The Hopkinson Report: Wired.com’s marketing guy compares the iPhone to a Porsche, and asks, “Has the iPhone reached ‘no substitute’ status?”
A lot of people would choose to spend $20,000 on an all-new Chevy Malibu described as “almost dynamic,” and that makes sense if you want a brand-new, traditional sedan. In fact, Joe Brown, the editor of Wired’s Cars 2.0 Blog, Autopia, tells me to go easy on the American car maker. Not just because they’re a big Wired advertiser, but because they did really impress him with this model.
But not me. After owning a fantastic 1990 Mitsubishi Eclipse Turbo in my early 20s, I’ve had the itch for the next level of sports car, a Porsche. No, not an ego-fueled $90,000 911 (though I wouldn’t turn it down), I’m talking about the 100s of Porsche Boxsters available for under $20,000.
Meanwhile, it’s time to upgrade life’s most important gadget, the cell phone. Which model will I go for? As you’ll hear, there is no substitute.
Hi! This is Jim Hopkinson, Wired’s Marketing Guy, and yes, they’ve given me my own Podcast. Welcome. Every week, I’m going to take a fresh, funny, and sometimes, frantic look at marketing trends in the Digital World.
Today I’m going to talk about whether the iPhone is reached of what I call â€˜no-substitute status’. Are they at a point where it’s a matter of if you buy an iPhone, but when?
But first, let me you a quick story and talk a little bit about branding. When I was 24 years old, I had a 1990 Mitsubishi Eclipse Turbo. Man, that car was some kind of fun to drive. It was reliable; it was quick, sporty. It even fit my mountain bike in the back with the seat put down. But most importantly, it was a blast to drive. You’re hitting that on-ramp, shifting from second to third, the turbo kicks in, you feel your body pressed back against the seats. It was truly a rush.
But now for the past six years, I’ve been without a car, living in New York City, which is really tough for a guy that likes to drive cars, not simply ride in a car, but enjoy driving a car. There’s a difference; and it doesn’t come from renting a Chevy Malibu 4-door that I can get at Avis.
So I have a dream, I want to own a Porsche.
Now, I’m going to start and end this argument that it doesn’t make a lick of sense to own a Porsche. Forget that a car payment would be $500.00 a month, and insurance and gas would be $500.00 a month, the average cost of a parking space in my neighborhood would be $500.00 a month. Forget all that.
Not to mention, that it’s going to get stolen in New York; it’s going to get dinged up in New York, that it snows all the time in New York; and that if I have to go to Boston, it’s $15.00 to take the bus, but forget about all that. Don’t quash my dream.
But let’s say I magically come up with $20,000. What could I do with that? Take for example, that 2008 Chevy Malibu that Avis always hands me when I go in to rent. What is the marketing behind that vehicle? Now that car was just named the â€˜2008 North American Car of the Year’. That’s a pretty compelling reason to get this carâ€¦right, the Car of the Year?
What does the Chevy brand telling me? Well I pull up their website, and there’s a quote on the front on their page from John Davis at Motor Week that says; and I quote, ‘The Malibu was stylish, almost dynamic.’ Are you kidding me? Almost dynamic, that’s the best you can come up with for the front of your Web page? Almost dynamic??? It’s almost dynamic?!?
So then I zip over to cars.com, and I find a black 5-speed 1999 Porsche Boxster Convertible with less than 25,000 miles. Now, what does their brand tell me? Porsche: There is no substitute.
So of course, if you’re married with two kids, you make lots of trips to Costco, you want a brand new car that won’t break the bank; of course the Chevy makes a much more logical choice. But for the market that Porsche is going after, their branding statement is very, very strong.
And how’s that working out for them? Well, according to Mobile Magazine, Porsche is the most profitable auto maker. It makes more than $28,000.00 per car sold. Compare that to BMW, which clears $3,200.00. And for an American company like Chrysler, take a guess: $900.00. Now people tell me, just buy an old beat-up car or why not get a Honda S2000 Convertible; those are nice. Or what about one of those Mini Coopers … that will be easy to park and drive around town.
But they’re all missing the point.
I’m not buying something just to have a car. I want a different experience – “there is no substitute”. They’ve been able to plant a seed in my mind that none of these other things matter. For me right now, it’s not a choice between five different cars.
It’s a choice between the experience I have now and the dramatically different, albeit, dramatically more expensive, second option.
So through years of carefully crafting their brand, they’ve been able to set up a situation where users will pay a premium to get a better experience while discounting their competitors.
There is no substitute, which brings me to Apple.
OK, let’s start with the iPod.
Now I can speak from experience here because, like a lot of people out there, I actually own several MP3 players in the 90’s before the iPod even came out in 2001. But, then came the iPod boom. All my friends were raving about the iPod. So if anyone, I could talk about alternatives.
But once I bought one, and I saw all the things that went into it: the continual update of iTunes and how much easier their user interface was, the additional of video iPods, new models that are rolling out every eight months or so.
And then the killer app, for me as a runner, the integration with the Nike iPod chip. So when I was ready for the new model, am I gonna to consider the Zune? No. Not when with Apple controlling 70% of the MP3 market. It was either keep the old iPod or choose a new one. There was no substitute.
Apple had set it up so there was no substitute.
Then came my computer.
I have a Computer Science degree. I learned how to program on a Commodore 64. I once bonded with an IT guy because I was the only marketing person he’d met that knew what a SCSI hard drive was; and basically, I’ve spent every day of my working life in front of a PC. So I’m really, really a difficult person to switch from a PC to a MAC platform.
What got me to switch? Well, first of all I admit it. There was a cool factor. Mac’s seemed a lot cooler than PCs. And I started spending time in a Apple retail store, and you can’t help but be impressed with that experience. Then they told me anything I could do on Windows could also be done on a Mac. So basically, over the through the years, Apple slowly addressed and then removed all the objections I have.
But the killer app for me on the computer was a combination of two things.
1) Moving to a smaller apartment, I wanted to go from a desktop to a laptop
2) Something with the competition.
Microsoft released Vista, and the bad reviews that accompanied that. So Apple had played up their strengths with their marketing and exposed the weaknesses of the competition that I might have considered.
So now on to the iPhone.
And I find myself in the same situation as the car, as the iPod, and the computer. Everything I have is now is fine. But what is that killer app out there that’s going to make me pull out my wallet and buy that iPhone. Has the iPhone yet positioned itself to â€˜there is no substitute status’? But here is some things that Apple has done well with their marketing.
1) The coolness factor. Again, like any Apple product, the design it has differentiates it from the rest of the competition.
2) Surfing the Web. No doubt, the ability to find a movie, get directions, check a score, use Google on the fly is a huge selling point. Recent TV spots for marketing they’ve had show users bringing up ski maps, checking car prices, going to Facebook, checking the weather, stock on the fly. They’re doing this very well. But is it enough?
I remember some of the earlier commercials they ran for their visual voice mail. Do you remember that? They made a huge to-do about that. Can you believe it? You can listen the second voicemail you received before the first voicemail you got. Really!?!? That’s a breakthrough idea-worthy of an entire TV commercial??? You know how I get from the first voicemail to the second voicemail on my current phone? I press the number nine! It skips you right from number one to number two. How can that be the most compelling thing on the iPhone?
But to wrap things up, the question I pose originally was – has the iPhone reached â€˜there is no substitute status’?
When it does come time to upgrade my phone, will I look at my competitors from Samsung, Nokia, Motorola, and others. I was recently at a sales conference in New Orleans, and I came across three things in one day that leads me to say at least for now, ‘yes.’
First, from a marketing angle.
I wake up in my hotel room; and there’s this full color, full page advertisement from Sprint in my USA Today. It touted their simply everything plan. Let me grab it here. Alright, for $99.99 you get: unlimited talking, unlimited Web surfing, unlimited emailing, unlimited texting, unlimited video messaging, picture sharing, unlimited GPS Navigation, unlimited push to talk,Â unlimited Sprint TV, unlimited Sprint music, unlimited NFL Mobile, and unlimited Nascar Sprint Cup Mobile. So if I’m a happy Sprint user, which I am, shouldn’t I be the ideal customer for this? The answer is yes, but not on the current phone that I have. I’m going to need a new phone.
Next, from a business angle.
Wired’s (former) Technology Director, Scott Laine, made the point in the presentation that the Apple software developer’s kit cost only $99.00 to publish an application, but the ifund that is set to reward developers for great applications is, insert your Dr. Evil voice here, $100,000,000.Â So in other words, you just have to spend $99.00 to build an application that could net you millions. Don’t you think that there’s going to be thousands of people making unbelievable applications that are going to be the killer app for you in there? I think so.
And lastly, to bring the point home.
We did a team building activity, with an amazing race-style event around the French Quarter of New Orleans. We had to visit various points around the city, answer trivia, collect certain items, and so on. Part of the thinking when they set up various teamsâ€¦ each team had to have at least one member that owned an iPhone.
Now the reason for this is that even to have a single team not have one, would be a tremendous disadvantage. And by using the iPhone in a real world scenario, my team came in first place. Yeah!!!
Now, would I say the iPhone was much more valuable in helping quickly navigate the city than if we had a brand new Porsche?
[Editor’s note… I bought the iPhone 3G in July of 2008]