Beleaguered GM and Beleaguered Apple

[tonybelding]

I was pondering the situation GM is in now, and I think it might make sense to compare today's "beleaguered GM" with the "beleaguered Apple" of the mid-1990s.

GM's problem is that once people form a negative opinion of your brand or your product, it's impossible to get them to take another look at it. I don't mean it's hard, or it's a challenge, I mean it's impossible. The great majority of people who've been burned by the bad GM products of decades past will never, ever, not in a million years, consider buying another GM product.

Apple's case is instructive because they've come back from a similar situation. In the mid-1990s "beleaguered Apple" was widely written off by the press and the public. In the minds of the public, there had been a great competition between Microsoft and Intel (i.e. "Wintel") on the one hand and Apple on the other hand, and Apple was the loser. As George Patton once cannily observed, the American people love a winner and will not tolerate a loser. Being branded "loser" in the public mind was virtually a death sentence for Apple's brand.

After Steve Jobs returned to the top post at Apple, he began a turnaround based on product. The original iMac kicked it off. From that point forward Apple has moved from strength to strength, consistently releasing products distinctly superior to their competitors in the marketplace.

That's remarkable. What's more remarkable is how little effect those superior products had. For several years the only visible result was that Apple's miniscule market share was no longer decreasing as rapidly as it had been before. The turnaround in the marketplace happened at glacial speed.

Now here we are in 2008 and Apple is once again a respected brand. Their miniscule share of the computer market appears to even be increasing modestly. But why did it take a full ten years of superior products to achieve this modest rebound in the marketplace?

From where I sit, it looks like Apple had to wait for a new generation of buyers to enter the computer market. The people who formed negative opinions during the "beleaguered Apple" days are lost forever. Many of them, even now, still harbor deep skepticism or even outright hostility toward Apple The Loser. These people, for the most part, have not taken -- and will not take -- another look at Apple's products.

Apple's newfound success has been built primarily on younger people who don't remember the whole era when Apple was in deep trouble. The iPod has been a great tool for engaging the younger generation. It's been highly successful. However, everything Apple has done hasn't been so golden.

Apple also ran an advertising campaign, called "Switch", where the goal was to convince existing Windows PC users to give the Mac a try. These ads became the butt of much laughter and ridicule. I've seen them, I thought they were well made and I liked them, and I couldn't figure out what was so funny. After studying the matter for a while, I finally figured it out. To someone who remembers Apple The Loser, the ads were hilarious because they completely flew in the face of the viewer's beliefs.

To these people, the Switch ads were like something from the Flat Earth Society. They were funny because Apple appeared to be stubbornly denying the plain and obvious fact that Wintel Won and Apple Lost. Only a crazy person or some kind of fanatic would say that! They had long ago written off Apple, and it seemed as bizarre to them as if Sony had started trying to convince people to switch to Betamax.

Now GM are facing the same problem. A large portion of the US population have formed negative opinions of GM's brands and products, and nothing is going to change their minds. There is literally no product GM could ever produce, or any advertising campaign they could ever run, which would get these people back. It's not going to happen. Attempts to get these people to consider GM products will only waste money and prompt the kind of laughter that Apple's Switch ads prompted.

GM have their iMac. The new Chevy Malibu has been examined by the automotive press and dubbed the best mainstream family sedan in the world -- distinctly superior to the Toyota Camry and Honda Accord. If GM think that's going to bring buyers back in droves, they're in for a big disappointment. Judging by Apple's experience, GM now needs to produce another ten years of new products like the Chevy Malibu in order to rebuild their brands.

They also need to focus hard on products for younger buyers. If they can get a few hit products for first-time car buyers -- something to play the role of the iPod in this comparison -- then they might have a fighting chance.

There is one difference between Apple's situation and GM's situation that I can't overlook. Apple's turnaround took ten years in an industry which had previously been chaotic, but had rapidly matured and stabilized. GM's turnaround, if it happens, will take place in an industry that has previously been mature and stable, but is now facing upheaval.

If the auto industry gets shaken up enough, GM might be able to take advantage of that and make some moves that Apple could not. People tend to form opinions during times of upheaval and live by those opinions during times of stability. During the upheavals I see ahead, GM might even be able to do the impossible and get some GM-haters to take another look at their products. But I wouldn't bet the farm on it.

 

[SByer]

It's always easier to ride the quality curve downwards than to struggle up it.

GM has the reliability portion of quality nailed. It wasn't until their very latest models that I think they've got some of the other parts lined up - but it's still hit-or-miss.

Last GM I drove may have been reliable, but had too many can't-live-with-*that* "features" (daytime running lights, auto-headlights, lame parking brake, cheesy pull-knob for headlights - to name a few) that derive from their bad habit of raiding the bad-parts bin for every new car. That's a hard habit to break. They've also got that humongous per-car pension/health care liability.

Then again, at this weekends' SV car show (we were looking for a wagon to replace a '99 Outback - as a car guy, I know SUVs suck on too many levels, and a wagon is more drivable, carries more, is far safer, and gets better gas mileage) of the cars that were interesting, two were Chevys - the HHR, which design-wise is far better and more practical than the PT Cruiser and the Equinoxe, which was the smallest, most wagon-like crossover there, but ultimately still to damn tall and too much of an SUV. Very surprising.

Though walking next door to the Pontiac booth and looking at their Equinoxe cousin with Pontiac's typical lame additional styling and other design mis-cues indicate that GM has portions that have a long, long way to go.

Remember, Apple flushed every last design out the door, and nailed a number of designs in a row before now. That's years of being far above average before starting to see the marketing share results.

GM has a couple of bright spots, but if you just went into a dealership, you'd be hard pressed to find them among the muck that still occupies their stable. And if you wandered into the wrong GM variant, even their best designs might be hidden by plastic gewgaws.

I think GM could survive, but not in their current form. They'll end up much smaller, and possibly be the better for it.

 

[tonybelding]

Remember, Apple flushed every last design out the door, and nailed a number of designs in a row before now. That's years of being far above average before starting to see the marketing share results.

Right. . . GM has a much wider range of product lines to begin with, and the auto industry has much longer product development cycles and life cycles to contend with than you'd ever see in the computer industry.

GM has a couple of bright spots, but if you just went into a dealership, you'd be hard pressed to find them among the muck that still occupies their stable. And if you wandered into the wrong GM variant, even their best designs might be hidden by plastic gewgaws.

Actually, most of what I wrote about GM could also apply to Ford and Chrysler. The difference is that GM does, at least, have a couple of bright spots. GM has the new Malibu, and they are working on the whole E-flex architecture. What do Ford and Chrysler have?

 

[vfx]

There are at least a 6 of those Chevy commercials with Wayne Wilderson ("Bill" the WaMu guy) teaching kids about their green cars. That's a drum being banged long and hard. But 10 years? Whew.

Maybe like Jobs bringing Apple from the ashes, Martin could pull a Phoenix for GM.

 

[tonybelding]

There are at least a 6 of those Chevy commercials with Wayne Wilderson ("Bill" the WaMu guy) teaching kids about their green cars. That's a drum being banged long and hard. But 10 years? Whew.

That's about three product development cycles for a car company.

But you know. . . In its darkest days Apple was down to something like 3-4% of market share in computers. GM has fallen to something like 24%. . . . SO you might say they're not nearly as "beleaguered" as Apple was.