Apple iPad success shows PC firms need to pursue Stella Artois tack

Apple's success since the Second Coming of Saint Steve has effectively rewritten much of what we thought we knew about the computer industry. Back in 1997, Michael Dell could quip that Apple should give shareholders their cash back without serious objection apart from a sympathetic thought that this was kicking a man when he was down. Today, with Apple worth getting on for 10 times bigger than Dell by market cap, and with the iPad providing yet another smash hit, the boot is very much on the other foot -- and (mixing metaphors here) thereby hangs a tale.

Michael Dell could make this comment because in 1997 the computer industry seemed very simple. The textbook had been written, it seemed. In fact, it could almost be expressed as an equation:

Building-block commodity platforms (Intel chips + Microsoft operating systems) + open ISV platform + low-cost manufacturing + integration with server + supply-chain excellence + direct marketing = lowest-cost products = reasonably satisfied user = volume

But that's now ancient history and the new paradigm is this:

Industrial design + unique selling point + tightly controlled ISV platform + internal IP + user delight + supply-chain efficiency + retail stores = premium-priced products + integration with handset + fee-attracting software services + brand marketing = volume with fat margins

There are some caveats of course. Apple's rise has been largely on the consumer side (although its rise in business would be remarkable if seen in isolation) and the mainstay business client device remains the PC. Also, that supply-chain efficiency has been the subject of various tricky questions of ethics. But there's no doubt that the new model is asking very difficult questions of the PC generation that Dell embodies. So much so that Dell and other Wintel-generation vendors have even dumped the beige facia and have emphasised colour, design and differentiation.

Also it's clear that not everybody can 'do an Apple' by going their own way but there might still be some lessons to be learned. For example, some still seek to knock Apple on price and value terms but surely one aspect of what we are seeing here is evidence of the cleverness of the old Stella Artois campaign. Apple products are "reassuringly expensive" and therefore must be superior and worth the extra: this, remarkably, is a message that has resonated even in the teeth of a recession.

Everything we thought we knew about how to sell computers turns out to have been (partly) wrong. The PC was the product of the 'good enough' generation that abided by the rule that a product satisfying most of our needs would be satisfactory assuming the price was right. Instead, it turns out an older adage, coined by Ralph Waldo Emerson, may have been right all along: "Build a better mousetrap and the world will beat a path to your door."     


Copyright © 2010 IDG Communications, Inc.

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