The second part of the article explores more cases of component companies that built a brand
In the first part of the article, we learnt what ingredient branding is, its benefits along with a couple of case studies explaining the concept further. Let us explore more such cases. The first is the amazing story of NVIDIA, how it got to where it is and how it is poised to dominate the future. The second is an older story of Zeiss, how its heritage in lenses made it the perfect choice to be an ingredient brand in camera phones and digital cameras.
NVIDIA and the GPU
NVIDIA is synonymous with gaming. And for good reason! It was established in 1993 by Jensen Huang, Chris Malachowsky and Curtis Priem. This was only three years after Intel did its Intel Inside campaign that sky-rocketed its image. NVIDIA’s journey is different, but it came from being a niche to now being more mainstream.
In 1995, NVIDIA first launched a PCI card with inbuilt 2D and 3D graphics. This was a commercial failure that forced it to regroup. It came up with a strategy based on its understanding of its impatient consumers, who wanted the best technology sooner than the current 18 months market average. Hence, it decided to launch a new chip every six months. This turned out to be a watershed moment for the company.
From this strategy emerged NVIDIA’s first processor in 1997, called Riva 128. This was a big success, selling a million units in four months. Then in 1999, it came up with a game changer, the graphics processor unit (GPU) called GeForce 256.
So what is the difference between a GPU and a CPU (central processing unit)? Well, a GPU is a processor that renders images, video and animations for the computer screen. It takes the load off the CPU, as it does the rendering instead. But the great thing about a GPU is that it performs parallel functions—something a CPU is not designed for. And these parallel functions are needed in gaming to provide zero lag and better refresh rates.
Connecting with gamers
What better proof can there be that the product is of such great quality that Microsoft decided to use NVIDIA GPU for its first Xbox launch? Sony PS3 followed in 2005. Soon, all game creators started using NVIDIA gaming platform. By 2016, more than 100 game creators were using it. Not just that, all Hollywood movies with great graphics and animation in the last few years have been created on machines with NVIDIA GPUs.
Being the brand of choice for Xbox and PlayStation as well as the brand that helped deliver Oscar-winning movies are some of the key ways NVIDIA became synonymous with gaming. This is proof of the product, its capability and performance, which gamers see every day as they get to enjoy the latest graphics on Xbox or PlayStation.
However, NIVDIA was not happy just to provide proof to its consumers. It needed to connect with them, too. So it used social media in a big way. It has a blog that features all the latest that is happening at NVIDIA and the same content is shared on all social media platforms. YouTube not only showcases NVIDIA’s latest product offerings, but also features user-generated content in the form of reviews by tech influencers or gaming simulations. In fact, NVIDIA has a strong network of tech influencers that it keeps happy for getting positive reviews on its products.
Another key effort to connect with gamers is gaming conferences, such as Games Developers Conference (GDC) in the US and GamesCom in Germany, Europe. NVIDIA puts up great performances at these conferences, often unveiling new launches and always showcasing new technologies.
GPGPU is the future
What happened in the last few years has made things interesting. GPUs can now be used for general-purpose computing, or what are also called GPGPUs. Because the GPU can carry out many parallel functions, it has the potential to someday replace the CPU.
But that is not something Intel will allow so easily. In fact, there have been legal battles that Intel has fought with NVIDIA, AMD and Federal Trade Commission (FTC), where Intel had to settle and pay. (The FTC is there to protect the consumer and to prevent anti-competitive activities by companies.)
Since a GPU can carry out some of the functions of a CPU and, at multiple times, its power, some interesting uses have come up. This is a key reason the artificial intelligence (AI) revolution has gone into overdrive—creation of super computers with tremendous processing power. And, a GPU is basically a super computer processor.
Smart cities is one such use case. Cameras placed all across the city capture a lot of data, which GPUs analyse. This helps with traffic and parking management, law enforcement and city services, among others.
In healthcare, GPUs can help with medical imaging, analysing genomes and so on.
NVIDIA recognises this as a breakthrough phase. Academicians are pioneering scientific discoveries. They need computing power for their experiments and discoveries. Hence, NVIDIA is convincing these universities to adopt this computing power.
Retail is using AI to optimise the supply chain and user data to increase conversion, provide customised shopping experiences, micro-targeting/pricing and in other areas.
AI touches all aspects of self-driving cars—be it safety, driver alertness, easing traffic congestion or designing new products. NVIDIA is being generous with its technology. It is not only working on its own self-driving technology, but is also working with companies like Uber, Baidu, Toyota, Mercedes-Benz, Audi, Volkswagen and Tesla. Clearly, the company believes that partnering is the way forward.
A big thrust area for NVIDIA moving forwards is super computers, which are driving cloud services. All of these are giving up using CPU servers and are moving to GPU ones, including Amazon, Microsoft, Google and Baidu.
Let me give you an idea of how much more powerful a GPU server is in comparison to a CPU server. One GPU server can replace 160 CPU servers. And when you interconnect multiple GPUs, a speed of two petaFLOPS (for the interested, that is 1015 FLOPS) can be achieved. These computers are needed to solve the most complex AI challenges of the future and, frankly, it is mind boggling where GPUs are taking the power of computing.
Understanding market dynamics and consumers is critical. This is what led to NVIDIA’s success over other GPU players. Its strategy to continuously provide upgrades at six-month intervals and keep innovation as its core propelled its growth. It pushed its product designs to maximum technical limits, always providing the best end-user performance.
NVIDIA chose its niche well—gamers—too. This audience was smaller than the main consumer market for PCs, but it was knowledgeable, and that kept NVIDIA at the cutting edge of technology. NVIDIA found the right forums to connect with them, either at conferences or through social media, and used tech influencers well. But perhaps the best is yet to come! The age of super computers and super computer processors has put AI into overdrive, and NVIDIA is at the centre of this revolution that has already begun. Will it be the next Intel?
Zeiss has been the camera of choice for generations. It was the ingredient brand for Nokia phones in the 2000s as well, but that was possible because of Zeiss’ beginnings. Carl Zeiss opened his workshop in 1846 and focused on making scientific instruments and lenses. He developed the famous Jena optical glass.
By 1861, Zeiss was considered one of the best in Germany. By the end of WWI, it was the world’s largest camera production company. And in 1969, Zeiss Biogon lenses were used in Apollo II mission to the moon by NASA. That is the heritage of Zeiss. Always considered a pioneer and leader in lenses!
It is not that Zeiss has had no competition over the years. It has just been more focused on delivering to consumer needs, on keeping up with the market. Over the years, it built a brand. It developed and released campaigns, showcasing new lenses and the picture quality from Zeiss lenses.
Zeiss also entered into collaborations and licensing agreements with other companies like Hasselblad, Rollei, Yashica, Sony, Logitech and Alpha. It either provided its brand for co-branding of lenses that were developed by other companies, or licensed its technology to them for complete optical design and manufacturing.
Zeiss and Nokia
Zeiss entered the cellphone camera market with Nokia, which had, by 2004, become the world’s most sold cellphone brand. And yet, Nokia did not have the best phone camera. Sony Ericsson did. So Nokia roped in Zeiss to develop a lens for its cellphone. The result was N90, which was launched in April 2005 with 2MP camera by Zeiss.
The partnership produced a series of phones and had a steady hold over the consumer market, including Nokia N95 with 5MP camera.
The milestone of Nokia and Zeiss partnership was the launch of Nokia 808 PureView in 2012. The highlight was the name of the phone, which was solely based on the imaging quality of the phone camera.
What brought Nokia down was the launch of Apple’s iPhone and the multitude of Android phones. Both were software that were far superior to Nokia’s Symbian. Even Microsoft buyout did not help, because the launches post this were using the not-so-popular-for-cellphones Windows platform.
Recently, Nokia made an attempt to come back on Android platform—Nokia 8—again with Zeiss lens. At last count, early this year, it had managed to gather a little over one per cent of the global cellphone market. While this is a far cry from its earlier high, it is not a total dud!
Nokia recently launched Nokia 6.1 and 5.1. And while Apple and Android are far ahead, we will have to wait and watch to see if this attempted comeback by Nokia goes anywhere.
Zeiss and Sony
Well before the Nokia partnership, there was the Zeiss-Sony one, which commenced in 1995. It is another great example of ingredient branding. Because here too, just like Nokia, Sony was not well-known for optics and photography. However, since Sony was a reputable name with consumers, it used the expertise of Zeiss to launch a range of camcorders and digital cameras.
The first product launch of this partnership was Sony Handycam CCD-TR555. The partnership has also launched lens-style cameras that can be attached to smartphones.
Zeiss supports Sony throughout the optical design and development process. It then tests and approves prototypes. It also develops 25 of its own distinctive lenses that perfectly fit Sony cameras. This is how symbiotic this partnership is, and an extremely successful one too. They celebrated 20 years of this partnership in 2015, and are still going strong. They have sold more than 185 million products through this collaboration, which continues even today.
Zeiss, in the meantime, is not depending much on Nokia and Sony. It has the following four focus areas:
- Semiconductor manufacturing technology that is enabling the manufacture of powerful microchips
- Medical technology, like products and solutions for ophthalmology, neurosurgery, ENT surgery, dentistry and oncology
- Precision equipment and microscope systems to ensure even the tiniest structures and processes become visible
- Eyeglass lenses for movie and camera lenses, binoculars, etc
Zeiss is not only exploiting its core strength of lenses but, has taken that expertise into other industries as well.
From its inception, Zeiss has kept pace with the market, understood its consumers and been an innovator. It has had many firsts over the years. It has partnered with other camera companies like Hasselblad and Sony, which ensured a consistent delivery of quality lenses.
Building a brand early on, and consistently, is critical to the longevity of a business. Zeiss ensured that it survived when its competitors failed and positioned itself perfectly to be the ingredient brand in one of the biggest booms of camera phones.
The bottom line
A few key principles that can be taken away from these cases are:
- Speaking to a niche audience that is knowledgeable and impatient has advantages for a company; it is pushed to the limit when it comes to innovation. The desire to surprise its consumers can be a great motivator for a company.
- Partnering is a critical step to stay at the cutting edge. Zeiss did it for the longest and so did NVIDIA. Their partnerships include licensing, sharing of knowledge, technology and know-how.
- Building a brand is critical with the end-user. This creates pull for the brand, and big players like Xbox, PlayStation and Nokia rely on the brand to build their expertise and loyalty with their customers. It allows them to charge a premium with the end-user partly. This is a great position to be in for any company.
I hope this article inspires Indian ingredient brands for Indian and global markets—principles are quite the same wherever you may be. As long as you invest in development and choose your segment wisely, there are opportunities out there waiting to be either created or grabbed.
Abhimanyu Mathur is executive vice president, Lowe Lintas (part of MullenLowe Lintas Group)