Why Apple Always Wins: “It’s Better to be First Than it is to be Better”
Chris is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Dr. Scott Powell, Professor of Marketing at Grove City College, teaches that “It’s better to be first to market than it is to have a better product.” Firms that are first to market are often perceived to be better and more innovative.
For example, tech companies could potentially increase sales and even reduce costs by being first to market – sales would increase because the product has a longer “shelf life,” and the company would need to trim down the most expensive features to ship faster. Of course there are exceptions to this rule; however, Nokia (NYSE: NOK) and Google (NASDAQ: GOOG) will lose market share because Apple (NASDAQ: AAPL) is beating them to market.
The Big Announcements
Nokia and Microsoft (NASDAQ: MSFT) jointly unveiled the new Lumia 920 and 820 phones, which impressed the market. Both phones are sleek, and the 920 phone features a high-quality camera, a 4.5 inch screen, 1G of RAM, and an awesome feature – wireless charging. Moreover, the phones will help Microsoft’s push into the mobile market. Microsoft hopes that its new Windows 8 software obtains strong market share.
Both companies have been building up excitement for the operating system and the phones for months – and the companies hoped to be the first to show off their new creations.
Google’s Motorola also gave the market a good glimpse of its new creations. The DROID RAZR is expected to hit stores September 13, but its higher-end RAZR HD and RAZR MAXX phones won’t hit stores until sometime “before the holidays,” says Motorola. In effect, the excitement around the announcement will likely sizzle out before the product is launched.
Being late to market is also a problem with Microsoft and Nokia. Nokia’s CEO Stephen Elop said that the new Lumias won’t hit the market until the fourth quarter this year.
Essentially, these three companies shared their products with the market in hopes that consumers would wait until the phones came out to buy another smartphone – essentially asking people to not buy the iPhone 5. Good luck with that.
Apple’s Strategy
Apple plays the game differently. While not certain, Apple announced its new iPhone 5 on September 12. The phone is to be slimmed down with a larger screen, amid numerous other engineering changes.
Apple understands the mobile market place for what it is – a zero-sum game. Consumers are not going to purchase two phones and two data plans. They will buy only one. That’s why Apple has a history of showing off its newly designed phone then releasing it within two weeks. Last year there was a 10-day gap between the announcement and release, and in 2010 there was a two-week gap. Apple builds anticipation then strikes while the market is still infatuated.
This leaves Nokia, Microsoft, and Google in vulnerable positions. The companies are in the position of hoping that consumers are willing to wait until their products come out to buy a new smart phone – effectively passing on the new iPhone, one of the best products of 2012. It’s the equivalent of asking a small child to pass on a large, warm, and delicious chocolate chip cookie right now so that he can have a smaller stale cookie in one week. It’s not going to happen.
And that is precisely why Dr. Powell says: “It’s better to be first than it is to be better.”
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ChrisMarasco has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Google, and Microsoft. Motley Fool newsletter services recommend Apple, Google, and Nokia. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
