I used to think that patent lawsuits and such were not in my area. For Lawyers, inventors and innovators and maybe even engineers. Absolutely! Marketers like me? Absolutely not. That is until now.
An article just appeared in Wired entitled, Apple Fires at HTC, But the Target is Google http://www.wired.com/epicenter/2010/03/apple-fires-at-htc that got me me thinking about smartphones, iPhone and the recent launch of the Google Nexus One smartphone manufactured by HTC.
I remember seeing that Google’s groudbreaking strategy of selling this next generation, unlocked and carrier-agnostic smartphone direct to customers had run into a few bumps early on.
Some customers were having trouble trying to sign up or get their phones activated. It appeared that others who couldn’t figure out where to get activation and other issues resolved, found themselves in customer service “purgatory,” getting an endless runaround between Google or T-mobile, the charter carrier for this landmark product with limited success. And then some folks, who got sick of the whole thing and attempted to end their new service apparently were hit with a $350 early termination fee from their old friends at, no not the carrierT-Mobile, but Google itself.
These issues I think could be attributed to a new product and in fact whole new paradigm and distribution eco-system that is no longer under carrier control. My initial thought was, so what, there are a whole lot of customers out there hungrily waiting for this great device that will buy it anyway.
If you read my last posting, you may remember my response to Nexus One and the very real threat it posed to Apple’s iPhone franchise, the leader in its space. And what I perceived (and still do) as a very real threat capable of exploiting Apple’s weakness inherent with it’s excusive ATT relationship. Because of this, a strong Nexus One product has the ability to render the current leader iPhone to niche status.
Then it hit me. Add up the launch glitches with this new wrinkle, and any uncertainty before has now been amplified many times over.
And what does that mean?
It means that mainstream, early majority/mainstream buyers who may be very interested in this product, especially on say a Verizon or other non-ATT platform… are now forced by their very nature to hold off any such purchase and wait, wait until these issues have been resolved… a process that I bet may take years to sort out if Apple has its way!
This is NOT good news for Google!
How is this so? Geoffrey Moore in his great book that I still use in my Principles of Marketing class entitled Crossing the Chasm defines “early majority” buyers as conservative and pragmatic.
They don’t gamble on horse races… they buy from already established winners. They also adopt when peers adopt, and peers don’t adopt until leadership has been established. This paradox gets to the core of the Chasm.
And of course, once things are hashed out and leadership established, customers buy often moving all at once as a herd creating a lucrative Stampede, Tornado or Tipping Point that we have all heard so much about.
The key underlying risk and now major impediment to market domination comes down to, “What happens to my $500 investment in Nexus One if this suit is won by Apple?” In this case, this is a $ billion question!
I will bet that this very lucrative and key mainstream segment will most likely do what they always do when faced with such uncertainty… they stay with the status quo, perhaps begrudgingly, and wait until things get sorted out.
This makes this patent lawsuit a classic market-buster, at least for now.
Google/HTC had an opportunity to grab a significant market share of smartphone buyers who if nothing else, had an interest in a product of this class outside of ATT from a trusted brand and innovator.
But now this prize is out of reach, at least for now with this very clever, marketing move by Apple. The market will wait. And I will bet Apple is in no rush to settle either.
Google still has another prong to its strategy, which is to evangelize its Android operating system as far and as wide as possible, but the lucrative profits from its own handset will elude them, at least for now.
I will leave you with this thought. I still don’t think lawsuits like this should be considered savvy marketing strategy or tactics, except perhaps under unusual circumstances.
One criteria which makes this a marketing move is the fact that the Plaintiff in this case (Apple) is the established leader in this category, and under attack by the Defendant newcomer (Google/HTC). Conquest of the top-dog, especially a leader such as Apple, which is marketing at a consistent, radical and best practice level, is very, very hard, even if you are Google.
Secondly, Apple’s claim of patent infringement is credible even to us lay folks. It does not appear frivolous. Just look at the phones side by side. If it did, we probably wouldn’t care.
Are there others? I would love to know what you see and think.
Marketing To Win 