 "A great product and a great strategy are different things: Felix Oberholzer Gee")
Strategically speaking, Apple keeps making the same mistake over and over: developing a really great product and then failing to make that product ubiquitous, Felix Oberholzer Gee tells Devina Joshi
Reverse publishing has picked up in some markets but a lot of conventional markets are yet to see the wisdom behind digital-first publishing. Is this a good thing or a bad move?
As media companies look for new models, it is always very dangerous to generalise and say that there is a particular best practice that will work for everybody. Let me give you an extreme example: The Economist is very slow to embrace the web. The weekly digest does not depend on digital-first at all; it is a lean-back experience that allows me to think about what happened last week. But there are other publications which, if they didn't go digital-first, would be in deep trouble.
The issue, really, is on the ad revenue side: How can we pay for newsrooms and first-rate journalism given the low ad revenues? There is a whole range of answers. I would be very surprised if reverse publishing was the answer for everybody.
In emerging markets consumers show resistance to paying for online news. What, then, is the way forward for paid content?
I think what's common between more mature markets and emerging markets is that it is very hard to charge for commoditised news (news that I can get from free sources). If I can google the news, why should I have to pay for it? For mass news, people won't pay. But why can an FT, The Wall Street Journal or The New York Times charge? Because they are different, whether it is high-quality, in-depth reporting or their ability to break news faster than everybody else. They are the type of publications that make the news as much as they report it. But for the kind of information that is available everywhere, I don't think anyone will be able to charge.
What would you advise global brands looking for a cost-advantage in emerging markets?
From a brand's perspective, there is no such thing as India, China; there are, say, urban middle-class consumers in the big metros. Then I can decide the brand message. Places like India, China and Brazil are so diverse. To think that there is a 'Brazilian' approach is like thinking 'what works in New York will work in Ohio'. No, these are very different markets.
Some of the common misconceptions brands have is that if people have lower incomes, they don't have high aspirations. Brands think they can get away with selling last year's products that don't sell anywhere else. You can often de-feature products so that they have more reasonable price-points but it can't be a 'meek version' of what you sell in mature markets. You cannot think that emerging markets mean lower standards. Nothing could be worse than that. Take China, where we get a price premium for brands which is anywhere between 20 and 50 per cent greater than the US. Why? Because in China there are a lot of fake products. 'Brand' as a symbol for quality is therefore much more valuable in China than it is in the US.
Analysts say Apple is on its way to losing its leadership position and has been reduced to a tentative, challenger brand now. What happens if a market leader fails to spot an opportunity in time - even if that leader is as formidable as Apple?
Strategically speaking, Apple keeps making the same mistake over and over: developing a really great product and then failing to make that product ubiquitous. Apple is always dying a beautiful death and the only thing that saves it each time is if that next product idea comes just in time before the company is in serious trouble.
Rewind to the mid-90s, and you will find everyone convinced that Apple is dead. Why? Because Apple has a product called Macintosh, selling at enormous prices with just a tiny market share, which means it has no software to speak of and therefore, the company is set to be dead. More recently, take the iPhone. Apple has a beautiful phone, sells it at a huge premium and as a result, the global share is tiny. And so, Android and Samsung are the big companies in this market. So how you manage the collaborative environment of a company is as important as what the company does. What is an iPhone without really great applications? Nothing.
Apple's weakness is that it cannot understand how to effectively collaborate with other companies. Apple wants to be alone and righteous - as a result, it is niche. The one product Apple managed really well is the iPod, which didn't cost a bomb and as a result of its success, Apple's finances were restored. But that is an aberration in the history of the company. Just consider how Jobs fought tooth and nail not to make the iPod part of the Windows Operating System. I mean, don't you see… 98 per cent of the internet humanity is on Windows. By creating a product that works only with the Macintosh, you relegate yourself to being 'not important', right then and there. Opening the iStore to others at this point in time seems nothing but an afterthought.
The margins in being premium are wonderful but as the market gets commoditised, if 'rounded edges' and other silly little things are your competitive advantage, that won't last. Big market shares tend to be more sustainable than niches. Apple is an example of how great product companies are not, in general, great strategic companies. Having a great product and having a great strategy are two different things.
A STEP AHEAD
Reverse publishing has picked up in some markets but a lot of conventional markets are yet to see the wisdom behind digital-first publishing. Is this a good thing or a bad move?
As media companies look for new models, it is always very dangerous to generalise and say that there is a particular best practice that will work for everybody. Let me give you an extreme example: The Economist is very slow to embrace the web. The weekly digest does not depend on digital-first at all; it is a lean-back experience that allows me to think about what happened last week. But there are other publications which, if they didn't go digital-first, would be in deep trouble.
More From This Section
I see this very often now, if there is an interesting new model that works, everyone wants to jump on the bandwagon. The New York Times does a paywall, and the next thing you know, everybody does a paywall. It is a very specific answer working for The New York Times given its costs and opportunities, but the same publication that also owns The Boston Globe, doesn't do the same paywall for it. There is an interesting array of models out there, but the idea that if I don't follow 'x' best practice I am in deep trouble is possibly the worst thinking one can have.
The issue, really, is on the ad revenue side: How can we pay for newsrooms and first-rate journalism given the low ad revenues? There is a whole range of answers. I would be very surprised if reverse publishing was the answer for everybody.
In emerging markets consumers show resistance to paying for online news. What, then, is the way forward for paid content?
I think what's common between more mature markets and emerging markets is that it is very hard to charge for commoditised news (news that I can get from free sources). If I can google the news, why should I have to pay for it? For mass news, people won't pay. But why can an FT, The Wall Street Journal or The New York Times charge? Because they are different, whether it is high-quality, in-depth reporting or their ability to break news faster than everybody else. They are the type of publications that make the news as much as they report it. But for the kind of information that is available everywhere, I don't think anyone will be able to charge.
What would you advise global brands looking for a cost-advantage in emerging markets?
From a brand's perspective, there is no such thing as India, China; there are, say, urban middle-class consumers in the big metros. Then I can decide the brand message. Places like India, China and Brazil are so diverse. To think that there is a 'Brazilian' approach is like thinking 'what works in New York will work in Ohio'. No, these are very different markets.
Some of the common misconceptions brands have is that if people have lower incomes, they don't have high aspirations. Brands think they can get away with selling last year's products that don't sell anywhere else. You can often de-feature products so that they have more reasonable price-points but it can't be a 'meek version' of what you sell in mature markets. You cannot think that emerging markets mean lower standards. Nothing could be worse than that. Take China, where we get a price premium for brands which is anywhere between 20 and 50 per cent greater than the US. Why? Because in China there are a lot of fake products. 'Brand' as a symbol for quality is therefore much more valuable in China than it is in the US.
Analysts say Apple is on its way to losing its leadership position and has been reduced to a tentative, challenger brand now. What happens if a market leader fails to spot an opportunity in time - even if that leader is as formidable as Apple?
Strategically speaking, Apple keeps making the same mistake over and over: developing a really great product and then failing to make that product ubiquitous. Apple is always dying a beautiful death and the only thing that saves it each time is if that next product idea comes just in time before the company is in serious trouble.
Rewind to the mid-90s, and you will find everyone convinced that Apple is dead. Why? Because Apple has a product called Macintosh, selling at enormous prices with just a tiny market share, which means it has no software to speak of and therefore, the company is set to be dead. More recently, take the iPhone. Apple has a beautiful phone, sells it at a huge premium and as a result, the global share is tiny. And so, Android and Samsung are the big companies in this market. So how you manage the collaborative environment of a company is as important as what the company does. What is an iPhone without really great applications? Nothing.
Apple's weakness is that it cannot understand how to effectively collaborate with other companies. Apple wants to be alone and righteous - as a result, it is niche. The one product Apple managed really well is the iPod, which didn't cost a bomb and as a result of its success, Apple's finances were restored. But that is an aberration in the history of the company. Just consider how Jobs fought tooth and nail not to make the iPod part of the Windows Operating System. I mean, don't you see… 98 per cent of the internet humanity is on Windows. By creating a product that works only with the Macintosh, you relegate yourself to being 'not important', right then and there. Opening the iStore to others at this point in time seems nothing but an afterthought.
The margins in being premium are wonderful but as the market gets commoditised, if 'rounded edges' and other silly little things are your competitive advantage, that won't last. Big market shares tend to be more sustainable than niches. Apple is an example of how great product companies are not, in general, great strategic companies. Having a great product and having a great strategy are two different things.
A STEP AHEAD
- A member of the Harvard faculty since 2003, professor Oberholzer Gee received his Masters degree and his Ph.D. in Economics from the University of Zurich
- His first faculty position was at the Wharton School, University of Pennsylvania. He teaches competitive strategy in executive education programmes such as the Programme for Leadership Development and Senior Executive Programme for China
- Prior to his academic career, he served as managing director of Symo Electronics, a Switzerland-based process control company