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Apple

With Design as Centerpiece, Apple Stands Out

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Apple continues its evolution from the darling of early adopters to a must-have tech brand for the masses.

Apple's marketing over the past year focused on three key existing brands -- iPhone, iPod and Mac -- but the lines were freshened with updates and extensions, and backed by enticing ads from TBWA's Media Arts Lab, to keep consumers buying amid a faltering economy.

Steve Jobs
Photo: Tim Wagner
ON TARGET: CEO Steve Jobs has become an expert at selling the Apple brand and the lifestyle as well as products.
"A few years ago everyone was saying, 'Boy, those early adopters really love this Apple stuff.' And now everybody is looking at Apple products," says Gartner analyst Mike McGuire. "They don't build things people want or need -- they build things people desire."

"If the products didn't live up to the marketing, then it wouldn't work," says author and branding consultant Joe Calloway. "It all starts with design, and Apple has mastered the notion of design as the core differentiator of product."

It was a year of the second-generation iPhone, skyrocketing Mac sales, redesigns for the iPod line, feature adds to iTunes and hotter-than-ever retail stores. Apple's third quarter, ended in June, beat its own estimates with sales of $7.5 billion, up 38% from a year ago. CEO Steve Jobs said in a news release that it was "the best June quarter for both revenue and earnings in Apple's history."

$7.5B
Sales for the third quarter, up 38%
8%
Apple's share of U.S. market for personal computers
30/70
split (in developers' favor) for apps Apple adds to App store
Mac now hovers at around 8% market share in the U.S.; it shipped almost 2.5 million computers in the third quarter, up 41% from a year earlier; Mac revenue was up 43%. Apple sold more than 11 million iPods and 700,000 iPhones in the third quarter (with sales of the iPhone 3G not included since it didn't go on sale until July 11).

IPhone and Mac got most of the marketing attention. While the iPhone 3G has been marketed with the tagline "Twice as fast. Half the price," its latest big story involves apps.

The App Store sets up an iPhone economy similar to the iPod-iTunes economy. Recent iPhone ads boast of the wide array of applications available for the phone, ranging from the popular "Cro-Mag Rally" game to the Vicinity mapping app, all available through the online App Store that debuted last summer. Hundreds of independent developers are creating apps for the iPhone 3G, and Apple has played its hand brilliantly once again, deftly elevating its smartphone up and away from any other on the market.

Apple's ads continue to be stories in themselves, thanks to TBWA's Media Arts Lab, the unit created in 2006 to handle Apple's advertising and allow TBWA Chairman-Chief Creative Officer Lee Clow to delve into his theories of brands as media. Mr. Clow sees Media Arts Lab not just as a creator of ads but as a participant in the consumer culture, and singer Yael Naim can testify to how that can work. The ultrathin, ultralight MacBook Air got mixed reviews, with some complaining about lack of features, but its introductory spot featuring Ms. Naim's song "New Soul" gave the Israeli performer a big boost in the U.S., with the song debuting at No. 9 on the Billboard Hot 100.

Provoking a response
The "Get a Mac" ("Mac vs. PC") comparison ads with the nerdy Bill Gates-like PC character played by John Hodgman and the cool Mac played by Justin Long continued with 13 creative executions cataloged on apple.com.

And in a testament to the effectiveness of Apple advertising -- among its competitors as well as consumers -- "Get a Mac" finally evoked a response from Microsoft Corp. After years of no response -- and in fact, refusing to discuss the ads at all -- Microsoft recently broke a campaign themed "I'm a PC," which features its own PC character (an actual Microsoft employee) in an effort to take back the PC persona and show that in fact, many people are "PCs," including celebs such as actress Eva Longoria and author Deepak Chopra.

Apple's whole aura of the unexpected adds to its image. Mr. Jobs' closely tracked keynote speeches and famed "one more thing" missives set the tone for reams of pre- and post-rumors and analysis, aka tons of free media mentions and impressions. The strong-willed and demanding CEO is also a savvy marketer with an uncanny and unwavering sense of how to sell not just products but the larger Apple brand and lifestyle.

"Apple isn't guided by engineers, legal teams or financial people. They're guided by Jobs," says analyst Rob Enderle. "They also don't let too many people come out to talk, and when you have a contained group of specific people, you contain the message." Apple wouldn't permit any of its executives or its agency to be interviewed for this article.

From product-marketing mavens Phil Schiller and Greg Joswiak to retail-store leader Ron Johnson (a former Target executive) to world-class designer Jonathan Ive and even longtime Apple agency TBWA and its creative leader Mr. Clow, Mr. Jobs' crew works overtime all the time in each of their specialty areas, even occasionally rising to check the boss' vision.

"Firing on all cylinders is great, but that also becomes a big challenge [to outdo yourself]," warns Gartner's Mr. McGuire. "Steve Jobs has even said it's not like they can count on their competition to push them."

Apps for anybody with an idea

Brian Greenstone was sitting in a hotel bar with a friend watching the Summer Olympics when a new Apple iPhone 3G ad came on. He turned to the friend and said, "Hey, this must be that ad I told you about."

Another friend had alerted him to the spot, and as they watched the iPhone ad, "Cro-Mag Rally," a game Mr. Greenstone created, popped up on the screen and stayed there pretty much for the whole commercial. Mr. Greenstone was stunned. Although he'd signed some release forms a few weeks earlier, he had no idea his iPhone app would be the star of the ad.

"I thought, 'Wow, I'm really getting my 15 seconds,' and it was free," he says. He isn't alone. Hundreds of developers are getting their 15 minutes, maybe not in prime-time ads but through Apple's new online App Store, which is open to anyone with an idea and the ability to write code.

From video games to medical primers to Mandarin language translators, these developers' iPhone apps are either free or sold for a few dollars as digital downloads, with few costing more than $10. Developers split the sales with Apple, 30/70 in the developer's favor. Some, like Mr. Greenstone's No. 1 "Cro-Mag" app, have made millions, while even those further down the list have made hundreds of thousands.

But the App Store is more than just a developer community builder and iPhone sales driver -- it's also emblematic of Apple's longstanding business and marketing strategy. It's once again entered a developing marketplace (apps for mobile phones have been around on a variety of platforms for years), made it easy to use and fabulous to look at, and packaged it all as a necessary lifestyle for the cool and hip and those who just want to be. Remember that the PC, the digital music player and the wireless phone were all well-established when the Macintosh, iPod and iPhone arrived.

"They've created a whole new economy," says Doug Kennedy, apps developer and co-founder of Publisher X. "They've given users who own an iPhone more reasons to use it, but they've also attracted consumers still considering an iPhone."
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