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From Toyota to Apple: Lessons from an Abstract Comparison

February 17, 2010

Toyota’s recent troubles remind us about the limits of a company’s growth. The Japanese car maker provides an abstract comparison for Apple, a company whose current growth and penetration seems unstoppable. Nonetheless, Toyota’s rise and recent falter (fall?), provide valuable lessons and potential insights for the Cupertino-based power.

This article captures how the dynamics of brands and companies capitalizing on opportunities and looks to identify the challenges that can follow.

It also offers a prediction for Apple’s own ‘brake-problems’ – and who may benefit.

The Oil Crisis of 1973

In 1973, the oil crisis drove consumer interest towards lighter, smaller more fuel efficient Japanese cars from Nissan, Honda and Toyota. From the late 1960s into the early 1970s, Japan nearly doubled production of Toyotas. American car makers continued to suffer from decreased sales into the 1980s. Meanwhile, Toyota and other Asian brands were able to create brands that represented quality and reliability, at a time when it really mattered. It would later introduce brands Lexus – and eventually Scion. This growth represented success in delivering a focused platform of reliable, quality vehicles – including the Tundra and other larger, more luxurious vehicles. Quality began to represent luxury – and the amenities of Lexus – backed by the reliability of Toyota – provided the ultimate luxury for consumers.

Scion, a Departure from Toyota’s Core

Nonetheless, while the brand grew over time – extending its international manufacturing presence, and furthering its development into Formula 1 and its Scion brands – I think this is where they lost focus. If you noticed, Scion was a departure from previous Lexus/Toyota marketing – focused on customization and the cheap tricks of the street car scene, following the likes of Fast and the Furious. Those cheap tricks helped to create traction among younger buyers – but did little to connect with the core-brand. Like the rap music that boomed in those cars, the street-racing movement probably shares its peak in the early 2000s around 2002-2003. (I’m referring to another article from Christian Science Monitor <http://www.csmonitor.com/Commentary/Opinion/2010/0129/Move-over-Kanye-West-Taylor-Swift-and-the-Millennial-generation-are-taking-over-music/%28page%29/2> that demonstrates how Gen Y’s taste in music now prefers country and rock, based on sales).

The comparison has been made between Toyota’s Scion and GM’s efforts with Saturn – although I truly believe that is a bit different – as Saturn could have helped GM transition in the long-term, if correctly positioned. However, that is an entirely different analysis. More importantly, Scion represented the type of significant brand growth that can become difficult for any company to manage and maintain.

Today, we’re turning on the TV, logging into our Twitter feeds, and listening to reports about Toyota’s continued struggle. I’d say that Toyota definitely lost focus on what helped them capitalize on the opportunities associated with the 1973 oil crisis – and continue with its legacy of quality and reliability.

Apple’s 1973, the (Microsoft) Antitrust Decision of 2000

For Apple, they received a similar opportunity. At the end of the 1990s, United States vs. Microsoft resulted in the 2000 decision that Microsoft committed and attempted monopolization. While not the same as what happened in the auto/oil industry in 1973, this definitely sent shockwaves through Silicon Valley. The impact and opportunity here is the dissolution of Microsoft’s Internet Explorer packaged/bundled with Windows Operating System.

In addition, post Windows 95 operating systems (Windows 98, ME, 2000) parallels Detroit’s failure to change in the midst of the 1973 oil crisis. Windows XP underwhelmed many – and later Service Packs, provided results that were often worse than its 95/98 predecessors – and did little to innovate the operating system that Microsoft had introduced with 3.1 and later 95.

Meanwhile, as Windows continued to oversaturate its aging code from 95 with “cartoonish” features of XP, Apple developed its brand new code via the OS X platform in 2001 – a new and innovative user-interface. More importantly, Apple designed a user interface that began to represent the next decade of its innovation – again, the user interface represented the most significant value for Apple.

Like Toyota, Apple used Microsoft’s identity crisis (big monopoly with limitless opportunity to pre-package software, especially IE for the growth of the Internet – to diversified company forced to divide its operations) to its advantage, building a Microsoft antithesis. Like Detroit in the 1970s-1980s, Microsoft was forced to change in the 2000s – and honestly did a pretty poor job all around, manufacturing and marketing products that offered little noticeable innovation or change (can you say Vista?).

The Apple Core: Quality, Simplicity through Innovation

Apple built a recognizable brand of quality and reliability. It used its core attributes to deliver an array of familiar (since they mimicked the familiarity of OS X), yet innovative software experiences – via iTunes in 2001 and Safari in late 2003. Since 2003, Apple continued to launch products that built upon the core experience created by OS X. Unlike Toyota, it hadn’t released anything I’d compare to ‘Scion,’ or a departure from this central model. Their current sales surge is the equivalent of Toyota in 2007-2008 (when the brand was #1 in sales). People are coming around to a brand that they know and like. For a long time, when people thought about their next car purchase, they thought Toyota (Until now – with reports of brake and accelerator problems abound). For consumer technology purchases, people are thinking Apple.

Apple’s Scion: the iPad and Apple’s Data Binge

For Apple, I think their major distraction could be actually be the iPad. I think that the iPad’s future can be either Apple’s Achilles’ heel or its most powerful pathway yet – depending on how it continues to use it to evolve the brand. Nonetheless, I think that the iPad represents the brand’s first major departure from its core since 2001 – and puts it at risk for the kinds of problems that accompany a loss of focus – decline in reliability, quality and service.

Eventually, the equivalent of ‘sticky-accelerators’ could happen to Apple – and while they’re version (hopefully) won’t amount in actual deaths, I do think that it will open the door for Google and Microsoft.

I think the heart of this weakness could lie in their continued partnership with AT&T and/or their continued negligence of the impact of their data-guzzling products on the government, businesses and consumers. No single wireless carrier can support the type of data-heavy growth Apple products bring to market. Like the supply of oil in 1973, the supply of data may also impact future tech innovation.

As indicated in this article <http://www.businessinsider.com/the-10-things-wrong-with-apple-from-apple-god-john-grubers-perspective-2010-2>  referencing remark’s by John Gruber, AT&T and the iPad both offer problem-spots for Apple. Where I disagree with that article, is that Apple ‘has no rivals.’ I’d say Google is absolutely a rival. In addition, Microsoft’s new mobile strategy could be to Apple, as Ross Perot was to George H.W. Bush in 1992. A smaller, but powerful and relevant distraction – allowing Clinton, in the form of Google, to succeed.

Google’s 1973 Oil Crisis: Post-Recession, the new standard of simple and essential

So, Apple can go on – celebrate, and cheer about their surge in sales – for now. However, like all empires, they will eventually fall.

The growth of iPhones sales certainly helped to build the Apple-experience and its associated sales. However, the iPad – like Toyota’s Scion – could make or break its current model of success. We’ll continue to witness Apple’s dominance, but I anticipate another change of the guards in the near-future. And its name we all know well—Google.

Google is the modern day king of content. The future will depend on how people and businesses can use, access and share digital information. That is what Google does – they understand this better than pretty much anyone else – in terms of access, format, and security. In the long-term that is the big-picture – and that is where I think Apple is already starting to forget. Creating sleek, user-friendly, intuitive products are great – but if there isn’t a network or infrastructure that can support them – then they’re pretty much useless.

Look at Google’s homepage and its applications. They’re simple – no frills – and essential. Sure, some could argue that Apple’s OS X is simple, too. But it’s simple in the way of “I need at least 40 GB of hard drive to support this sleek UI – and I will eat up hours of battery power and a constant charge.” If Google can harness and embrace the essential, simplicity of www.google.com, it will eventually deliver a model that is especially attractive to users and the enterprise in a post-2009 recession mindset of ‘less that does more, is more.

By BobertReport.

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2 Comments leave one →
  1. April 1, 2010 7:16 am

    First, thank you for having me on your Blogroll. I am honored.

    I came up with a completely different point of view after reading your post. I don’t see the iPad as a distraction but rather a move to strengthen it’s position as the leader in portable media consumption. I base this on my studies of Marketing Warfare.

    This is what I came up with:

    http://roihunters.wordpress.com/2010/04/01/marketing-warfare-the-ipad-battle/

  2. November 30, 2010 10:03 pm

    Hi, can I quote some of the content found in this entry if I provide a link back to your site?

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