How the Apple Newton’s failure formed a foundation for the iPhone’s market success.
June 20, 2021
Reading the Apple Newton not as a failure but as the groundwork that made the iPhone commercially possible.
There are two products that immediately come to mind as polar opposites in terms of marketing strategy and business success. The two products are the Apple Newton Messagepad and Apple iPhone. In many ways, these products were similar. They were both incredibly ambitious initiatives, with goals of changing the world computing, yet their business outcomes and impact on society were dramatically different.
The Apple Newton emerged during John Sculley’s term as CEO of Apple (Markoff 1993). Prior to the Newton’s release, John Sculley had been speaking to the press boldly about a visionary future of computing that would emerge with personal digital assistants or PDA’s (Planes 2013). While the Newton was attributed to Sculley, it actually emerged organically through Apple’s R&D organization when an engineer named Steve Sakoman was about to quit Apple. Sakoman attempted to recruit a fellow Apple colleague to start a handheld computer company. Their collaboration led to the creation of the newton product concept that was later championed by John Sculley. The newton was intended to be a pocket-sized handheld communication device that could take notes, send emails and collect contacts.
The iPhone emerged despite great cynicism from Steve Jobs. He hated the Newton and when he returned as CEO of Apple, he was initially resistant to the idea of creating a phone. In 2005, Steve Jobs addressed the press and was very coy and cynical towards the suggestion that Apple should build a phone. Behind the scenes Apple engineers had begun prototyping future phone concepts in 2004. Tony Fadell was an engineer responsible for the iPod who later became infatuated with the idea of a phone. Tony Fadell created a skunk works team to explore possibilities for the phone. They started by converting an iPod into an internet browser that Steve Jobs did not like (Merchant 2017). Eventually, Mike Bell was able to convince Steve Jobs to embrace the phone and in 2004 it formally became a top secret-internal initiative. The iPhone was intended to be a hand-held device that would integrate a variety of widgets such as weather, calculator, notes, and calendar, affording broad utility within a compact sized device that could fit in one’s pocket.
When evaluating the marketing case studies of the Newton and iPhone, it’s important to realize that Apple started with a strong brand. During the early years of developing the personal computer, Apple built a reputation for marketing genius and had established a loyal following of devoted customers. Apple had successfully differentiated itself from competitors who were solely focused on high-powered technology solutions afforded to the world of business. Instead, the original Macintosh computer was positioned as a personal productivity tool for achievers (Apple Computer Inc. 1983).
Apple’s success can be evaluated through the Four P’s of marketing. First and foremost, Apple was able to gain notoriety for the brilliant design of its products and user experience. During the launch of the original Macintosh, Apple consulted with marketing expert, Regis McKenna who helped create the marketing strategy. What McKenna understood was that at the time of the Macintosh computer, personal computing was still an emerging market and technology products needed to be marketed differently than established markets. McKenna believed that the goal of a technology company should be focused on “relationship marketing” and “owning” a market. With McKenna’s guidance, Apple developed a sophisticated strategy for engaging with the press. This strategy was carried froward by Andy Cunningham, a former employee of McKenna who was hired by Apple to implement Macintosh marketing (Apple Computer Inc. 1983). Cunningham would orchestrate “sneak” previews of the technology and invite individual members of the press to embark on six-hour events to engage with key executives, members of the design team and product demos to learn about the products. Apple regularly worked with experts like advertising firm, Chiat Day and product design agency, Frog design. These collaborations lead to the famous 1984 ad that ran during the superbowl and the “snow white” design language that differentiated Apple’s products from the rest of the industry. Apple sold at a premium price point which reinforced it’s elite positioning and drove product loyalty. Customers believed Apple was worth a higher price. A point of weakness in the launch of the Macintosh was place, as Apple sold its products in retail channels where it had a limited footprint. The first ad campaign for Macintosh was entitled, “test drive a Macintosh” and allowed anyone with a credit card to try a Macintosh for 24 hours. Retailers struggled to keep up with the customer demand that this campaign generated and it also introduced complexity that retailers were not equipped for.
Learning from failure
In Silicon Valley, failure is regarded as badge of courage and this sentiment is embodied in the words of Stanford professor, David Kelly, “fail faster to succeed sooner.” When studying the success of great companies, it can also be helpful to learn from their struggles. Often the path to greatness is paved with great setbacks.
In the summer of 1993, Apple Computer launched a product that would be seen for decades to come as a case study in failure (Honan 2013). This product was supposed to change the landscape of computing, but its struggles paved the way for Apple’s success a decade later.
When evaluating the common traits of the Newton’s failure, there were many reasons why it wasn’t successful, but a core issue was that the product did not work. The main feature of the Newton was handwriting recognition, which was supposed to convert handwriting into text that could be shared through email or instantaneous infrared communication. Unfortunately this feature was barely functioning when they shipped the product to customers and it became a point of criticism in the news media. It was the feature the public had been waiting for and it did not work.
A second trait of the Newton’s failure was promotion. John Sculley had been speaking to the press about the importance of the personal digital assistant for years, building tremendous anticipation for the Newton and tipping off competitors that Apple was building a mobile tablet, creating a vicious cycle internally within Apple. As a result of competitive pressure, Apple was forced to push the product out into the market too soon (Merchant 2017).
A third trait that contributed to failure was price which was a point of internal contention within Apple. Michael Tchao lead the marketing efforts for Newton and came up with different form factor configurations of the product, one was labeled “senior” and included great technology capabilities, a large size and a $5000 price point. Another was labeled “junior,” with limited capabilities, smaller size and a price point of $500 dollars. Tchao was worried that if the product was priced too high it would struggle to appeal to Apple’s core customer (Hormby 2010). When the MessagePad launched in 1993 it was priced at $700 which was perceived as being too high and ultimately sales were tepid (Ben-Hamdane 2015).
The main challenge with the Newton was that the value proposition was ambiguous, and the technology was not ready to go to market. Early advertisements had a headline that read, “What is Newton?” and then alongside was a long list of potential product benefits. Apple was not able to solve a clear user need with Newton, the idea of converted handwriting into text was not based in a clear user need. This failure lead to an immediate leadership change as Sculley left Apple at the end of 1993(Edwards 2013) and the Newton was discontinued in 1998.
From a competition perspective, is the poorly marketed product inferior to the successfully marketed product? Describe the importance of competition within the scope of marketing decisions for both products.
The Palm Pilot was introduced in 1995 and was a huge success. Palm did not suffer from the same issues that plagued the Newton. There were no technology bugs at launch and the form factor was much smaller. The product was superior in numerous ways. Palm captured 66% market share before Apple discontinued the Newton (Ben-Hamdane 2015).
In evaluating the product with the successful marketing campaign, describe the 4 Ps which the company may have identified.
Transformative success
The marketing strategy of the iPhone was dramatically different than the Newton. The iPhone was a robust product that was centered on three uses; internet, email and telephone (Pierce 2018). When evaluating the marketing strategy of the iPhone, the product was transformative. The product was effectively to solve a critical user need of bringing the internet to life within a mobile phone. Apple was able to partner with Cingular to bypass the constraints imposed by mobile carriers, achieving the product it desired and providing Cingular with exclusivity.
The promotion of the iPhone was a historic event that would change the history of consumer technology. The Steve Jobs keynote address became a market moving event. Millions of consumers would view the key note addresses and then place orders for the iPhone.
The place for the Apple iPhone was the Apple Store. Customers would arrive at Apple stores days before the product launch to secure a place in line. This cult following became symbolic of the information age. The Apple store provided an environment where customers could learn about the product and gain tech support. What Apple struggled with during the original Macintosh launch, was not a problem with the Apple Genius Bar. Apple could now manage any troubleshooting issues within its stores. Customers could get tech support while shopping for iPhone accessories.
The last element of success for the iPhone was price. Apple was careful to offer multiple price points and product configurations at launch that would make a purchase much more attainable for customers. Apple was always working to lower the price of the iPhone and increase access to a broader market.
It is fascinating to compare the iPhone with the Newton. The Newton was a revolutionary product that ultimately built a foundation for the iPhone (Mosley 2020). The iPhone became a global phenomenon, while the Newton is now a footnote in history. Evaluating these two products provides so much insight on the inner workings of an organization and how that translates into marketing. The Four P’s of marking provide a set of anchors to ensure business success. When reflecting on the history of Apple there are great insights that can be drawn from the novel approaches Apple took. There were also moments when Apple failed to realize a complete marketing strategy. Apple’s shortcomings in this regard, illuminate the importance of a robust marketing strategy for a successful product launch.
SOURCES
Apple Computer Inc. 1983. “Macintosh Product Introduction Plan.” Stanford University. July 10, 1983.