Rumors of a $499 Apple

Today's San Jose Mercury News has an interesting article on a rumored $499 computer from Apple. However, the quote at the end by NPD analyst Rich Baker sounds a bit off-key here.

"I'm not convinced that they could do an entry-level product, at that kind of entry-level price, very well,'' said Stephen Baker, director of industry analysis for the researcher NPD Group. ``They'd have to take too much out of it, and make it not very worthwhile. I'm not sure how they'd market it. It's not the kind of thing this company does. Does anyone tell BMW they need to have a $14,000 car?''

So lets see. There are currently Windows computers selling for $399 which incur costs like Microsoft Windows licenses and Intel processor costs which Apple doesn't bear. Further, Apple has the luxury of adjusting the OS to accommodate new low-cost parts, something a manufacturer like Dell or HP can't do nearly as easily. Finally, the analyst's analogy really breaks down when he starts talking about BMW; in fact, BMW has been most successful with its lowest cost 3 series cars, which, while not $14,000 are certainly competitive with more mainstream vehicles like Honda Accords and Toyota Camrys.

The bottom line: Apple certainly has the ability to introduce a low cost computer. However, Apple under Jobs only does things when they make sense for the brand and for the overall image that Apple stands for. But while the rumor may or may not be true, the one thing Blackfriars is sure of that doesn't stand in their way is economics.

More press recognition of the tyranny of too much

Two articles appeared today that recognize and attempt to cope with the trend Blackfriars terms the tyranny of too much. First, the Wall Street Journal noted that the trend for advertising in 2005 is to eschew traditional media in favor of more stealthy means to reach the consumer, simply because consumers are overwhelmed by media messages. Secondly, The Seattle Times noted that consumers today suffer from "cognitive overload" from their efforts at multitasking and trying to do too much at once. Both articles are interesting and thoughtful reading.

Technology Review notes the tyranny of too much

In this season of endless shopping for presents, James Surowiecki comments on why more gadgets don't necessarily increase our well-being. One of the factors he cites is the larger number of choices thrust on the consumer by technology products and the paradox of too many choices decreasing consumer satisfaction.

Telling stories without a net

Today's New York Times has a great article on Garrison Kiellor and his 30 years of telling stories on Prairie Home Companion. One factoid we didn't know before reading the article is that Garrison makes up and tells all his "The News From Lake Wobegon" monologues without ever writing a script. He simply recites the story as it unfolds in his head during the performance. The fact he has done this week after week for 30 years simply shows the power and memorability of stories as a communications medium. Next time you are sitting down and working on a powerpoint presentation, start by asking yourself what story you want to tell and build the presentation around that. You may not be the next Garrison Kiellor, but at the very least, the presentation will be a lot more memorable.

Effective communication demands correct spelling

President Bush hosted a two-day conference on the challenges facing social security last week. Unfortunately, someone didn't bother to spell check the theme of the conference before they posted it on a large screen monitor for the hour Bush was participating in the panel. So now the story is about how much we should trust White House arithmetic on social security when it can't spell the word "Challenge" correctly for a major event. The moral: silly mistakes can undermine communication, even when one has control of the message and the media.

Sizing the US marketing market

Marketing

Update: We have had so much interest in this topic, that we have released an entire market research report on it titled "Sizing US Marketing." Look for it at the Blackfriars eStore. You can read the press release which updates the sizing to $1.074 trillion for 2005 here.

A couple members of the press have recently asked Blackfriars, "How much do organizations spend on marketing each year in the United States?" Well, some of the data we collect in our quarterly survey that drives the Blackfriars Marketing Index actually provided us with an answer. That data tells us that advertising is about 30% of marketing spending in most corporations. We further know that the current estimate for overall advertising spending in the US is $263.7 billion, according to Robert J. Coen of Universal McCann (Stuart Elliot in the NYTimes wrote this article on the topic last week)

The result? Blackfriars estimates the size of the US marketing market to be about $867 billion in 2004. Another way to think about that number is that it is about 8% of the US Gross Domestic Product. Now some may think this number is rather large. But think: how many large corporations have substantial marketing and/or corporate communications departments (hint: nearly all of them unless they are trying to hide under a rock)? How many corporate events are sponsored each year around activities like the Super Bowl or big Las Vegas conventions? Now think about how much time, money, and energy goes into all the corporate Web sites in the United States. All those categories of spending count as marketing activities and are included in this number.

Please comment if you think we're wrong or have other sources of data. But from where we sit, we see US marketing as an almost $1 trillion activity.

Luxury Brands and Consumer Electronics

The New York Times commented this weekend on the fact that luxury brands are outperforming low cost brands in the 2004 Christmas shopping season. This article nicely validates a long term trend identified by Silverstein and Fiske in "Trading Up: The New American Luxury". But we believe this trend isn't just about Gucci bags and Hermes scarves; we can see it playing out in consumer electronics with companies like Bose Corporation seeing new cache in their brands as consumers start seeing them as luxury brands too.

Need more proof that the luxury brand trend is diffusing into electronics? Take a look at the PC industry. For years, the conventional wisdom was that only companies with the lowest costs could win in PCs, implying that high touch, high value companies like Apple were doomed. In fact, Apple has been proclaimed dead or doomed no fewer than 43 times in major press since 1995. Yet last week, it was PC maker IBM who sold its PC business, joining the ranks of Compaq, eMachines, and others who found the relentless price competition against Walmart-inspired Dell too unprofitable. The major market research companies have lowered growth for the PC sector in general, and even ingredient brand companies Intel and Microsoft are struggling to keep their stock prices up. Apple, in contrast, will likely see one of its best years ever in 2004.

We'll be continuing to look at this trend next month when Blackfriars will visit the 2005 Consumer Electronics Show in Las Vegas. After all, no event better illustrates the tyranny of too much than CES. But meanwhile, selling luxury in electronics seems like a trend that marketers should stay tuned to.

Intel's unintended dual messaging

I listened to Intel CEO Craig Barrett and Intel COO and CEO-elect Paul Otellini speak at their 2004 Fall Analyst meeting earlier this week. One of the big messages in the meeting was Intel's transition to dual-core technology, which they claimed will power 70% of its desktop chips by the end of 2006.

But there was a different dual-core message at work with the executive presentations. Barrett, who was hired as an engineer at Intel, spoke to a set of slides that were simple, clear, and easy to understand (those are slides 1 through 21). Otellini, who led Intel's sales and marketing prior to taking over the COO and President's role, spoke to a set of slides that were highly technical, rather complex, and full of acronymns and graphs (slides 22-49).

Guess which executive was quoted more often and more accurately in the news stories after the event?

The moral of the story: no matter how technical your product, you will be more effective in any job if you deliver simple and easy-to-understand messages.

Clear Messaging Matters In Politics As Well As Business

Blackfriars believes that simple and clear messages, what we call strategic clarity, are the only way to cut through the tyranny of too much. The Democratic party wasn't convinced of that strategy before the election, but now may be getting the message.

George Lakoff, a Berkeley professor, was scheduled to speak to House Democrats in Washington today about how the Republicans have been dominating political debate by using clear and evocative messaging, and what the Democrats can do about it. Some great examples Lakoff cites of what Democrats should do to frame political issues: 1) refer to the national debt as the "baby tax", 2) redefine same-sex marriage as "the right to marry", and 3) talk about environmental protection as the right to live in "poison-free communities."

The title link above is to an article in the San Francisco Chronicle describing the talk.

Welcome to the Blackfriars Blog

Hi all,

As the result of our Web-based discussion forum becoming clogged with spam postings, I've decided to try creating a blog instead. As before, we welcome your feedback on our site and our content. This blog also allows me to comment on marketing, technology, and learning events as they happen and solicit your comments on those as well.

To kick things off, I'd like to point people to today's New York Times article titled "What Corporate America Can't Build: A Sentence." The upshot: with so much corporate communication happening by email today, many employees find that they shouldn't have slept through their basic English grammar and spelling courses.

Click on the title of this post, and you'll be taken directly to the article for the next couple of days.

Carl