Apple’s shares took a hit of as much as 3% yesterday after a JP Morgan Chase analyst announced that Apple was reducing orders of parts for its iPad by as much as 25%.
This is an interesting move, especially as we’re about to begin the traditionally busy lead up to Christmas.
I don’t want to say “I told you so”, but I did write here, here and here that the iPad will fail.
Twitter, facebook and other social media communities have been buzzing with comments related to the RM1,800,000 (US$600,000) Tourism Malaysia (TM) is spending on Social Media (SM). Here’s a little background on the story.
Initially, the deputy minister of tourism was quoted as saying that the RM1,800,000 “covers the cost of hosting various activities on the facebook page, including six interactive Flash applications, development and maintenance work and advertising.” He went on to say that, “the ministry spent nearly RM300,000 to develop each of the six applications on their facebook page.” I could only find one (see screenshot below).
This statement was rejected by citizens and government ministers alike with one minister suggesting it was a waste of funds as the facebook site is free and using the ‘Visit Penang’ facebook page as an example (see screenshot below), explained that it was set up for free and had attracted over 100,000 fans.
Citizens were even more incensed, with one enterprising and concerned tax payer setting up a facebook page that parodied one of the official government pages (see screen grab below). Within hours, this page had attracted 5 times as many ‘likes’ as the official page.
A couple of days later, the tourism minister announced that, “the RM1.8 million (is) for a full social media branding campaign, and not just to set up a facebook page.” She went on to say, “”(The money) is for responding, informing, interaction and monitoring (work on the facebook page), evaluation, data collecting, content development and advertising on Google, Facebook, etc…”
With her comments came an official release that stated the costs were for the following:
1. Technical
* Dedicated hardware deployment
* Software licencing
* Front end applications
* Application server engine
2. Development of six campaigns that require the following:
* Flash games engine
* Flash programming and coding
* Creative development and design
* Campaigns ideas and concept
* Front-end Flash design
* Testing and debugging
3. Campaign promotions
* Digital advertising campaigns on Google and facebook
* Contest, page wall and tourism fanpage content management
* Collection and management of database
The tourism minister then went on the offensive, asking reporters, “Do you think it’s cheap to set this up?” And as if to justify the expense, explained, “Tourism Australia is spending RM150 million (US$50 million) for the next three years on social media.”
Most recently, the minister stated that the allocation was to ‘run, manage and monitor a tourism campaign in the social media, including RM360,000 for advertising and over RM500,000 for prizes for the contests organized.’
‘Disappointed and hurt’ she is reported to have invited the Malaysian Anti-Corruption Commission (MACC) to investigate the campaign finances.
It is too early to determine the results of Tourism Malaysia’s first foray into social media but whatever the results, the Malaysian government, the tourism minister and the tourism ministry could have handled the matter more effectively and efficiently.
One would be forgiven for thinking that Tourism Malaysia has some internal communications issues. Because when the deputy minister first explained what the funds were spent on, his statement didn’t make sense. The deputy minister’s statement suggests he was provided with notes written by someone more familiar with the workings of an IT department than the requirements of a social media campaign. This has caused the deputy minister to be embarrassed in parliament and I hope someone has been reprimanded.
In terms of the social media exercise, Dave Duarte MD of South Africa based Huddlemind and a social media expert who was in Malaysia as the story broke stated in his blog that the exercise has already justified its expense.
His rationale is based on his guesstimate that the average conversion rate of a facebook fan to a customer is approximately 3% and because the average domestic tourist spends RM2,500 with 40,000 fans, the facebook page has already recouped its expenses.
This statement may be a little optimistic but it is certainly worth tracking the number of ‘likes’.
In terms of the game itself, it seems OK, leaning heavily on guitar hero. Personally I found the racial profiling of the characters unnecessary. Playing the game requires one to be more dexterous than I and as a result, the score required to qualify for the iPad 2 draw will always be beyond my means! I suspect I’m not the only decision maker in the family who will feel the same and this resulted in me leaving the page rather disappointed. But I digress.
So Tourism Malaysia’s (TM) long overdue foray into social media has not had an auspicious start. In the future, what can this key organization that contributes over RM50 billion (US$16.6 billion) to the national purse do to ensure tax payers get value money for all social media branding initiatives?
Here are 10 key recommendations for future initiatives
1) A social media strategy or any of the tactics within that strategy, is not the responsibility of the IT department. In future, the head of the department responsible for social media initiatives should represent the ministry when talking to the press and his press release should be prepared by him and his department and not by anyone else. Although the minister or his/her deputy must respond to questions in parliament, it is wrong to expect them to be knowledgeable about branding tools such as social media. Ministers do not need to talk to the media about such relatively small activities.
2) Social media requires an ongoing strategy and interactive initiatives such as the facebook pages are merely tactics within the strategy. Successful social media initiatives must be integrated with other branding initiatives.
3) I strongly suspect TM didn’t think through what they were doing when they launched the facebook pages. First of all it is important to develop a plan. Within that plan and before embarking on a social media strategy, it is important to identify what are the goals and how can facebook add value to branding efforts. Facebook is obviously an additional channel to interact with prospects and customers but why do it? To get more fans? Why? To get more participants? Why? How does TM convert those participants in the competition into leads? How does TM put a monetary value on social media activities? What metrics should be used? All of these should be outlined in the social media plan before implementation.
At the moment, registration is only required if participants want to be included in the draw for the iPad or meals. So how will TM optimize interactions with those participants and get them to become customers?
4) It’s also important to get fans to interact with other participants and to interact with participants. Critical to the success of any social media campaign are the conversations. Channels such as facebook are not platforms to broadcast messages about the company or in this case, Malaysia. The cuti cuti 1Malaysia facebook page has generated over 40,000 likes in a very short time and this is impressive. Furthermore, many of the postings on the wall have generated plenty of comments but TM is failing to enter into discussions with those who comment, preferring instead to pass that responsibility to others (See screen shot below). Interacting and engaging with people who comment is what social media is all about and will give TM more visibility, improve reputation and increase trust.
5) This first foray into social media is pretty basic and there is nothing wrong with that. But in future, Tourism Malaysia must look to be more innovative with what it does on social media. Fans will soon get bored of commenting and uploading images, especially if issues raised are ignored. Tourism Malaysia must encourage fans to be more creative. Perhaps by designing trips, submitting and voting for slideshows or setting up sub groups of specific niche related fans.
6) What makes being a fan special? At the moment nothing really which is a good and bad thing. Good because it means more people will become fans but bad because TM doesn’t know how many fans are really interested in the product or just want to win an iPad. In future, TM must look for ways to offer special content to fans or competition participants. Don’t be afraid to ask people to register.
7) This maybe a bit difficult for TM because technically, it isn’t allowed to sell Malaysia, only promote it but that doesn’t mean it can’t turn facebook into a potential profit centre. TM should make it easy for fans to book trips to destinations featured on the TM facebook the way it does on its website.
8) TM is still using mass media tactics on social media channels. This is ineffective and pointless. TM needs to stop thinking demographics and start thinking communities.
9) This applies to everyone and not just TM. Pause before creating a facebook group. Managing a group is difficult, time consuming and requires talent and patience to be able to respond to issues raised and continue a conversation till it’s natural end. TM launched four or five facebook pages at the same time! That requires a lot of talented manpower and judging by the lack of responses to issues raised, TM was ill prepared. Also important is what to do with the facebook group once the contest or event is over. It you want to delete a group, you have to manually delete every member of the group. With 40,000 members and growing, and with at least two clicks required to delete a member, the cuti cuti site will take a lot of manpower to shut down! If TM decides not to close down pages, in five years time, there will be a lot of dead pages that will confuse people.
10) The big question with facebook is what to measure and how to calculate ROI. In 2010 a study stated that fans of the top twenty brands on facebook were worth an average of US$136 each. With 40,000 fans, that would make the cuti cuti page worth over RM16 million! However the study was panned as it was actually a measure of the value of customer loyalty and not a measure of how much facebook had contributed to that loyalty. Moreover, the average of 20 brands like Nokia and Apple bears no relevance to tourism anyway!
As TM doesn’t technically have a product to sell, it is hard to know what to measure. For instance, TM can’t measure the ROI of acquiring a prospect and turning that prospect into a customer via facebook and comparing it with other customer acquisition programmes.
In reality, Measuring the ROI of facebook fans is probably impossible, especially for a national tourism agency such as TM and especially when the facebook page features a competition that allows multiple attempts from the same user and the end product is a future staycation.
As the dust settles on this rather unfortunate event, TM and its agency has a lot of work to do to sort out its social media strategy. It’s not a great start, and a lot of mistakes have been made. The key is not to make the same ones again.
The announcement yesterday by RIM that it will release a tablet device in early 2011 may be the death knell for the iPad. The new device comes with a 7-inch multi touch touchscreen and a new operating system developed by newly acquired developer QNX.
Called the PlayBook (I’m not sure why they came up with such a lame name), BlackBerry is calling it “the first professional tablet”, and is marketing it as “an incredible gaming platform for publishers and the players”.
Whilst the choice of name for a business tool that is for gamers and publishers is a little confusing, the hardware does a lot of things the iPad doesn’t.
For a start, the new tablet will run Adobe’s Flash, which Apple’s iPad doesn’t. It offers micro – USB ports and micro – HDMI, again not offered with the iPad. It has dual (front and rear) HD cameras for video calling, also unavailable on the iPad. It weighs about 400g. 16GB and 32GB models will be available. One drawback is that it will initially connect to the web via wifi or via a BlackBerry smartphone, however 3G and 4G models are in the works.
BlackBerry is very excited about the new operating system that will offer open standards, which the smartphone maker promises to be “a breakthrough development platform for IT departments and developers”. The developers’ kit will be out in the next few weeks.
This new tool is undoubtedly a smart move by RIM as it dominates the business tool segment. According to research firm ComScore RIM has a 39.3% share of the smartphone market in the US. The iPhone’s share of the same market is only 23.8% whilst Google’s relatively new Android already has 17%.
Some are forecasting the tablet space to be worth up to US$40 billion by 2012 and is becoming increasingly competitive with the recent announcement by Samsung of its Galaxy tablet and the 5 inch Streak introduced by Dell recently and with HTC, Lenovo, Acer and Asus as well as Google and Microsoft all threatening to launch tablets, the battle of the tablets has begun in earnest.
It is too early to say whether or not RIM can deliver on promises made, especially as the new tablet will be introducing another operating system. But if it can keep the price attractive for everyday users and retain all the high quality features, it will pose a serious challenge to the iPad, and may even see off what is essentially after all, a superfluous gadget that no one really needs.
As far as I am concerned, Apple is one of the finest brands on the planet. It ticks just about every box for me. Design, product innovation, user interface, image, brand culture, service, communications and so on. But when the iPad launched, I wrote a piece about it and gave 8 reasons why I thought it would fail. You can read the full article here. At the end of the article you can read a number of comments from readers. I am responding to Carl Brooks comment.
Carl makes some interesting comments about the iPad, including “Who knew many people could get by with a device that allowed them to do 90% of the tasks they did on a PC.” He adds, “f you don’t have an iPad pad yet, you are missing out on a truly mobile device. Instant on, long lasting battery, huge screen, multitouch interface that even a baby can pickup.” He also says, “I don’t even bother dragging my laptop offsite anymore.”
I have a couple of reactions to Carl’s comments.
A few of days ago I tried to plug in a portable hard drive to an iPad so I could show someone some TVCs. Unfortunately I couldn’t do so because the iPad doesn’t have a USB port. I’m serious. I also tried to show the same person some images but the iPad doesn’t have an SD slot. Now I appreciate this isn’t an industry standard but it meant that I was unable to use the iPad in a way that I have become accustomed to using computer hardware.
As for missing out, well that doesn’t appear to be the case as I have a superb Apple laptop that does everything an iPad does plus I can multitask. I can listen to Pandora and write a document at the same time. Something I can’t do on an iPad. On my laptop I can have my Twitter app open at the same time as my browser.
I heard that an iPad won’t allow you to have AIM open at the same time as your email! Well I can on my laptop. Oh, and on long flights I can watch a DVD on my laptop, something I can’t do on an iPad. Talking of flights, when I am away, I can talk to my kids on skype with my laptop, they can see me and I can see them. Something you can’t do on your iPad.
Carl mentions that the iPad does 90% of the tasks done on a PC. That’s not much use if you want to do one of the tasks included in the 10%. If you do, then the iPad is useless. To me, that’s a bit like saying a Trabant does 90% of the tasks a Rolls Royce does.
Carl finishes with this comment “I will enjoy this device until a better one is created by Apple or by any other competent competitor that can make something better.”
Well Carl, that moment may be here sooner rather than later. The iPad may have the market to itself now, but by early 2011, it’s nemesis, the Android may gatecrash the party in the same way it has gatecrashed the iPhone party. 10.6 million smartphones using the Google developed platform were sold during 2Q2010, equal to about 17% of the market. Apple sold 8.47 million iPhones in the same period, equal to about 14% of the market. A recent report in Digitimes says that Google, Verizon and Motorola are creating an Android tablet with a 10.1-inch screen that could be on sale at the end of 2010.
One solution to some of the issues above would be to buy yet another adapter but even I, a long time Apple devotee am tiring of all the extra money I have to spend on Apple accessories to carry out basic tasks. And anyway, that wouldn’t solve the SD issue.
I still think that Apple is one of the finest brands on the planet. But the cynic in me thinks that perhaps the reason there isn’t a SD card slot on the iPad is to stop consumers buying a 16GB model and increasing the storage themselves, depriving Apple of further income.
Although I’ve been aware of Apple’s strategy of only letting proprietary products complement its devices, it hasn’t really bothered me. However, I do think that if a brand pushes consumers too far or constantly adds new products that require existing customers and those brand ambassadors who build the brand to spend more money then the brand will eventually lose its lustre, especially today when consumers are more fickle and less loyal.
But that is another story. This article began as response to a comment on a story I wrote giving 8 reasons why I thought the iPad would fail. The iPad, in its present form is a flawed product and there are opportunities over the next 12 months for other tablet manufacturers to take market share from the iconic brand.
However, if we take iPad sales (3.27 million units in Q32010 alone) then it could be a success but I still reserve my judgement!
Apple owns some of the finest brands on the planet. And I’m an Apple loyalist and brand ambassador. I bought the green iMac when it first arrived in Malaysia. Even though there wasn’t any software to run on it and because it wasn’t compatible with anything else it required multiple peripherals. And even though it spent more time being fixed than it did on my desk and despite the fact that the keyboard was awkward and the mouse hopeless, I loved it and I’ve never had anything else since.
I now have macs in my home and at the office. Every morning when I walk into the office I catch my breath as I look at the sleek lines and brilliant screen of my top of the line iMac.
Every member of my family has an iPod and my two older kids have macbooks. I even convinced my luddite wife to switch from PCs to macs and her company now has 10 of them. Baes on my recommendations, at least one friend bought macs for his event management firm.
I’ve seen the stock I once owned soar over 5,000% from the price I sold it at.
And even though I know that Apple is making margins of over 40% on some of the products I own, I buy them because they are cutting edge in terms of design and functionality, are easy to use and have great features. And because the experience I have with my sales agent is brilliant and he’ll come to my house at nine o’clock at night to help me troubleshoot. At every touchpoint, it’s a great brand.
So you’ll never hear me say a bad word about a mac product. But I think the iPad is a mistake. And here are 8 reasons why:
1) It doesn’t have a camera or a webcam. If the iPod can have a camera, why can’t the iPad? A webcam would also have made sense.
2) The touch screen on the iPod is temperamental so if it’s the same with the iPad, users will need an external keyboard. Reading through the information, users will have to buy a separate keyboard that costs US$75 and can’t use any of their existing Apple keyboards.
3) The iPad doesn’t have any USB ports or card slots so I’m not sure how users are supposed to transfer documents from other devices. There is an iPod connector feature that means users will have to buy another adapter.
4) The iPad doesn’t have Adobe flash which means that any web pages that have applications, videos or advertisements on them will have large blank areas. You read that correctly, users can’t watch video on websites. If true, what are the implications for the travel industry?
5) The iPad doesn’t allow more than one programme to run at a time. So users can’t be working on a document in word and have a video downloading on youtube at the same time.
6) The iPad is not HD ready so watching movies will not be the experience it should be.
7) It can’t be used as a phone.
8) Apple will be able to remotely disable applications.
Before the launch of the iPad The Wall Street Journal wrote: ‘The last time there was this much excitement about a tablet, it had some commandments written on it.’ Apple leapt on that and included it in there marketing collateral at the launch.
Personally, whilst it won’t affect Apple’s position as one of the finest brands on the planet, I don’t think the iPad will fly. Only time will tell if I am right. What do you think?
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