Droid Commercials Are Missing the Mark, and Potentially Damaging

Since the new Droid X has sold out online for Verizon, one could go ahead and say that Android has been doing a good job of marketing the newest Droid phones. Here is the most recent commercial that I've seen for the Droid X, and every Droid commercial has been along the same vein: humans turning cyborg or being like machines when they use the Droid.

It's very hard to find smartphone user demographics by age group, but from what I've read around the web the typical Droid user is young, male and single. In this regard, the Droid ads seem to be hitting the mark: they are somewhat edgy and while I would not say cool, they definitely get you talking (I think they are kind of creepy, but although I am the target demo it does not matter what I think, it's what everyone thinks).

What I would like to suggest, however, is that Droid could be inadvertently shooting themselves in the foot with these commercials. For their current market, it makes total sense. But as they start to expand to some of the older generations and females, these commercials could scare off potential users. Here I breakdown why the commercial fails to bring in new demographics, and why it actually scares them away.

Older users:

- Phone appears to be scary and difficult to use. Commercials suggest you have to be a machine in order to use one, and the usability is not emphasized, if anything the ad seems to suggest "unless you're a young male, get the hell away from this phone!"

Females:

- The 'cool' machinery imagery might be a selling point, but almost all of those featured in the ads are by themselves and males. To some the commercials can be kind of scary, and the ads suggests that most of the users are loners.

This video has circulated the internet, but I think it does a great job of showing the type of misconceptions there can be regarding iPhone vs. Droid

WARNING: NSFW [Language]

While the video is of course satire, one point that I think it does a great job of bringing across is that less sophisticated users care less about the facets of the phone, and more about how it works and the applications one can use. In this regard, I think a good deal of Droid's billboards that I have seen in Portland, Los Angeles and San Francisco are excellent:

Picture soon to follow

Emphasizing this one point is very important. While the billboard does not necessarily sell viewers on the Droid, it introduces the concept that the Droid could potentially do as good or a better job as that performed by the iPhone in terms of applications.

Moreover, while the Droid adverts might be doing a great job in the near term, they are cultivating an image that the device is difficult to understand for non-tech savvy users and that it is not a sociable device (see above commercial). I strongly feel that Droid needs to shift their marketing effort to be more all encompassing with the understanding that the device will not always be able to grow in sales by finding more young, single males.

Does Software Development Threaten to Dethrone Apple?

A couple of months ago I wrote an article speaking to how Apple (AAPL) was the fourth largest company in the United States by market cap according to the S&P 500 (it is currently the 3rd largest), and began speculating as to whether or not the company deserved this highly coveted position. While being a tech company with no debt obligations is going to bias Apple's position upward in the S&P 500, I do think investors should re-evaluate whether Apple deserves this position in the market.

Yesterday there was a very interesting article posted in Slate (Apple Wants to Own You), and while I feel that the title is far too fear-mongering, I do think that a few of the issues raised are pertinent to Apple's ongoing success.

The biggest point raised in the article is the fact that the locking-out of third-party software that originally only pertained to the iPhone is now being included in the iPad, something at the very least controversial given that the iPad is being hailed as a tablet computer. This is to say that except by ways of the Apple marketplace for apps, you are unable to install any non-Apple endorsed piece of software on the iPad without manually unlocking the device and voiding your warranty. While this may not be a short-term concern for Apple, the Slate article identifies that one of the key draws to Apple products is the rich environment of downloadable apps.

This of course raises the question of whether software begets users, or users beget software. As it stands now, Apple gets 30% of the sales from all apps. That's a pretty lucrative business for being referee and market maker on your own devices. With Apple additionally trying to take 30% out of magazine subscriptions on the iPad as well as growing rumblings over the subjectivity and increasing conservatism of iPhone and iPad app acceptances, there is concern that Apple is starting to take more advantage of the moat of user base it has built up with the lights-out success of past products.

While the iPad currently has no side-by-side competitor, other phones such as those using the Android operating system produced by Google potentially offer users a more unfettered access to third-party software than those using the iPhone.

The story of the iPad has been a huge success thus far, with Apple reporting over 500,000 units sold. Apple's stock momentum appears to be one of maintained margins and continually growing revenue, with revenue expected to jump 47-80% from last year's second quarter. While Apple has been a very strong performer in the past, it might be worthwhile to current investors to re-weight the risks and evaluate whether the price that Apple is currently trading at is pricing in a significant amount of optimism regarding future success.