Subtitle: How to thrive without a brand
Acknowledging how important a strong brand is in the modern globalized consumer-led digital-age…it is still possible to be successful without one!
This isn’t going to be a man-the-barricades rant against corporations (remember ‘No Logo’?), but an alternative business model where the creator deliberately takes a back-seat, Customers are other businesses (B2B) or a shared community of use, not the end-Users. There are brands of course, you are acquiring something from someone after all, but they may be hidden from casual inspection by layers of other brands.
I was recently reading about ARM Holdings, a huge and influential designer of the low power microprocessor chips, or ‘Systems on Chips’, that live at the heart of 95% of smart phones in the world, as well as a huge number of other digital devices. In 2014 alone, 12 billion ARM-licensed chips were produced, that’s 1.7 for every person on the planet!
(Ed. ‘chips’ are integrated circuits, slices of silicon that are etched with thousands of electronic components – the beating heart of all computers and digital devices)
So why aren’t ARM as famous as their bigger brasher neighbours in Silicon Valley (and Silicon Fen) and why aren’t there ‘ARM-inside’ stickers on everything?
Keep it simple
First a bit of history and a look at the approach and business model at ARM…
Advanced RISC (Reduced Instruction Set Computing) Machines are very cool – they even have an acronym embedded in another acronym! The company was spun out of an Acorn and Apple Computer’s collaboration in 1990, to develop and license their chip designs, that is the intellectual property (‘IP’) rather than producing the physical devices themselves. From the early days in a barn in Cambridge (England) to a multi-billion Anglo-American corporation, ARM has maintained this simple, if slightly unusual, approach to doing business by,
…designing and licensing of IP rather than the manufacturing and selling of actual semiconductor chips.
The difference at ARM, compared to other tech companies, seems to be the absence of a ‘physical’ product, either hardware or software. By working in their own niche (how big can a niche be!) and not chasing retail Customers or sales, and not manufacturing or distributing anything, they can concentrate all their efforts on being creative and innovative, a bit more like a university research lab or even a not-for-profit organisation. Their network of partners and licensees do all the ‘heavy lift’ work.
But isn’t this reliance on such an intangible and easy to copy artefact dangerous? No, in the words of their Chief Executive, ‘We licence our tech to anyone who wants to buy it…at a reduced price so that it’s cheaper to buy it that to build it yourself.’
When the volumes are in the billions even a tiny profit margin is significant.
The future looks bright
So what about the future, with the market for smart phones almost saturated where people can afford them? Well, tech keeps delivering, we are starting to see the explosion of embedded chips in wearable technology and the ‘Internet of things’…of which I will be writing about another time… ARM are perfectly placed to tap into all these new markets for chips in watches, cars, TVs, your central heating sensor, even fridges and light bulbs!
Back to the no brand title of this post; there are a lot of places where we as consumers don’t need-to-know or think too much about what is happening under the bonnet, or who is really providing the goods or services. How else can banks sell insurance, supermarkets sell gas & electricity, or a certain high-profile company sell everything from coca cola to mobile phone contracts, hot air balloons to space flight…they all buy-in or out-source the services from third parties or purchase ‘white label’ goods to re-badge as their own.
More of the same
This is not a new thing, as soon as any artisan craft or local personal service becomes something that can be traded, copied, industrialised or commoditised, so the link between the producer and the consumer gets stretched and blurred. And, counter-intuitively, the more people and moving parts involved in the value-chain the cheaper the end product [can] become. I’m not an economist, so I will leave that particular conundrum to someone else!
So losing, re-focusing or otherwise hiding a brand can be a win-win-win situation, for the producer, the intermediaries (one or many) – including distributors, retailers & wholesalers – and of course the end-users and consumers.
I have written before about the increase of recycling and sharing of code (software) and the economics of re-purposing and re-using all manner of creative, knowledge and IT-related products. Well, ARM is just taking this to the next level, selling ideas not brands!
(c) 2015 Antony Lawrence CBA Ltd.