Analyst Angle: How to beat the iPhone and the Blackberry

Editor’s Note: Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry. In the coming weeks look for columns from Current Analysis’ Peter Jarich, NPD Group’s Ross Rubin, and more.
There are a lot of brain cells focused on trying to find ways to beat Research in Motion’s Blackberry and Apple’s iPhone. What amazes me is how few of the strategies seem to have any real chance of succeeding because none of the competitors wants to do what is necessary to win the race. They seem to think they can introduce products at random and eventually one will magically get the attention of the market. While that was how the Razr came to be, this “throw stuff against the wall” approach rarely works in markets where the leading companies, in this case Research in Motion and Apple, are both focused and successful.
Neither of these companies is unbeatable, but to beat them a firm will have to do things they aren’t currently doing and may not now be qualified to do. It is my view that anyone competing in anything unwilling to do what it takes to win, should walk away and save everyone a lot of money, time and effort. Right now I think the majority of cellphone, and cellphone platform, providers should just go home because they clearly don’t intend to play to win.
Let’s look at what it would take to play to win.
Own the solution
Both Research in Motion (RIM) and Apple own their respective solutions end to end. When you look at most cellphone providers they only own the hardware, share ownership of the applications, and generally get the operating platform from someone else. In addition, core back-end services also are supplied by third parties. For both RIM and Apple, they generally define the solution and it is their technology at the client and server sides of critical parts of it. For RIM it is their own server that makes e-mail work and for Apple iTunes is the back-end for the media delivery core to the success of their iPod and iPhone platforms.
Microsoft actually owns more parts than either RIM or Apple in terms of technology but they generally don’t own the solution. Particularly for phones they don’t own the hardware and virtually never control the Exchange server the phones connect to so the experience with Microsoft offerings is very uneven, ranging from excellent to frustratingly bad.
Motorola with Good Technology actually comes really close to the RIM solution but they don’t have the product variety in this category nor do they have good carrier coverage so most aren’t even aware they can match or better RIM in terms of solution because they will never own or know someone who uses the Motorola solution.
Design to sell
The iPhone and various RIM phones have a clear primary focus and that is to do one thing better than anything else in their class. For the iPhone that is multimedia and browsing, for the RIM phones it is e-mail and text. Apple is targeting, at least for now, the consumer and RIM is targeting the employee and executive, and both are starting to look at the other’s turf.
Both have realized these devices are personal and have put a substantial amount of effort into making them attractive. Right now thin is in and it amazes me how many phones are trying to compete with both of these offerings that look fat, and are, by current hardware standards comparatively unattractive as a result. Apple, in their design, actually favored this thin look over practical aspects like being able to survive a drop and long battery life. The consumers didn’t care, and in some ways the Blackberry Pearl is both the most attractive and least useful of RIM’s products and it has also been one of the most successful.
Recalling an earlier hit phone, the Motorola Razr, you may recall that while it was incredibly good looking for its time it was almost painful to use and very limited for its class. That didn’t seem to matter because people bought it in record numbers.
Both RIM and Apple get that metals, high gloss plastics, glass, sometimes color choice, and thin are driving current successful designs and that this crosses a number of product areas including laptop computers right now.
Demand, not just advertising
This last amazes me because it often looks like most of the cellphone companies believe that if “you build it they will come,” which rarely actually works. Apple is expert at demand generation marketing, from hinting at things that aren’t announced to building a feeding frenzy, to how the product is introduced, to broad spectrum marketing; there are few people who don’t want an iPhone right now. It is amazing how many people I know that have bought one and kept it who actually have a second cellphone to use for calls. Getting people to buy something they shouldn’t actually want, based on their current needs, showcases the power of marketing done right and is a good deal of the success of the iPhone.
RIM, because they are mostly focused on business, is more restrained and their campaigns are largely limited to focused print advertising. If they truly expect to go after Apple’s turf they will have to up their game which, while adequate for their current business audience, isn’t going to work with the broad consumer audience they will eventually be targeting more heavily.
Now this doesn’t mean that other companies don’t market, clearly Samsung, Motorola, and LG have highly visible campaigns running this year. But advertising alone isn’t really marketing and getting people really excited about a product generally requires aggressive placement, seeding, advocates, and/or events that Apple is famous for. For many CMOs I often think they think success is a splashy campaign, success is making your product so desirable people will prioritize buying it over almost anything else.
The keys
As Apple broadens its target market, look at how they are managing what will come out of their releasing their SDK, by pushing the results through iTunes they are building in a quality assurance model to make sure they continue to own the quality of the products. This is ownership and is the most important foundation element to being, not just successful, but a segment superstar.
Toyota leaned that to be successful in the U.S. market they needed a U.S. design studio and they are now the biggest car company in the world. Thin, Metals, high-gloss plastics, glass, and color/finish customization are what is currently driving a lot of segments right now (even washing machines).
Finally, it continues to amaze me how many CMOs seem to be forgetting the basics. One of the things that helps Apple stand out is that marketing is designed into their products at the front end. If the goal is to sell lots of phones, then they should be designed to sell at birth.
Eventually someone is going to build the phone that blends what is best in the Blackberry and iPhone and create a “Perfect Storm” product. But I doubt it will happen by accident, it will need the services, design, marketing and consumer experience to win what could be the biggest opportunity ever to exist. Think about how big is the market for a device like this? Anyone want to bet against Apple getting their first?
Questions or comments about this column? Please e-mail Rob at renderle@enderlegroup.com or RCR Wireless News at rcrwebhelp@crain.com.