Wharton Prof. (Widely) Misses Point of Apple Name-Change

It's no secret that I have little faith in market research and traditional marketing. Seth Godin, Malcolm Gladwell and many others have all shown the inherent flaws in both disciplines, and one thing is very clear -- to really gauge the future success of a product, look at what people are telling you unconsciously, not what comes out in a focus group.

But sometimes, I read an expert's comments that are so wrong-headed I can scarcely believe that the source is credible, let alone a leading figure at one of the nation's most respected business school. Wharton School of Business Marketing Professor Peter Fader recently offered his two cents about Apple and the iPhone to Knowledge@Wharton, and his assessments are as off-target as Rex Grossman on an off-day. I'll specifically address his three biggest off-base conclusions after the jump.

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Giant Off-base Conclusion No. 1: Design is just about being cool.

I don't know how, I don't know why, but in the United States, the vast majority of people still don't understand what good design is really about. Good design is not about aesthetics. It's about solving people's needs. It's about clarifying the complex. It's about looking good AND working better. People care a little bit about features. They care way more about knowing how to use them. Here's Fader's take:

And, I think on the feature side, it doesn't really have that many features. In fact, it's missing some really, really important features. What it has [going] for it is just a really cool design factor and that's not enough. It's going to help them to differentiate themselves from the other phones out there, but it's not going to be enough to really be a winning entry.

Does he know what he's even arguing in terms of design here? The breakthrough on the iPhone is not how it looks. It's how it works. Don't look at the appearance of the interface, look at how brilliantly the iPhone switches modes and hooks its features into one another. It's about integration AND intuition. You don't have to make trade-offs.

Giant Off-base Conclusion No. 2: People will be disappointed by the video quality of the Apple TV

People in business have an odd tendency to place all of their faith in pure technology. Pure technology has never proven to be marketable purely on its own basis. For major success, you need to connect with people. This is why Fader's comments really miss the mark here:

Another problem is that one of the great things about watching video on the iPod was the compression that they used -- to make it relatively quick, to be able to bring those videos down to a small device. Now you're going to take those highly compressed videos and try to bring them up to a big device and they're going to look terrible. __And Apple at this point hasn't done a good job of supporting some of the high definition and say that the 1080 standard that many people are looking at. So there's going to be a lot of disappointment there. Of course consumers aren't really aware of that __but they're going to find out the hard way, that things don't look as good when they are projected.

Read the bolded part over again. This is a mentor to the future business leaders of America. What does he actually mean here? Clearly, the first generation of iTunes video is too low-res to look good on a big TV. The current generation, however, is up to widescreen 480p, which -- get this! -- is higher-res than the vast majority of TVs in the country. It's near-DVD quality, just with a bit more artifacting. Then look at how people will get it on to their TVs. The Apple TV up-samples to 720p. I have a 720p LCD-TV and an up-sampling DVD player. I also have HD cable service. Here's the thing -- I can't tell the difference between watching broadcast HD and a standard-def DVD upsampled to 720p. And I guarantee that 85 percent of the population has no idea what I just wrote. T

here are about 500,000 people in the country who will be disappointed by anything less than 1080p, but they're few and far between. The rest of us care about technology we can use that also looks good. This is the same tortured logic that led to the misguided development of the PlayStation3. Just because the specs are better, the games will be better. As I recall, a heck of a lot of business experts were sure the PS3 would stomp the Wii. Last I checked, that's not happening. Stop looking at the specs. Pay attention TO PEOPLE. They're th eonly ones whose opinions matter.

Giantest Off-base Conclusion No. 3: Apple dropping "computer" is a sign of surrender.

I can't even begin to comprehend how far off the mark this assertion is. I mean, look at the guy's logic!

Well for one thing it's an admission of defeat. One of the ideas of the iPod was to eventually port people over to the Macintosh. It would show people that "Hey I can work with one of these Apple devices; maybe I'll take the bigger bite". And that hasn't worked. It's made no difference at all.

It's very important to realize that the Mac is still a huge piece of Apple's business. And, it's quite surprising what wasn't announced at Macworld, which was anything about the Mac. As far as I know there were no announcements about the Mac. That really is the bread and butter of the company. And it's a signal that they're not going to be developing or supporting it as much as they used to.

That would be a big mistake. I mean draw a contrast with IBM. They're not making or selling business machines anymore, but they're still very deeply committed to that business and to finding other ways to help customers meet needs when they're dealing with so called business machines. Apple seems to be moving away from that and they're becoming kind of a cute, cool gadget company. And, oh by the way they have a few computers over there as well.

Wait, what? Did he actually use the change from International Business Machines to IBM (which was far from an admission of defeat, I must say) to show why Apple should tie itself to computers for life? I would think that IBM and AT&T would be pretty clear cases for why mature, sustainable companies change their names to de-emphasize their roots and allow moves into new markets. And when have you ever needed to have your product in the company name to own the market? HP doesn't have computer in the company name, and they have the No. 1 slot for world market share. This analysis is so off-base I can barely even express it. Especially since Apple has very strong data showing that their market share has gone up in the past few years. Just crazy talk.

Peter Fader on the New iPhone and Matching Technology to Consumer Demand - Knowledge@Wharton:

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