A vivid example of how FUD works
Victim: Apple's iPod Nano
Last November I did a Corpwar issue on FUD (Fear, Uncertainty
& Doubt) as a competitive weapon. Basically I described how it works and why
it's such an effective tool for giving your competitors a very bad day. It's cheap
and simple. For better or worse there's no question FUD is one of the attack dogs
of the modern corporate battlefield. A true corporate warfare terror weapon. And
corporate warriors need to know how to use it.
An interesting thing happened after we sent that FUD issue out.
We immediately received several calls asking if we would help engineer FUD "campaigns"
(an LOL euphemism for "attacks") against the callers’ competitors. Since
the calls came from longtime readers I took the requests seriously but declined.
I declined not because I have anything against the tool but because I knew, in at
least two cases, the idea was to use heavy FUD against other Corpwar readers, one
of which is also a search client of mine and I'm extremely protective of my clients.
So, after a couple of technical conversations, we took a firm pass. Unfortunately,
I think one of those conversations was later put to effective use...
Let's flash forward to early last week.
I got a call from a reader that's a senior executive in the computer
and music industry. He remembered the FUD piece and asked me if I would take a look
at what's happening to Apple's brand new iPod Nano. The iPod Nano is a nifty little
music player that basically blows away everything else in its category. In
general, iPods have a market share of between 40%-70% depending upon who you ask.
The Nano is designed to extend that dominance down into the lower end of the market
where a variety of smaller, non-disk drive players are scrapping violently for sales.
Naturally a new, and essentially perfect product (the Nano), put out by the industry
Death Star, is very, very bad news to the scrappers desperately chiseling away for
share in the category.
So, what does a real Corporate Warrior do? Simple: you FUD the
new product. If all else fails, think like a guerilla fighter. Guerilla warfare,
by its amorphous and cost-effective nature, is extremely hard for the incumbent
to effectively battle against.
A rumor suddenly started circulating a couple of weeks ago that
the iPod Nano has a particularly scratchable screen and that they could even shatter.
The rumor quickly spread that the scratching issue was so bad that if you left the
Nano in your pocket (where music players frequently live) the screen could quickly
become marred to the point you could barely read the underlying text rendering it
almost unusable. Supposedly this would happen even if the pocket was empty other
than the Nano. (I could never figure this out.) I asked the fellow how the polymer
in the Nano's screen differed from other iPods (none of which have a scratching
issue) and he laughed, vaguely amazed: "It's the same stuff!" He added
there was a minor supplier issue with some breaking screens but that was being fixed
immediately and they were repairing the Nanos that had broken. It was the rumor
of the screens being so easily scratched that was the expensive issue. Some potential
buyers were reacting as expected—holding off. (The typical potential customer reaction
to well-crafted FUD is to execute an immediate full stop).
His question was simple: Did I know anything about who might
be spreading the rumors (e.g. the FUD)? Well, in fact, maybe. But what's the difference?
The attacker didn't even have to explicitly lie. It IS possible to scratch the Nano's
screen (of course you can scratch a diamond too). The damage is done. FUD can be
modeled via a contagion model because it spreads like a biological agent moving
through a living population. The more closed-in the population the faster the contagion
moves. And few things move like good FUD since it doesn't require "old fashioned"
physical distribution (air, touch, etc.) especially when it breaks out into the
press and social media spaces where it can become an epidemic of disinformation
in a couple of hours. These days FUD can travel at almost the speed of light because
that's how fast data can move along optical fiber. Think about it. It's scary. But
it's also an opportunity for the true corporate warrior that needs to make, or protect
sales, to survive. Few things can slow a competitor down, or even stop them altogether,
like well-crafted FUD. Period. It’s Very Nasty Stuff. It’s electronic anthrax.
So here it is just a few weeks in and the iPod Nano is felt by
many to be somehow "delicate" (this is what it all factors down to). And
that's pretty terrible for a portable music player. Although Apple's recent stock
performance was blamed on the downgrading by Merrill some blamed it on the perception
that the new product has problems and this might somehow prove Apple was pushing
new products to market too quickly, e.g. the perceived problems with the Nano's
screen somehow demonstrating Apple was becoming reckless.
The funny thing (well, sort of funny) is the caller naturally
thought that it might be one of Apple's big competitors that had initiated the FUD.
Not necessarily. Knowing how flexible FUD can be in the hands of a clever corporate
warrior, my response was simple: "Or, look for somebody very small. Somebody
new that needs revenues badly and that can make them by mitigating a supposed flaw
in the Nano's construction. Look around. They will be advertising, or somehow in
the press or on social media, for solving the problem." "You mean like
a [music player] case maker or screen protector manufacturer?" "Exactly,"
I answered. I further described that a lot of people will buy the high utility Nano
even if they think it has problems and, predictably, they will attempt to mitigate
the problem via an accessory (a very American response, especially for the younger
demographic). It's the people on the fence that will be swayed by the FUD not to
buy (many people are eager to find reasons not to spend money and they are happy
to wait for the social proof provided by early adopters and, even then, may have
actionable doubts). And there are more than a few of them. (Note: I'm not one of
them. I bought a Nano for my plane, then one for each family member. It's immensely
excellent and none of my hyperactive clan have yet to see any screen marring whatsoever.)
But causing potential buyers to delay may just be a collateral effect. The real
FUD benefactor here is the accessory maker who now has an accessory that's perceived
of as a necessity. Very clever. Very good FUD unless you're an Apple equity
holder waiting for reality to overcome the FUD. (This often happens but it can be
a very expensive wait, which is also, of course, an access window for still others
that can even position against the “flaw”.)
The underlying lesson here is it didn't take much effort on the
front end to create the Fear, Uncertainly and Doubt. And it was created fast (in
fact, REALLY FAST) and cheaply.
Think about this the next time you're taking on somebody much
bigger, or you're really big yourself and feeling complacent and untouchable.
Seriously, think about it…
