Total Dominance over the Media
Some companies excel in getting their name into the media. “Buzz,” it’s called. The media plaster adulatory articles, pics, and videos all over the place. It doesn’t last forever, but it can go on for a long time before the media finally get disenchanted, and the whole thing turns sour.
Tesla – or rather CEO Elon Musk – used to excel at it. For years, every news outlet bombarded its readers or viewers with some fawning piece on Tesla whose electric cars would change the world into a better place. And if it wasn’t Tesla itself, it would be something like the Hyperloop or the Gigafactory or something.
But now even the media has figured out that these $75,000+ small-batch production cars that few people can afford don’t amount even to a rounding error in global car sales. Manufacturing and selling a lot of cars at a profit is really, really hard. And making losses into the future as far as the eye can see, according to Musk himself, isn’t the ideal business model for an automaker.
Until that unfortunate turn of events, Tesla used the hype to extract a few billion dollars from investors. And it’s now busily burning through this money.
Media adulation is in part based on gravity-defying shares. In early August last year. Tesla shares traded at nearly $300, giving the company a market valuation of $37 billion. This is what media adulation can accomplish.
These shares have since zigzagged down by 35%, trading at $189 as I’m writing this, on their way back to some ultimate reality. And media adulation is beginning to curdle.
But now we read about Tesla’s current difficulties in the largest auto market in the world, China, where nearly 20 million passenger vehicles were sold last year, of which an imperceptibly small number – about 2,500 – were Teslas. Tesla is cutting back in China where other automakers are expanding like crazy. It will lay off 180 of its 600 employees there, according to Chinese media reports, a number that Tesla spokesman declined to confirm, though admitting that “some people will go.”
Perhaps it started last fall. In November, Tesla had a media run-in. BMW insiders said that Musk “is using us for PR purposes,” that stung by Daimler’s and Toyota’s exit from Tesla, he wanted to “decorate” himself with the name BMW. Very unpleasant for a media darling [BMW Smacks Down Elon Musk’s Tesla Collaboration Hype].
Over the years that Tesla’s media magic succeeded, there was only one company that was better at it: Apple.
Apple is a different animal with phenomenal global products, enormous sales and profits, and a stellar balance sheet. It has been for years the absolute media darling in the US. But the fawning coverage Apple and its products get during normal times pales compared to what happens ahead of, during, and after an Apple event.
Last week it was the hoopla that arouse when Apple’s stock was anointed to be in the Dow Jones Industrial Average. Now it’s the watch.
Apple is creating buzz for its watch, years after American consumers have given up on watches. Even lowly flip phones told the time, date, and day of the week 20 years ago. And why carry two devices that do the same thing? It took us years, but we finally figured it out.
So now Apple is out trying to persuade millions of people that the latest must-have device is a watch, the same sort of thing their parents used to wear back in the day. It’s going to be a slog. But OK, this watch is different: it can do some of the things a smartphone can do.
The market is already crowded with the products of other smartphone makers: LG Watch Urbaine LTE, Moto 360, Pebble, Samsung Gear S … but to heck with them.
So this morning, you couldn’t turn on the radio or look at news sites without being confronted with Apple. MarketWatch, a division of the Wall Street Journal, is an example. After it soured on Tesla, it’s certainly doing its part in promoting Apple and its latest gadgets.
This is a screenshot of its front page this morning, ahead of Apple’s “Spring Forward” event, that would feature the watch: Apple, its products, and its stock were depicted 8 (eight!) times:
Is that enough free promo – at least, I assume it’s free – by just one publication, with similar adulation being multiplied by countless publications spread across the internet, for a company and a watch?
The answer is NO. Of course, it’s not enough free promo for Apple. Every new version of its iPhone gets a similar treatment. No other company comes even close to being able to this extent to show consumers, without incurring the cost of ads, these mobile options that are available.
After the event started, I took the screenshot below (at 10:45 AM Pacific Time). It now features, if iCounted (?) correctly, 16 mentions of Apple and its products, including a photo of the event with CEO Tim Cook speaking. A later version had an Apple-produced close-up pic of the watch – better than a banner ad. That’s how you do it:
So Apple comes out with a watch, hundreds of years after the pocket watch was invented, and look what happened. Anything else going on in the world? Hardly.
It is proof that the media’s unquestioning and adoring love for anything Apple remains red-hot. And Apple has got the media wrapped around its little finger.
On the other hand, note the mention that the erstwhile media-darling Tesla got at the bottom. I marked it with a black rectangle. Very unflattering, after all the China hype that Tesla was able to drum up last year and that ended up propelling its stock to nearly $300 a share. But that’s like so over.
In the broader context, corporate America has a very chilling message about the US bond market. Read… A “Crush” of Bond Sales Before the Market Goes to Heck
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Got to chalk it to AAPL PR machine but seriously they pumped and pimped it too excessively on a watch that requires recharging daily. Status symbol? Really for mere digital watch even if it is ladened with real gold (next up is iwatch snatchers armed with sharp objects)?
My 2-cent is that all the coordinated media PR orgies may be due to the fact that iwatch might be one of those rare AAPL flops like Lisa and Newton…
Latest poll: 82 percent of the American public are already sick and tired of hearing about the Apple Watch.
– Frank’s polling of his friends and neighbors
I wonder……. While some watches are fashion items, most are utilitarian time pieces and last a long time, a lot longer than Apples new product cycle.
So, how much can Apple charge for an item that will fairly quickly become obsolete as a result of technological change ? Apple will want to have customers replace their watches fairly frequently to keep profits up. But how many people have both the need and the money ? Segway anybody ?
Wolf wrote about Tesla: “These shares have since zigzagged down by 35%, trading at $189 as I’m writing this, on their way back to some ultimate reality.”
Methinks the “ultimate reality” price for Tesla will be a big fat zero. That’s right, Tesla is going to go to zero. I think individually-owned cars are going to go the way of the horse and buggy, at least in urban areas. They’re going to be replaced by computer-controlled driverless cars, slowly at first, and then more rapidly. Aging baby boomers who are no longer competent to drive will demand driverless taxis. So will Millenials, who can’t afford to buy their own cars, much less their own houses.
And these driverless cars won’t cost some absurd Tesla-like price of $75,000.
And while we’re talking about the latest iGadget, the Apple Watch, I think it is going to be an epic failure. It is after all, a complete waste of time, not to mention a waste of money.
Reminds me of what is now happening in the Philippines.
All the fanboys went and bought the latest crapple 6 almost all on credit and now they starting to realize in droves what plonkers they were.
Local or Chinese phones, most often better or at just as good sell at anything down to 20 % of a crapple and so the back street stores are filling up with second hand crapple 6’s.
And the price is dropping week by week.
You can spend an evening at a bar now out on the patio without some kid coming up trying to sell you a crapple just like they did with fake DVD’s several years ago
Bread and circuses for the 21st century.
It doesn’t have to be a hot product.
It just has to sell well enough for Apple to make profits.
Their products, separated from the “gotta have the latest” are reliable.
I have an iphone 3GS, of nearly 6-years age, that still works well. My personal carry-around-all-day phone is an iphone 4S (2 years old).
I really don’t bother about the hype, the Apple products last a long time.
Given that all their devices are high-profit, and sell, even though not as many as competitors that sell more for a smaller profit, I don’t see why the watch will not evolve into a profitable device.
The name of the game is money, and if you cannot scam your way into government subsidy, you have to sell and make a profit.
Timex Ironman….I have had this digital wonder for over 10 years. Best watch out there. I forgot where I put it a few years ago and found it last week, still running and still accurate.
We are some of the lucky few to live in an area where cell phones don’t work, although I noticed when my daughter was up for a visit she could log on to our wifi with her ‘device’. I plan to now put a small sign on our driveway. “No ‘smart phones’, no gaming devices, no mini-vans beyond this point. I guess I could add…No Apple Watches to the list, but I don’t know anyone stupid enough to buy one.
Apply Watch? Why not? It’s just a status symbol. Like any somewhat upscale fashion, it has to be overpriced and go out of style quick, to keep the wearers differentiated from the masses. Utilitarian may have been part of the Iphone/Ipad equation, but is not part of this one. Apple’s got a brand, and they’re milking it with zero shame on this product. More power to them. (And their customers will be just as shamelessly mocked, to their great pleasure, by those who “don’t get it”)
And here’s Bloomberg to explain the problems with the $10,000 edition…
There has been no mention yet at all of the biggest elephant in the room: what do you do with a solid gold watch when it becomes obsolete? One would hope for some kind of trade-in or recycling program that prevents all that gold from sitting unused in a drawer, but it will likely be a while before we know of anything real. (Many $10,000 mechanical watches actually rise in value after you purchase as the years go by.)
Yet the Apple fan boys and gals will step on each other for the bragging rights to owning it in today’s narcissistic selfie society built on instant gratification.
As a fan of mechanical clocks and watches I am much amused at the Apple hoopla. Old guys like me still wear wrist watches and do not reach for the I phone for the time. I don’t even carry the thing around unless I’m expecting a call or reading you all over dinner.
Clocks have been very accurate since the mid 1700s. The best mechanicals were accurate to 8 minutes per year. Regulators (for clocks) were in most train stations, and people would set their watches by them. The more discriminating buyer could buy a wrist chronometer, descendants of Harrison’s marine chronometer # 1.
Before WWI ‘bracelet watches’ were considered effeminate. Men wore pocket watches. The realities of trench warfare and chemical gear moved the wristwatch into the accepted bracket, when the vets came home the old guys kept their pocket watches and the youngsters adopted the wristwatch. By the 1930’s the changeover was mostly complete.
So now comes the I watch trying to make something old new again. Remember the LED watches of the mid 1970s? They didn’t have any battery power. They were beautiful things, but they’re consigned to the dustbin of history. So is the Edsel. Go figure.
I recall in awe staring at my elementary school vice principal’s new LED watch back in 1974… Then came the cheap LCD versions and lest we forget swatches.
Anyway iWatch’s battery life is reported to be mere 3 hours if one used it to talk on the phone like Dick Tracy or something.
Now, if APPL could come up with a pocket watch, I’d bet you would buy it.
http://www.theregister.co.uk/2015/03/12/gold_apple_watch_economics/