apple has achieved "Splendid Isolation" from competitors through its closed ecosystem and control over both hardware and software, leading to consistent innovation and financial success despite economic turmoil. 2) Apple's annual revenues have grown tremendously in recent years and now exceed the GDP of many countries, demonstrating its economic power. 3) Within Apple's ecosystem, brands can connect with consumers through iAd mobile ads and apps, though opportunities are limited and competition is intense given the vast selection available. Successful examples like the Nike+ app show what is possible.
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2012 7 25 splendin isolation
- 1. splendid iSolation By Norm Johnston @ntjohnston
- 2. In a far off corner of the of $508 billion, making it the world’s biggest world called Silicon Valley there is a land company. In short, Apple could easily snap up that lives in a perpetual state of bliss. It’s a the likes of RIM, Twitter, and T-Mobile...and place seemingly oblivious and unbothered by still have a hefty cash balance. the constant warfare of its neighbours. Each harvest is more successful than the last one. Who lives in this delightful digital kingdom? Even the death of its founder and spiritual As you might expect it’s slightly more male leader hasn’t curtailed its good fortune. This than female (55% to 45%) and dominated by land is called Apple, and it seems to live in those 25-55 year olds working hard enough to Splendid Isolation from the rest of the world; a draw enough income to pay Apple’s big price paradise island with a closed ecosystem that tags. However, an increasingly vast swath thrives while its neighbours continue to poke of society has opted-in to Apple’s expensive each other in the eye. alternative digital universe, where USB sticks are frowned upon and applications rather Apples annual sales income ’ than the old fashioned open Web rule the is greater than the GDP of 160 roost. In fact, in the US, tablets, dominated by the iPad, are now outselling clunky old countries. PC’s, which most punters predict will soon happen throughout the world. One in two In Apple’s case we probably should call it US households now own an Apple device. Splendid iSolation. Against all odds Apple No longer just for geeks and fashionistas, has become one of the world’s wealthiest everyone from truckers to flight attendants companies and most recognized and use Apple kit. Infants now swipe before respected brands. Apple’s business has gone they walk. Apple’s broad appeal is partly from $20b in sales in 2005 to over $128b in explained by their ability to control and 2011; many estimate it will hit over $200b in perfect the entire user experience via their revenues by 2013. To put that in perspective, ownership over hardware and software and Apple’s annual sales income is greater than a largely closed and controlled ecosystem. the GDP of 160 countries around the world, Unlike their competitors, Apple doesn’t including Poland and Belgium. have to compromise to meet the lowest common denominator throughout the value This growth has confounded investors waiting chain; this generally equates to superior for them to trip-up over a botched product and differentiated innovation on a timeline or the on-going global economic maelstrom. largely based on their judgement rather than None of this has happened. Granted, not every multiple dependencies. new product has been as earth shattering as the previous one (hello iPad 3), but people Infants now swipe still flock to their local Apple store willing to pay hefty prices; Apple makes a $368 before they walk. profit for each iPhone while Google makes roughly $10 per phone. If that isn’t enough, So what can brands do in this blissful bake in the 30% Apple makes from sales of ecosystem? To date Apple has mainly limited iTunes applications compared to Google’s brand opportunities to ads and applications, measly 5%. It all adds up to some really big their version of milk and honey. Apple’s numbers: as of writing this Apple has $110.2 iAd advertising network is part of their iOS billion in cash and a market capitalization operating system, and allows brands to create
- 3. content that can be displayed within iPhone, mobile assets, including Apple friendly iPad and iPod touch applications. iAd’s are content. designed to combine the emotive impact of TV with the interactivity of the Internet, all on Nike+ has grown to over six a portable device. Naturally done in HTML5, iAds not surprisingly keep users in their million dedicated and very fit applications, conveniently not disrupting users. their user experience. The second most discussed brand opportunity is around applications. The industry has moved beyond the initial knee-jerk “let’s make an app” stage and is now collectively taking a much wiser view on whether and how to successfully develop and launch an application; fundamental given that consumers have over 600,000 apps to choose from in the iTunes store. In fact there are over 800 new apps added every day, and nearly 50% of them are free. So getting your target audience’s attention with a new application is iAds have now been around for nearly two not easy. Recent research from Deloitte found years, and Apple has wisely eliminated the that nearly 80% of branded apps get less than confusing media pricing model, minimized 1,000 downloads. So how you do launch an the upfront commitment to $100k from app and ensure users can find it, download $1m, and dialled down the hype and dialled it, and use it? Clearly iAd’s play a key role via up the data to lure more marketers into the their ability to both reach consumers at scale iAd program. Mindshare data indicates that as well as enabling those users to quickly well-developed iAd’s can deliver results. download the app in the actual ad unit . For example, our Range Rover Evoque iAd Think of iAds as the communications tool, campaign featured an eye-popping 360° while the app is the on-going brand platform virtual tour of the car complete with a for consumer engagement, which can be configurator tool all built into the actual sustained and significant. Take Nike. They advertising unit. It was an incredibly rich teamed up with Apple to create arguably the and award-winning experience. However, industry’s best example of a branded utility marketers need to keep in mind that and application. Nike+ has grown to over six such a unique creative asset requires million dedicated and very fit users. more production to match Apple’s unique What other digital delights exist in Apple specifications and quality expectations. land? Many brands have been enviously Consequently, any ROI needs to factor in sizing up Siri, Apple’s intelligent assistant. development budgets as well as media costs. Siri’s seductive voice has persuaded 87% of To reduce such expenses, Apple has launched their iAd Production support program, which eases production time and costs via drag and drop tools. Furthermore, groups like Mindshare’s Mumbai Mobile Center of Excellence have been established as one- stop shops to cost-effectively scale multiple Nike+
- 4. iPhone users to talk to her at least once a Travel site Orbitz has discovered that Mac month. Granted, nearly a third of those users users tend to spend 30% more a night on never make it beyond basic commands like hotel rooms. Consequently, Orbitz is now making a phone call. Nonetheless, Siri will showing Mac users costlier premium hotels in surely mature and spread her wings over the their search results. coming years. Steve Job’s successor Tim Cook The last point regarding targeting across has made it clear she’s a core ingredient to devices is particularly important as Apple their future success. Apple has so far fended potentially expands into the living room. off any significant paid brand opportunities The long rumoured Apple iTV may finally be with Siri; the lady is apparently not for sale. the device that revolutionizes the television However, surely Apple is contemplating experience, and acts as a catalyst for some useful commercial applications for the entire IPTV industry, including early Siri, particularly as she’s lined up to rival and pioneers like LG and Samsung. Sounds usurp Google’s ubiquitous search engine. ambitious until you think about what Apple Imagine Siri delivering brand-sponsored has already done to turn the music, mobile, cooking assistance or health and fitness and PC industry upside down and rapidly training? Siri may even go through a gender scale next-generation device and business or species change and reappear as Mr. Clean model adoption. If Apple iTV really does or Tony the Tiger. exist, marketers may finally have a chance to innovate on the good old television, an opportunity that has thus far eluded them due to industry fragmentation, lack of scale, and inferior experiences. Apple iTV may finally be the device that revolutionizes Apple Siri the television experience. Finally, Apple has an absolute gold-mine of data of from its iTunes store. Over 400 While Apple engineers possibly experiment million users have left not only demographic with TV, the iPhone and iPad experiences information but also behavioural data and will continue to evolve. Graphene chips credit card purchase history, not to mention will dramatically increase the memory on whether they are Justin Beiber or Deep Purple these devices while making them lighter, fans. Over 125 million have also uploaded maybe even transparent. NFC technology their content and data directly into the will turn your iPhone into a wallet guided iCloud. Apple has been very coy about how and informed by Siri and your iTunes data, they use and protect this data, but over time which of course will enable Apple to deliver they may enable marketers to ethically tap a seamless experience, including highly- into this information to improve targeting targeted branded content and utilities, across and experiences across the Apple ecosystem, all of their devices and ecosystem. Splendid and maybe beyond. Some companies are iSolation indeed for both consumer and indirectly leveraging Apple proxy data. advertiser. Even Siri must be smiling.