Ramblings of an Eccentric Soul... |
An MBA grad student @ Thunderbird School of Global Management, a musician, a gadget-freak, a committed geek, a doodler, a babbler, a cook, a lover of the simple things in life, a proud T-bird... I am available on a lot of services. You can access them here - Renganathan Ramamoorthy When I find time, I am usually writing at
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Apple has an edge, but…
The ever venerable John Gruber makes an excellent point in his piece Herd Mentality. He argues that Apple is the only company with its own OS and is hence able to stand out from the herd of PC makers. I cannot agree more. I believe that Apple is able to be competent and play the game well because they have a different strategy as opposed to other PC makers. There is one thought that I disagree with John.
And then there’s HP, a company with one of the best names and proudest histories in the industry. Apple made news this week for the design and tech specs of its all-new iMacs, which start at $1199. HP made news this week for unveiling a Windows 7 launch bundle at Best Buy that includes a desktop PC and two laptops, all for $1199. That might be great for Microsoft, but how is it good for HP that their brand now stands for bargain basement prices?
I am not sure if that’s such a bad thing for HP. Branding in the PC industry is tricky. There are very few brands that can command the premium on price that Apple can because of their dependence to Windows and the fact that John argues that everybody finally runs the same OS. Consequently, people tend to almost discount hardware. This puts the PC makers in a predicament and requires them to change their strategy to run economies of scale. Business 101 teaches you that economies of scale forces your brand equity to go down. This is the reason why HP has acquired Voodoo and Dell has acquired Alienware - for the premiums that these brands can command in the PC market. So, yes, HP can now be a bargain basement brand (which I still don’t believe is entirely true) but they have a line within their company that commands premiums (even if the profit is razor thin). So HP is now a brand family, which has its own flaws of brand dilution. However, all this is not necessarily BAD for HP. HP still has an enterprise side which is rock solid, which Apple does not have (yet). And HP can also capitalize on its other profit making businesses of services. So, while the HP PC brand might be losing, it’s not necessarily bad for the company.
