The Ford brand is a goldmine: a whole lineup, from toolboxes to lawn mowers, could fit within the "Tough" positioning. Surprisingly, though, the diehard fan wearing an oval-shaped Ford belt buckle cannot buy products connoting "toughness" outside the light-truck product line, and no car, minivan, or any other Ford-branded offering makes the "Tough" promise.
Actually, few of the most popular car brands—including Beetle, Golf, Corvette, and Mustang—have ventured outside the boundaries of the automotive industry at all. All of them sell branded key holders and golf balls, but only luxury makes, such as Ferrari, have genuinely attempted to stretch their brands into non-auto products, like gold watches and fountain pens sold through separate distribution channels. Among the notable mass-market exceptions is Peugeot, which has stretched the brand on nearly all its individual vehicles: cars, motorbikes, and bicycles. There is little doubt that a line of Peugeot sports shoes, with or without wheels, would be an exciting way to attract kids and other hard-to-reach demographics.
Ford and GM did, in fact, launch lines of branded credit cards. They should have been a hit, but they probably suffered from the manufacturers' lack of experience with brand management in the 1990s. The carmakers' credit cards were generally considered as (expensive) marketing programs rather than new growth areas. At the time, many carmakers would have argued (and rightly so in such vertical industries) that pushing credit cards, fountain pens, and other consumer goods is not part of their core business.
That is, however, if you feel that their business is manufacturing vehicles. But what if we consider that the strongest asset that those companies have is in their brand? Many people from various industries and countries have wondered the same question in their respective fields.
Across the pond, Richard Branson, with a natural instinct for branding and lateral thinking, has been proactive in stretching his music label into airlines, beverages, credit cards, and phone-carrier brands.
A longtime music producer, Sir Richard's resume might hardly show any expertise in telephony, but the British entrepreneur does know a thing or two about pleasing his customers.
Virgin Mobile actually does not operate a telephony infrastructure. It is a mobile virtual network operator (MVNO), which leases network capacity at a wholesale rate to existing operators. In sum, Virgin leverages the power of its brand to reach segments, such as the youth market, more effectively than the traditional telcos, while using a third-party infrastructure like that of T-Mobile.
In a business model that now fits many consumer product and service industries, even a car could conceivably be called Virgin while being designed by Porsche in Germany and assembled on the spare capacity of General Motors in Detroit or the Nanjing Automobile Group in China (and perhaps never need an oil change!).
Others, such as the Carphone Warehouse, have also ventured into operating an MVNO. With more than 1,400 stores in Europe, Carphone Warehouse leverages its retail network rather than its brand. In the UK it leases capacity from, again, T-Mobile. But in France, Carphone Warehouse has pooled forces with Virgin. The joint venture operates in that market under the sexier Virgin Mobile brand, using the Orange network, and plans to attract 1 million customers within the next three years. The new phone plans are distributed through almost 1,000 points of sale, which include Phone House and Virgin Megastore outlets.
There is another star-entrepreneur that has successfully moved his brand out of the box. Three decades after the birth of Apple, the iPod is in nearly every purse and pants pocket. However, cell phones are now increasingly competing with dedicated MP3 players. Rather than playing defense, Apple is in a perfect position to become the next major MVNO, putting a cool iPhone in every hand.
As often in business strategy, there is no one-size-fits-all approach, and Apple's situation appears different from that of Virgin or Carphone Warehouse.
Today, Apple does not make phones but—in the words of one of its top executives—is not "sitting around doing nothing" about it. Thus, we can speculate that an alliance with Motorola would make sense on paper, as the two firms already collaborated on the Rokr, a Motorola phone compatible with the Apple iTunes online music store. As a product, however, the Rokr suffered from business compromises that turned off customers.
Despite the success of a similar alliance between Sony and Ericsson, Steve Jobs might decide that his quest for perfection precludes any co-branding arrangement. The Apple brand would have to stand on its own, which palmOne (known simply as Palm since July 2005) has shown can be done in the mobile business. Technically, Apple has not only the engineering firepower to develop its proprietary mobile operating system (OS), but it could probably license Symbian, a reliable operating system that beats at the heart of many smartphones.
The rollercoaster history of Microsoft Windows Mobile shows that the path from computer OS to smartphone OS is full of difficulties. Licensing a time-tested OS would thus reduce development time, costs, and headaches for Apple.
The economic models of the expensive iPod and the (seemingly) inexpensive wireless phone are also fundamentally different. Phone manufacturers—e.g., Nokia and Samsung—get their devices heavily subsidized by phone operators that lock customers into 12- or 24-month service contracts and recoup the "discount" over monthly bills. In the past, Apple has collaborated with Cingular, a phone operator, and could do so again. As operators also handle customer service, Steve Jobs may balk at this traditional arrangement, though. It would go against the long-term, 360-degree branding effort rolled out in the media, websites, and stores, with its customer-friendly Genius Bar, a popular support station inside every Apple retail store.
Thus, Apple looks ripe to become the next major MVNO, selling and operating wireless devices—at least virtually.
As in the case of Virgin, Apple's issue is more a business-model challenge than a technical one, although a bad product launch would hurt even Apple. Many still remember the debacle of the Apple Newton, the company's unsuccessful line of personal digital assistants. It is nonetheless a reasonable scenario that presents the benefit of giving the Cupertino-based company full control of its brand.
The convergence of technology is happening in the living room, in the office, and also in the pocket. As such, the iPod has little future if it does not become the platform for all the digital services that people expect on the road: phone, emails, pictures, games, web browsing, in addition to iTunes' music and videos. Henry Ford would have agreed: the iPhone is really the next natural step in Apple's growth strategy.