Tuesday, August 20, 2013

Confusion and Phone Sales: What is Really Important?

I looked at the cover page of a major business web site today and got a bit confused. In the central place reserved for the best stories, I saw news on Sony’s new Smartphone as well as Apple’s plans for two new iPhones. In less prominent parts of the web site I read that banks in China are increasingly breaking lending rules, Japan is considering a spending increase to go with a potential tax increase, Asian stock markets are falling, and North Korea are making moves to avoid the influence of defectors. Smaller stuff than Smartphones, you might say, especially Smartphones from Sony.

So what is going on here? Well, let us admit that journalists arrange front pages in part to follow the tastes of their customers – us – which are not perfectly correlated with importance. But it is not just that. Sony and Apple are star companies, both of which have arguably done better before than they are doing now (certainly Sony). The combination of stardom and current problems is very easy to sell. 

How important are these phones? Well, it is hard to say because both companies are holding back information. But, Apple is supposed to launch one low-end and one high-end iPhone, and is particularly interested in getting new customers with the low-end phone. Rumors on Sony center on a very powerful camera, though a good screen should also be expected. OK, nice stuff. But the same page of the web site has key information on Asian stock markets and economic stimulus in Japan. Without the star power of Sony and Apple, the smartphone news would not have deserved its placement.

What does this mean for companies? Well, we can clearly see the strong and lasting advantages of high status. Not only do you get solid coverage of the important things you do if you are a high-status company, you can also do pretty trivial stuff and find it good places in the press. Not bad, or what? I am guessing that Sony is particularly grateful, because their actual fall in economic performance has been a lot greater than that of Apple. There are few things that last a long time in business, but a high status is one of the best.We still can't guarantee that this will give Apple and Sony sales over new and powerful Smartphone competitors, of course. Competition happens in many other places than business web sites.

PS: Let me also apologize for the delay in updating this page. Regrettably I was recently put in hospital by an event on the road, but I am now improving well and writing new blog entries. At least now and then!