Image by HP PSG APJ via Flickr
The sudden news of Hewlett-Packard’s (HP) decision to exit and essentially give up on the Smartphone and Tablet markets has some analysts and market watchers reeling. This amounts to an outright ceding to Apple and their success with the iPhone and the iPad. The read I get into the corporate announcement by HP’s CEO Leo Apotheker is one of a strategic move to focus on challenging IBM with head-to-head similar business models. It sounds plausible given his background with SAP. But there is more to this story.
The real question is why consumers or business buyers will not buy into not only HP’s Touchpad but all the other Apple iPad imitators including Blackberry’s Playbook and the Android Tablets? After all, some of the Apple iPad challengers have features that work well, offer more technology than Apple iPad, and synch up well with email. Like HP, Samsung, Toshiba, RIM, and others have made significant investments into the Tablet device but are combined a very small fraction of the market share. So what gives?
What Apple understood well is the buying behavior of their audience. Apple took time with their Apple iPhone to gain an understanding of how consumers and business buyers behaved when considering a Smartphone and exactly who were their buyers. Let’s think back just a little. Before the Apple iPhone, Smartphones were essentially targeted towards the business buyer and the enterprise. Hence, RIM’s Blackberry devices became the dominant corporate device. When Apple iPhone came out, there was a significant shift in buying behavior. The iPhone made the Smartphone a mainstream device that transcended both consumer buying behavior and business buying behavior. It became the everyday device that cross the boundaries of personal and business use. The growth of the Android Smartphones is directly attributable to this shift in buyer acceptance and the fact that Apple may have stayed a little too long in its’ exclusive arrangement with AT&T. Having a few years of understanding this buyer behavior phenomenon, Apple designed the iPad to fit into the mainstream and know what satisfied their ultimate buyers. What are Apple’s competitors missing and getting myopic about?
Technology
Most of Apple’s competitors jump on the shortcomings in technology. The lack of Adobe Flash is repeatedly the most notable shortcoming loudly announced in promotional channels. What their competitors fail to see is that buyers simply don’t care. The only types of buyers who care are the techie power users who are features and spec obsessed. Mainstream Apple iPad buyers wanted a device that is easy to use, a fun experience, and something that became a part of their everyday life.
Distribution
Because the iPad was creating a new market, Apple understood that new buyers would exhibit some excited yet hesitant behavior. Apple’s retail presence allowed buyers to get informed about the iPad, touch it, experience it, and talk to knowledgeable Apple dedicated folks. Contrast this with the other Tablets. It is either Best Buy or Office Depot. Or, you can go to a Verizon or AT&T retail location. As anyone has ever experienced at these distribution points, you have to rely on luck to get someone to help walk you through a new device with a knowledgeable sense of mainstream usage. Most often you get people dedicated to showing their prowess for in-depth knowledge of features and spec – or worse – you get sales people who simply don’t care.
Buying Experience
Associated with distribution is the overall buying experience. The buying experience through Apple’s retail distribution is designed to make people feel at ease learning, exploring, touching, and talking for as long as they want about an Apple product. You get a representative dedicated to finding out how you might use an iPad and showing you how to fit it into your everyday life. I talked with a health and beauty salon owner recently who visited her nearest Apple retail location and discovered that she could get rid of her cash registers and use an app on an iPad 2 designed specifically for her type of business. She was so excited she ordered two. Best Buy, Verizon, and others simply cannot duplicate the experience one can get in an Apple retail location.
Marketing
The marketing that launched and continues for the Apple iPad 2 is a clear example of knowing your audience and ultimate buyers. You get the sensation when you watch an Apple iPad 2 advertisement on TV of – I’d like to do that! They focus is on the experience that can be created as well as how this experience enhances the buyer’s own daily lives. Competitor advertisements seem to miss the mark on knowing who their buyers are – or – they focus exclusively on the techie spec buyer. Emphasizing futuristic speed, HD resolution, Flash, and oftentimes technological features that most people just don’t comprehend nor do they want to comprehend.
Applications
The only point to make here is this: Apple is so far ahead in available apps that there is something for everyone. All others are simply playing catch up. What Apple discovered with the iPhone and is enhancing with the iPad 2 is that the purchase of the device is only the beginning. The buying experience is duplicated and reinvented each time Apple iPad 2 owners discover a new app that enhance their life.
What is the lesson in this latest market shakeup? For all businesses, failure to understand not only who your buyers are but also what drives their buying behavior could have you doomed from the start. A lesson HP has no doubt harshly learned and is cutting their losses. Apple iPad 2 competitors seem to have missed behaviors that transcend consumer and business buying. Instead they have focused myopically on technology and a small fraction of a buyer audience that cares. You see, that is the problem the challengers are facing – mainstream buyers simply don’t care – unless it is an Apple iPad 2.
