Posts Tagged ‘Apple’

Want to cut your ad budget? … Simple, be Apple.

August 13, 2012

According to court testimony in the Apple v. Samsung patent trial …

Apple no longer actually needs to do ANY advertising when it launches new products.

So testified marketing chief Phil Schiller

Instead, the company relies on these two strategies:

  • Positive media  buzz, e.g. glowing product reviews.
  • Product placement in TV shows and movies.

The media is so reliably disposed to favor Apple’s products that when the iPhone was launched in 2007, the company didn’t do any advertising during a brief period after the device was introduced in January 2007 and when it went on sale later in the year.

“We didn’t need to.”

The rave reviews of the iPhone and iPad did a better job than advertising to build buzz.

Apple also relies heavily on product placement: “We love to see our products used by stars in movies and television shows.

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Memo to JCP CEO Ron Johnson: JC Penney isn’t Apple !

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JCP CEO: “You’re fired for not making my dumb idea work”

June 19, 2012

Michael Francis helped make Target a roaring success.  So, JC Penney CEO  Ron Johnson offered him a $12 million signing bonus to jump ships. Francis took the bait.

Bad decision …except for the $12 million … which Francis gets before the tax rates jump on Jan. 1.

Now, Francis taking the fall for Johnson’s “no sales” strategy’s failure to ignite consumer interest.

Johnson’s still claiming that his idea is fine but it wasn’t marketed right.  That there was a failure to communicate.

After all, a sleek logo and aggressive “retail list price maintenance” worked at Apple … so why shouldn’t it work at a commodity rag place like JCP?

Excerpted from BrandChannel:

J. C. Penney ousted its JC Penney brand president, Michael Francis.

Francis was hired last October “at great expense” — a whopping $12 million signing bonus — from Target.

He  is seen as taking the fall for his boss, company CEO Ron Johnson, the former Apple top retailer who oversaw JCP’s new brand strategy in January.

Johnson who championed the idea of killing coupons and sales in favor of “fair and square pricing” (a reference to its logo), so-called “month long value” and “everyday low” pricing.

JCP recently scrapped that strategy and is re-embracing the dreaded s-word — “sale.”

CEO Johnson “will assume direct responsibility and oversight of the company’s marketing and merchandising functions.”

Ken’s Take: If I were JCP, I would have fired the Apple guy and kept the target guy … eventually, they’ll fire the CEO, too … and probably promote their VP Finance to interim CEO … as soon as it becomes evident that the critical Christmas season is a bust

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In case you missed it, I was on NPR a couple of weeks ago commenting on the JCP strategy.

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No coupons, no customers … the perils of being fair & square.

May 30, 2012

Punch line: JC Penney’s is trying to re-cast itself as the “fair & square” retailer.  So far, the dogs aren’t eating the dog food.  Why? It’s simple behavioral economics. People are predictably irrational.

Personal note: When I was at Black & Decker, we tried to lead the industry out of constant rebating.  You know, $5 back if you mail a receipt, UPC code, etc. to some PO Box in Texas.

When we stopped offering rebates, competitors doubled their’s and ate our lunch.

Penney’s should have asked me …

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Excerpted from

JC Penney’s “Fair & Square” campaign, which launched on Feb. 1, appears to be a disaster.

Revenue dropped 20 percent; customer traffic fell 10 percent; the company lost $163 million in the 1st quarter.

Could we have a moment of silence please for what might be the last heartbeat of honest price tags?

Not only did Penney’s plain pricing structure fail to attract fair-minded shoppers – it “repelled” them.

Apparently, if a firm tries to educate consumers on tricks and traps, and tries to offer an honest product, a funny thing happens: Consumers say, “Thank you for the tips,” and go back to the tricky companies, where they exploit the new knowledge to get cheaper prices, leaving the “honest” firm in the dust.

“Once you educate consumers on the right way to shop, they will seek out the lowest cost store.”

To oversimplify, here’s Penney’s problem.

JCP told the world that retailers only offer their best prices during crazy sales, and Penney stores would no longer host them.

Sensible consumers apparently took that information to heart and decided to simply wait for such sales at other stores.

As an added benefit, Penney lowered consumers’ search costs, because they now knew they didn’t need to bother driving to a Penney’s store anymore.

Penney’s is also leaving a lot of money on the table by rejecting a phenomenon known as “price discrimination.”

Some people have more money than time, and some have more time than money.

Some shoppers don’t mind spending hours to save $20; others would gladly give a store $20 to escape quickly. Smart retailers get money from both.

By killing couponing, Penney has eliminated its ability to satisfy price discriminators.

But the real problem is Penney’s ill-fated attempt to cast itself as the only fair poker player in a game of cheats.

Shoppers just aren’t buying it.

However unsophisticated consumers are, very few of them believe a pair of shoes bought at Penney’s everyday low price will be cheaper than a pair of shoes bought at Macy’s on clearance with a 25 percent off coupon.

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What do Mitt Romney and Steve Jobs have in common?

May 23, 2012

I love the irony when it’s revealed that a villain and a hero are found guilty (innocent?) of similar deeds.

Past couple of weeks, Team O has been pouncing on Mitt & Bain for the evil done by private equity firms.

And, for years, Steve Jobs has been revered for his magic at Apple.

Here’s an interesting snippet from an NRO article: Praise Private Equity

Just months before Romney’s career at Bain Capital became controversial, Americans mourned the death of Apple CEO Steve Jobs.

And yet when Jobs returned to Apple in 1997, Jobs returned as an angel of destruction. He fired over 3,000 employees, a move that helped swing Apple from a $1.05 billion annual loss to a $309 million profit.

He shut down Apple’s manufacturing facilities and outsourced almost every aspect of production.

He swung the axe pitilessly, since he was convinced that survival requires leanness.

And in the 14 years after Jobs returned, employment levels at Apple soared.

Apple’s manufacturing work force was eventually replaced by engineers, support staff, and — in a move that would have surprised many in 1997 — a vast army of retail employees.

The destruction was a prerequisite for the creation, and for the transformation of a wounded technology firm into one of the world’s most valuable public companies.

And, oh yeah, Apple is insanely profitable … and pays no Federal income taxes.

Jobs is good; Romney is bad.

Hmmm …

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Disruptive innovation: Apple threatened by skinnied-down challenger.

May 11, 2012

TakeAway: A disruptive innovator in the French Telecom industry is growing market share and inadvertently challenging Apple’s IPhone business model.

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Excerpt from Forbes: “Apple’s Business Model Vulnerability, Exposed by a French Upstart”

Free Mobile is up-ending Apple’s prospects in France. Analysts are blaming the firm for driving down iPhone sales by 10% in the past quarter alone.

Free is offering unlimited domestic calls and texts, free calls to many international countries, 3 GB of data, and no contract commitment — all for $25 a month. In exchange, subscribers give up benefits associated with traditional mobile carriers. Free barely advertises, does not invest in proprietary applications; and doesn’t subsidize handsets at all.


Free has won nearly 3 million subscribers in its first three months, and the incumbents are facing intense price pressure.

This is a major problem for Apple. People who have to pay the full price for a handset flock to the less expensive, and technically quite solid, Android and Windows offerings.

The iPhone has always been expensive, reliant upon big subsidies from carriers trying to stand out from their competitors.

Edited by ARK

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Apple stock tumbling … You may be surprised how much YOU own !

April 17, 2012

Apple’s stock has lost about 9% of its value since hitting its most recent all-time high of $644, and is on a week-long skid.

Even if you don’t own any AAPL sahres outright, if you’re holding any mutual funds or ETFs, you probably own a boatload.

For example, if you’re holding the PowerShares QQQ (QQQ), you’re holding a big slice of Apple … 17.5% is in AAPL/


What’s the top holding in the SPDR S&P 500 (SPY)?

You guessed it, APPL …4.37% of the SPY


Ditto for many of the most popular mutual funds.

For example, APPL is almost 10% of Fidelity’s Contrafund.


A couple of other biggies:

  • Fidelity Magellan (FMAGX) … top stock … 6.24%%
  • American Funds Growth Fund of Amer A (AGTHX) … top stock … 4.85%

You get the picture, right?

Two major takeaways:

First, If you’re holding any popular ETfs or mutual funds — individually or in, say, 401-Ks — then you probably own a bunch od Apple.

Even more important, so many big dogs — ETFs and mutual funds — are so heavily invested in Apple that, as Apple goes, so will the market.

I’m surprised that more hasn’t be written about about Apple’s influence on the total stock market.

You might want to start worrying

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Big Apple, not Big Brother is following you and your iPhone …

March 5, 2012

And the irony is that, in this case, Big Brother is Apple … not the Orwellian-feared government.

How so?

Some Apple apps can jack your address book, photos, and location coordinates.

In other words, all your private stuff.

More specifically, according to the NY Times

The private information and photos on your phone may not be as private as you think.

There are reports that some apps are taking people’s address book information without their knowledge.

As it turns out, address books are not the only things up for grabs.

Photos are also vulnerable.

After a user allows an application on an iPhone, iPad or iPod Touch to have access to location information, the app can copy the user’s entire photo library, without any further notification or warning, according to app developers.

When the devices save photo and video files, they typically include the coordinates of places where they were taken — creating another potential risk.

Conceivably, an app with access to location data could put together a history of where the user has been based on photo location.”

“It’s very strange, because Apple is asking for location permission, but really what it is doing is accessing your entire photo library.”

I guess Apple was right … 1984 is here.

Thanks to MET for feeding the lead.

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What’s $65 among friends?

February 28, 2012

There was a piece recently in  the NY Times — titled How the U.S. Lost Out on iPhone Work.

The article stirred up some flak against Apple for producing the iPhone in China instead of the U.S.

The author argues that lower Chinese wages are, at best, only a partial explanation:

It is hard to estimate how much more it would cost to build iPhones in the United States.

However, various academics and manufacturing analysts estimate that paying American wages would add up to $65 to each iPhone’s expense.

The article concludes: “However, labor is such a small part of technology manufacturing …and since Apple’s profits are often hundreds of dollars per phone, building domestically … would still give the company a healthy reward.”


Apple sells about 100 million iPhones annual … times $65 is $6.5 billion.

So, the answer is for Apple to suck it up, lower its profits, and dish the dough to high cost American workers.

Or, maybe Apple could just jack up the price of each iPhone by $65.

Certainly folks would be willing to pay that much of a premium to get an American made phone that works almost as well as the Chinese made one, right?

I’ll take the under on that bet.

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Move over Angry Birds … I need my iPad to edit a Powerpoint pitch.

February 17, 2012

I got an iPad last summer, but have been having trouble finding really useful things to do on it.  Even emails seem to have major limitations.

Hall talk with colleagues indicated that they were running into the same situation: great for playing games and watching Netflix, but limited re: practical apps.

That may be ending.

More start-ups are writing productivity apps for the iPad … including Quickoffice — which has a cheap app for viewing and editing Word, Powerpoint and Excel.

Anybody out here try Quickoffice yet?

Excerpted from Business Week: Microsoft Office-like apps are a big hit on Apple’s tablet

Quickoffice, an iPad app for viewing and editing Microsoft Office documents was regularly among the top-three highest-grossing apps throughout 2011.

The app can open and edit documents from Microsoft’s most popular productivity software programs: Word, Excel, and PowerPoint. It also ties into cloud-based storage providers such as Dropbox and and social networks such as Facebook, so users can easily store and share those documents.

The app’s $20 price tag is high relative to the app store’s typical $0.99 offerings, but Quickoffice’s CEO says he’s not worried about appealing to everyone.

“I don’t care about units, I care about money.”

Quickoffice’s sales topped $30 million in 2011 and are expected to grow more than 50 percent in 2012.

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Which are the most innovative companies in the world?

November 8, 2011

Apple tops the list from Booz & Company’s annual Global Innovation survey.

The study’s key finding:

There is no statistically significant relationship between financial performance and innovation spending, in terms of either total R&D dollars or R&D as a percentage of revenues.

Many companies — notably, Apple — consistently underspend their peers on R&D investments while outperforming them on a broad range of measures of corporate success, such as revenue growth, profit growth, margins, and total shareholder return.

Meanwhile, entire industries, such as pharmaceuticals, continue to devote relatively large shares of their resources to innovation, yet end up with much less to show for it than they — and their shareholders — might hope for.

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Mr. Sculley, what makes a good manager?

October 27, 2011

An interviewer asked John Sculley, former Pepsi exec and Apple CEO;

Mr. Sculley, you’ve said you aren’t a great manager. What makes a great manager?

Sculley’s answer:

Really good managers want to turn one-off projects into as much of a routine process as they can.

I am a project-centric leader.

I like to work on projects and solve tough problems.

Whereas a really good manager will say, “How do we replicate the processes so that when a problem comes up like this again we can routinely solve it?”

That is a very different skill set.

It takes both to run a successful company.

I always tried to complement my creative problem-solving skills with people on my team who had more process and management skills, so as a team we were very successful.

It’s important to understand what you are really good at and weak at so you can fill out the leadership team with all the needed talent to be successful.

So, are you project-centric or process-oriented?

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Sculley on Jobs … notable quotes

October 24, 2011

In one of the many tribute pieces to Steve Jobs, Business Week published a note from John Sculley.

A couple of lines caught my eye …

On PLC management:

When I first joined Apple, my priority was to squeeze three more years of cash flow out of the near-end-of-life Apple II so Steve would have enough cash runway to create and launch the Mac.

Simplify, simplify, simplify

Steve would say the hardest decisions are what to leave out, not what to put in.

He was the ultimate systems designer.

Always simplifying.

Everything began and ended with the user experience.

Simplify the steps. “Look, we can do it in three steps. … Not good enough, do it in one step.”

The master impresario:

The advances in technology over these years are extraordinary, but Steve wasn’t an engineer.

As an artist he barely drew anything recognizable on his white board.

But as a master impresario, the clarity and brilliance of his creations was genius.

Great companies, noble causes

Great companies must have a noble cause.

Then it’s the leader’s job to transform that noble cause into such an inspiring vision that it will attract the most talented people in the world to want to join it.

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