The reaction to Amazon’s new phone announcement followed a pretty typical pattern: gee-whiz live-blogging in the morning and cynical analysis in the afternoon. But dissecting nifty hologram effects and price points is beside the point. New product features have a retail half-life of 90 days and a media half-life of 90 minutes. In a few years these phones will come in the mail for free with an Amazon Prime membership.
The real lesson here is that Amazon has made a pragmatic decision to use the world’s most relevant consumer platform, the smart phone, to help cement one of the world’s most seamless brand relationships.
Andy McAffee, an MIT IT expert and author, pointed to this Interbrand survey of the world’s 50 most valuable brands and noted that the top three growth names could all be described as platforms: Apple, Google, and Amazon. He dismissed traditional business models like Coca-Cola, Toyota, General Electric, and Disney as dead-end single-channel vendors.
It’s a provocative assertion: Right now only three companies really get it, and we get to watch them duke it out in public, McAfee says. But what about the other 47 top brands? If they don’t reinvent themselves as platforms soon, he indicates, only those three companies will really matter in 10 years.
But what does McAffee mean when he talks about platforms?
All three of these companies have been able to extend beyond their original core competencies (hardware, search, and e-commerce) to build direct relationships with their consumers, relationships that are still faithful to their brands but extend way beyond their initial value propositions. Now, it’s likely that every single other company on that Interbrand survey would argue for the same “platform” designation. But here’s a simple test: It’s highly likely that you have an Apple ID, a Google ID, and an Amazon ID.
That ID represents more than basic logistics: your name, email and postal addresses, buying preferences, billing information, etc. This ID represents a relationship. Yes, the core of the brand still matters—design for Apple, knowledge for Google, convenience for Amazon—but while these companies take justifiable pride in their primary products, they also take pains to demonstrate that those products are just a means to an end.
Now, are you walking around with a Coke ID? A General Electric ID? A Toyota ID? A Disney ID? Probably not. Those brands don’t have a relationship with you. They don’t know who you are (you don’t buy Coke from Coke, after all). The idea of having a credit card-enabled ID connected to a fizzy sugar water company would sound strange. Or would it? For a particular demographic, a personalised Coke app might make sense as an event and activities content platform (Coke apps currently in iTunes range from knockoff arcade games to South American radio stations).
What about General Electric? No one logs on to GE to buy a coolant system for a power plant. But GE has a whole constellation of web-enabled products that could feed a great smart home app or a basic medical dashboard for a medical practice (to be fair, they’re actually doing some amazing work in medical imaging software collaboration, but I wonder how many doctors have GE apps on their phones right now).
A Toyota app would make more sense, as cars are essentially turning into data plans on wheels. They’re becoming much more multi-channel and service-oriented; they come with embedded diagnostic devices, entertainment channels, networked security, and safety features. A Toyota ID could access a dashboard app that features all these services in one place, as opposed to the mishmash of scattered apps they offer now: music, roadside assistance, finance calculators, etc.
And finally, Disney doesn’t want to sell its movies on Netflix for a reason. It wants to own the customer relationship. It just spent millions of dollars retrofitting its theme parks for its new FastPass+ system. What if that FastPass+ stayed with you? What if it lived on your phone, instead of on some goofy disposable wrist strap? What if you could use it to check into a Disney hotel, or buy that Frozen doll?
Amazon is using a smart phone, something we carry around with us everywhere, as yet another vehicle to make our Amazon ID or Prime Membership that much more relevant to our daily lives. That’s the real lesson behind Amazon’s announcement, not the specific features that went into the Fire, or how it stacks up against the iPhone.
There is no doubt many traditional brands are working to reinvent themselves as compelling, multi-channel platforms as opposed to single-output marketing bullhorns. And Andy McAfee is right to argue that customer-oriented platforms are going to be the real growth generators in the future. I’m just not crossing any names off of that Interbrand list yet.
Also I’m looking forward to checking out the nifty new hologram phone for myself.
By Tien Tzuo, chief executive of Zuora.
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