WSJ on How the iPod Crushed Creative's Nomad: Branding
by Ricky Spero, 2:00 PM CDT, August 12th, 2004
The Wall Street Journal has published a piece reminding us that Apple isn't always the innovator when it comes to products. In an article called "When Being First Doesn't Make You No. 1," Chris Prystay explains how Singapore-based Creative's Nomad player was among the first hard drive music players to market, but that it failed to catch fire because of the firm's poor marketing tactics.
More generally, the article explores the power of marketing the name of a firm or product rather than the usefulness of the product itself. The tactic is called "branding," and it is a strategy at which Apple excels, which serves as the basis for comparison in the Journal's article. From the article:
In business, though, being first doesn't always make you No. 1. Creative is best-known for its Sound Blaster audio cards for personal computers, a product category it pioneered and continues to dominate. But it's still a niche player; annual sales are a tenth of Apple's.
[...]
And so -- as often happens with innovative Asian manufacturers -- the Creative MP3 player has been a modest hit, while the iPod became a global sensation.Apple ran marketing rings around Creative even in its own backyard. For iPod's Singapore launch in late 2001, Apple plastered the city-state's main shopping district with funky posters and ran a hip ad blitz in movie theaters. Creative's response finally came last month, when it began sponsoring a children's TV show and running its first-ever televised ad campaign. But the ads ran only in Singapore.
"There's been a big shift in our business, and right now, our biggest challenge is marketing," concedes Creative's founder and chief executive, Sim Wong Hoo. "But I'm stingy. I don't want to waste money unless I know it's going to work."
There is much more in full article, which we recommend as a good read (subscription required).
The Mac Observer Spin:
In the article Mr. Sim is quoted saying, "Marketing is important, I know that. But we've always had the best technology, and we still do." He is also quoted saying, "We were first, but Apple has more [money] to splash around." The latter comment may be true, It is important to remember that Apple had two other very, very important assets to "splash around": clever design and iTunes.
We'll be the first to admit that branding is a significant part of the iPod's success. But Apple could not have branded itself as a "cool company" if its products couldn't back it up. The iPod is cool because it's both functional and fashionable.
Equally important was the existing presence of Apple's iTunes. iTunes had been around for a while before the iPod came out; the kinks were mostly worked out, and people were satisfied with it as a jukebox program. That allowed Apple to release a hardware product tied exclusively to that piece of software. Apple gets criticized for making a "closed platform," but people still buy it because it works. If the relationship between iTunes and the iPod were not so smooth, people wouldn't even bother to criticize it -- they'd just take their dollars elsewhere.
