|Sunday, Novemeber 1,1998
Sunday Plus: Page 4
'Sexy' and 'cool' is what sells today
A FRIEND asked the other day if I was on the take from Apple.
"Three pages of drooling hype for the iMac -- that's worth hundreds of thousands in advertising dollars," he said.
He was referring to the Sunday Plus cover story a fortnight ago on the iMac, the latest Apple computer.
"You were selling it as a 'lifestyle accessory with emotive appeal'. Give me a break, man, a machine is a machine is a machine.
"I'm still using my old faithful in my room. So it's not egg-shaped, big deal."
He was jesting about the bribe, of course, but no, I'm not on the take from Apple.
The company did offer though to let me "play" with the sexy thing for a couple of weeks, since we had arranged for the cover shoot to be done in my flat, and one of its men had to lug over an iMac anyway.
I said no to that offer because I knew I would end up buying it. The temptation would be just too much, even though I already have a Power Macintosh G3. Do take it back right after the shoot, I said, not without some anguish in my voice.
(The babe in the cover didn't come with the iMac. She was a model hired by stylist Lionel Lim. And the answer is no if you are wondering... )
I might buy an iMac later on, when I could use a cable modem (I am cable-ready, just waiting for the official green light), but not just now.
So why did my colleague Susan Long and I decide to put the iMac on the cover, and do a big song-and-dance about it?
Because its story is the story of how a machine is no longer a machine, especially in the consumer-product business, and how we need to adjust our mindset to respond to the new -- I dislike this word -- paradigm.
For in the global marketplace, you don't sell machines, just as Nike doesn't sell shoes. You sell a lifestyle.
And it's pointless to be sentimental about your old faithful pair of shoes and lament about the gross commercialisation of Nike, because the world has turned and it's not going to wait for you.
When Steve Jobs returned to Apple as interim CEO in September 1997, the company was in its dying throes. It had lost US$1 billion (S$1.7 billion) on revenues of US$7.1 billion the year before he went back. Turnaround legend Gil Amelio, who was hired to save it, couldn't. He is basically a suit (a corporate type).
In the first fiscal year since Jobs' return, the company made a profit of US$309 million on revenues of US$5.9 billion.
A fortnight ago, at the Flint Center auditorium in Cupertino, California, with a giant picture of Cesar Chavez on one wall and another of John and Yoko on the other, and with Grateful Dead booming from loudspeakers, Jobs in his faded pair of blue jeans unveiled before a gathering of journalists and analysts the company results for the fiscal fourth quarter which ended Sept 25.
What he showed exceeded Wall Street's consensus forecast by 38 per cent -- a tidy profit of US$109 million.
Jobs did several things to turn around the company, such as restructuring its operations, streamlining its distribution, reducing its inventory and cutting down its number of product lines.
But the biggest push came from the iMac, launched in August. It proved to be the hottest launch in the computer industry -- 278,000 snapped up in six weeks -- and for the first time in years, Apple's sales are growing faster than the industry average. Research firm IDC projects that iMac sales will hit 800,000 this year.
What accounts for this phenomenal success?
"It's not about technology," said computer design expert Donald Norman, who is also author of The Invisible Computer. The iMac merges cool industrial design and usability, he said. "It's cute and it's yours."
The design appears to be winning over the tech-shy. The latest issue of Fortune (Nov 9) quotes one study which showed that 16 per cent of buyers were first-time computer users, and an amazing 28 per cent were aged 50 and above.
In an interview in the same magazine, Jobs indicated that there were three kinds of iMac purchasers: the Macintosh users; former Mac users who have switched to Wintel (that's Windows operating system on Intel chip); and new users.
"Between five million and 10 million new users will enter the market in the next year or two, and we'd like to get a much greater proportion of those than our current market share. We're in a pretty good position to do that," he said.
Three weeks ago, when I discussed the story outline with Susan, I had told her I thought the iMac was the nearest equivalent in the personal-computer business to the Walkman.
So imagine how my heart took a little leap when reading the Jobs interview in Fortune, I came to this quote: "The iMac is a pretty good indication of where we're headed. The whole strategy of Apple now is, if you will, to be the Sony of the computer business."
He referred to Sony's strategy of having a consumer-product business, which is its core, and a professional business which serves broadcasters.
"Well, our professional business is our design/publishing business, and our consumer business is education and pure consumers.
"The consumer business is pretty cool because it's very high-volume and you get to interact with individual customers," he said.
Jobs didn't talk about the Walkman but how did Sony achieve its high-volume sales if not through the Walkman?
The Walkman is one of the world's most global products. More than 100 million had been sold by 1994. Many more millions must have been sold since, and in various formats: tape, CD, mini-disc. Today, hundreds of varieties are sold around the world.
No new technology was involved in the creation of the machine, just innovative adaptation of old ideas to new uses.
Sony's marketing staff did not think anyone would buy it. It had a low advertising budget. And the sceptical marketing director launched it by hiring schoolchildren to roller-skate in Yoyogi Park in Tokyo with the machines hitched to their belts.
"The reporters got the idea," chairman Akio Morita recalls. "We were selling a lifestyle."
And the machine was no longer just a machine. MEDICINE is no longer quite medicine either. The two bestselling drugs in recent times are Prozac and Viagra, both of which we could call broadly "lifestyle drugs", since the first is used mainly to manage mood disorders and the second, impotence.
I don't mean to make light of these ailments, which are real and serious, and in many instances, can be debilitating. But Prozac and Viagra aren't exactly life-and-death drugs.
For Eli Lilly & Co, Prozac will contribute nearly 30 per cent of its estimated US$10 billion in worldwide sales this year, making it one of the best-selling drugs ever, according to a recent New York Times report.
Sometime in the next five years, drug-company patents on Prozac will expire, and already Lilly and about six other giant pharmaceutical companies in the US are spending hundreds of millions of dollars to develop a drug that will supplant it as the market leader.
In the case of Viagra, Pfizer Inc said second-quarter sales of the drug, which was introduced in April, totalled US$411 million with 160,000 physicians writing 2.7 million prescriptions as of June 26.
Eli Lilly and Pfizer are multinationals which bank on "star" drugs that can sell globally, as much as entertainment conglomerates count on their stars, whether they are in music, movies, TV or sports.
iMac, Prozac, Viagra, Walkman -- these are global products which, at the same time, are intensely personal to the individuals. They point the way to the future.
What made these products? R & D, creativity, marketing, and especially in the case of Walkman and iMac, iconoclasts.
Although Jobs, 43, is a family man, he still has a wild rock 'n' roll heart. Bob Dylan is his creative role model.
Morita is one of the world's greatest innovators in the technology of pleasure, and his character is a blend of drive, chutzpah and calculated playfulness, according to Richard J. Barnet and John Cavanagh in their 1994 book Global Dreams: Imperial Corporations And The New World Order.
For 14 generations, his family had been a leading sake brewery and distributor of soy sauce. As eldest son, Akio was expected to take over the business. But instead he chose to set up a new company to make electronics products, and found himself up against the formidable giant, Matsuhita.
His radical strategy: "We do not market a product that has been developed already, but develop a market for the product we make."
Do our business leaders make room for iconoclasts, or do they still prefer the quai-quai (obedient and forebearing) types who had spent their early lives cramming for exams and missed out on everything else?
Do we think what is "cool" to sovereign individuals around the world when we think of a product or service, or do we think we know what is best for others?
By the way, Fortune gave 11 pages to The Second Coming Of Apple, including four pages to an interview with Jobs. Another page was devoted to a graphic deconstruction of the iMac, and yet another to a review of the, well, machine.
Fourteen pages in all. Hype or important story?
01/11/98 'Sexy' and 'Cool' is what sells today