Why AT&T Is Re-Inventing Its Brand, Again
Didn’t we watch AT&T re-invent their brand just 5 or 6 years ago? How often does a company have to reinvent itself in the marketplace? Apparently if you are one of the leaders in an industry that has been continually reinventing itself the answer is often.
As the industry continues to change, and as the services change, and as new competitors enter the space, it is vital that companies update their corporate image.
To understand what is happening let’s pull the camera back and take a look in the longer term historical perspective of the changes that are reshaping the telecom industry.
First was the big bang in 1984, which started it all. The break up of AT&T into one big national long distance giant and seven smaller regional local phone companies called baby bells. That’s around the time when MCI and Sprint became competitors. At that time the wireless business was brand new and just starting out and the Internet wasn’t even on the radar yet.
Then in 1994 we started talking about the Internet. That was only sixteen years ago. It was brand new to the consumer marketplace and it was just words. No graphics or pictures or movies or anything, just text.
In the mid 1990’s AT&T reached its peak. It was the largest long distance giant in the country. It looked bulletproof. It offered telephone, wireless, Internet and it even acquired Telecommunications Inc (TCI) and became the nations largest cable television provider.
That’s around the time when the baby bells started offering their television service called Americast. It was a very good service, but was put on the back burner when the bells started merging later in the 1990’s.
That’s when the wireless industry changed from analog to digital beginning the its revolution. It wasn’t an instant success. In the early 2000’s the wireless business was still trying to figure out how to convince customers to use their data services.
The Telecommunications Act of 1996 was a revolution. It was the rules of competition between the local and long distance companies. It was not about wireless or Internet, just about phone. That’s what we thought the world would look like going forward.
We were wrong, but did not know that at the time.
That new world lasted several years, but then the bottom quickly fell out of AT&T and the rest of the industry changed as well.
The baby bells won the battle over the consumers and AT&T lost. It didn’t take long. The writing was on the wall. After losing consumers to the baby bells for local, AT&T was at the end of its rope. We didn’t realize it, but that may have been AT&T’s last gasp as the company they were.
It quickly sold the huge cable television business to Comcast making them number one in cable television.
AT&T also spun off their wireless business called AT&T Wireless. The new company kept the same name, but was a different company.
All that was left of the once giant company with the most valuable brand name was a much smaller business services company. The marketplace just couldn’t wrap their arms around the fact that AT&T was pretty much gone.
SBC, one of the baby bells acquired them in the mid 2000’s. SBC changed its name to AT&T. That was the beginning of the re-birth of the phone giant. In a similar move, Verizon acquired MCI.
So the new AT&T was born, and it looked impressive, but was confusing. This changing industry and changing company was too confusing to explain, but I’ll give it a try.
First, a smaller and weakened AT&T was acquired by SBC, a baby bell from San Antonio Texas. The company changed its name to AT&T. SBC was originally the smallest baby bell of the bunch in 1984. It grew from the smallest to the largest by acquiring many companies including AT&T, Bell South, Ameritech and others.
Suddenly AT&T was re-born. At the time I remember telling people this was too confusing for the marketplace. I said in a few years we wouldn’t even remember this mess. At that time people will just think AT&T is the same company it always was. They will forget.
That new large company also owned a part of Cingular with Bell South, but now they also acquired Bell South so they really owned all of Cingular.
That was one of those brilliant and successful names and brands in the business. It gained top billings quickly. The kind of brand that should stick around right? Wrong.
Next step, Cingular acquired AT&T Wireless. That was the business that AT&T spun off. What name would they take going forward?
Eventually AT&T decided it needed a brand new identity and changed the name of Cingular to AT&T Mobility. Getting dizzy yet?
With all this water under the bridge just a few short years ago the company decided to take a break from the name-that-company game.
In the few years since, the wireless industry has transformed itself, again. Four years ago Apple jumped into the business with iPhone. They started with a few hundred Apps and now they offer around 150,000 Apps. That’s an incredible leap and opportunity and it is just the beginning.
That started a revolution. Smart phones are growing and taking over. Now Google is jumping in with their Android devices.
Suddenly non-wireless companies are leading the wireless handset business. Suddenly Apps are a big business when just a few short years ago the networks could not figure out how to get customers to try these things.
The direction of the wireless industry going forward looks much different than it did just a few short years ago. One thing that is different is if most US based customers already have a cell phone where will growth come from?
Plenty of places even though we don’t all recognize what is happening yet.
A few examples are Sprint working with Ford to put the Internet on the dashboard. Or AT&T working with power companies to read meters wirelessly, saving money on meter readers. There are many examples.
Suddenly the marketplace is different with new competition from many companies like Comcast, Time Warner and Cox.
With all of this new-ness going forward, now is the right time for companies like AT&T to re-think who they are and change their brand in the marketplace?
This signal of AT&T updating their brand shows we can also expect these companies to stay busy reinventing themselves. They will be painting the new background so we can understand what the world looks like going forward.
Pegboard.
Customers don’t understand big changes early on. When a new competitor comes into an existing space the customer already has a pegboard in their mind. Their understanding of the industry and the opportunity is already in their head and it is up to the new competitor to fit into that space.
However when a new space is introduced, like what AT&T is trying to do now, the customer doesn’t have a pegboard in their mind yet. They struggle trying to create a framework where everything starts to make sense again, and where they can start hanging ideas on.
The first company to get to the customers mind and present that framework wins that first important battle. They can create the environment that makes them look good. That is the same place that others will have to compete in.
So that is where we are right now.
AT&T is launching their campaign that will create the new thinking going forward. At the same time we can be sure Verizon is also working with their creative group on their next moves.
Since they will come in after AT&T the question is will they work within AT&T’s new idea for the industry, or will they create their own? I bet they will create their own, but will look similar to AT&T. That way they can both sound like they are tops in their own world.
One thing is for sure, this industry is one of the healthiest and most rapidly change. New competitors can pop up anytime like Apple and Google. Other entire segments can disappear like long distance. The industry keeps reinventing itself.
What will telecom look like going forward is the question. We can tell a few years in the future, but beyond that no one knows yet. It’s just the way this industry works.
The future of the industry is like what they say about the weather, if you don’t like it stick around and it will be completely different.
Jeff Kagan is an Industry Analyst. He focuses on wireless and telecom, cable TV and IPTV, Internet and computers. He publishes the Jeff Kagan Report & Comment, which offers analysis and opinion of the changing industry. Visit him on the web at http://www.jeffkagan.com
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