• by Laurie Sullivan  @lauriesullivan, January 2, 2008

Few companies can build real anticipation and excitement without heavy advertising, but Apple Inc. makes it look easy to get consumers in a frenzy almost on the strength of buzz alone.

When the iPhone debuted in June, consumers camped outside Apple stores across the country, some spending more than 24 hours in line before the phone went on sale. They counted down the seconds until the doors opened, crowds cheered, and the first consumers skipped happily out of the store--after paying up to $599 each--with shiny new gadget in hand.

Being the first to own Apple's iPhone was a social statement, says Bonnie Carlson, president of the Promotion Marketing Association, a nonprofit trade organization.

"Apple did a brilliant job of building interest for the iPhone, but also took a big risk by launching the phone exclusively through AT&T," Carlson says. "At the time, AT&T lacked the reputation to support the launch."

The Cupertino, Calif. company's success continues even while it takes such risks. Case in point: 2007 got off to a rocky start after Apple announced in January it would introduce the iPhone mid-year. In March, it rolled out Apple TV, which lets consumers download movies, TV shows and songs from iTunes to watch on a widescreen TV via Apple Remote. Apple took a chance by keeping the system proprietary and limiting available content to iTunes.

The company also dealt with major litigation in 2007. Cisco Systems hit Apple with a trademark lawsuit claiming it had owned the name "iPhone" since 2000. Cisco wanted collaboration to make sure the phone worked with Cisco's networking gear. The two companies settled in February.

The following month, Apple resolved a trademark dispute with Apple Corps Ltd., which guards the Beatles' commercial interests, over the use of the apple logo and name. The settlement gave the computer company ownership of the name and logo in return for agreeing to license some of the trademarks back to the music label; each can continue to use them.

Despite the distractions, Apple pulled off successful marketing and advertising campaigns and product launches throughout the year, with a continued focus on music and video. Aside from the iPhone and Apple TV, the company introduced a new iPod lineup, including an ultra-thin Nano with video capability. But the iPhone was the real star.

"Apple launched the grooviest phone that has hit the market in years, and somehow made a touch screen actually work," says Daniel Ernst, an analyst with Soleil-Hudson Square Research. "They do a fair amount of advertising and marketing after products launch, but it's not necessary, because the buzz markets the products."

Apple keeps the buzz going in part by taking advantage of Microsoft's woes over its new operating system, Vista. The PC-guy-versus-Mac-guy campaign continually reminds consumers of trouble in Microsoftland.

The subtle marketing strategy continues in Apple's stores.

"Apple makes it so easy," says Bill Pickett, Latin American sales manager for Unimark in Gardenia, Calif., who owns three Macintosh computers. "When you walk into the store, there's lots of literature that explains anything you need to know, and there are salespeople who know the product inside and out."

Customers don't even have to stand in line at the cash register to make a purchase; the salesperson comes to you with a wireless portable cash register, runs your credit card and e-mails you the receipt. Pickett says making it easy to buy iPods, iPhones, iBooks, Apple TVs, printers and speakers creates loyalty.

Apple famously extends that ease-of-use marketing tip to its product design and pricing strategy. In October, it released the latest version of its OS X operating system, called Leopard, replacing the version known as Tiger. Leopard comes installed on all new Macs, but consumers can purchase the software as an upgrade for older Macs for $129. Vista, on the other hand, ranges from $100 to $259 for the deluxe edition.

Vista is available in four versions, and Leopard in only one, simplifying the buying process. Apple fortified Leopard with Boot Camp, free software that runs Windows on a Mac; previously it was an add-on. These and other subtleties have helped transform Apple into a formidable competitor against Microsoft and other PC-makers.

It's true that the oft-praised yet slow-to-catch-on Mac took a backseat in 2007 to Apple's popular music and video gadgets, but the surge in the computers' popularity outpaced the PC market overall this year. Apple reported its Mac business brought in $3.1 billion in revenue for the quarter ending in September 2007, up from $2.21 billion in the same quarter the year before. It sold 2.16 million Macs, up 34% from 1.61 million, more than double the worldwide PC growth rate of 15.5%, according to analyst firm IDC.

"Any other company would call 2007 a phenomenal year, but for Apple it's a day in the life," Ernst says.