This is both straightforward and overdue, but still meaningful: while iTunes didn’t save Apple, the application is the connective thread of one of the greatest growth stories in business history.
The first was the end of iTunes, which will be split into separate Music, Podcasts, and TV apps device syncing will be handed by the Finder. There were three announcements in yesterday’s keynote that, particularly when taken together, spoke to a company moving forward. It might have been the best thing that could have happened to Apple. The long-run came quickly: one year later CEO Tim Cook had to issue a revenue warning thanks to slumping iPhone sales after four years of accounting for between 68-70% of Apple’s revenue in the company’s fiscal first quarter, the iPhone suddenly only accounted for 62%. What that means for the long run - stability-driven growth, or stagnation - remains to be seen. It’s all rather inevitable…The fact of the matter is that Apple under Cook is as strategically sound a company as there is it makes sense to settle down. In short, it just doesn’t make much sense to act like a young person with nothing to lose: one gets older, one’s circumstances and priorities change, and one settles down. To that end, if Apple wants growth, its existing customer base is by far the most obvious place to turn.
Apple still has the advantage in loyalty, which means switchers will on balance move from Android to iPhone, but that advantage is counter-weighted by clearly elongating upgrade cycles. In 2018 I called it Apple’s Middle Age:Īpple’s growth is almost entirely inwardly-focused when it comes to its user-base: higher prices, more services, and more devices…The high-end smartphone market - that is, the iPhone market - is saturated. This changes a company: instead of looking outwards for opportunity, the gaze turns inwards. The iPhone, though, was no longer a rocket ship scaling to new heights it was an institution, something with roots, and something that could be exploited. That appellation belonged to the $999 iPhone X, and given how many Apple fans will only buy the best, average selling price skyrocketed:įrom a financial perspective, it didn’t much matter where the growth came from - more units or more revenue per unit.
Then, last year, came the big jump: both the iPhones 8 and 8 Plus cost more than their predecessors ($50 and $30 respectively) more importantly, they were no longer the flagship. What has changed is Apple’s pricing: the iPhone 7 Plus cost $20 more than the iPhone 6S Plus.
The 6S was the new normal: iPhone unit sales have been basically flat ever since: The forecasts did get better, but as I explained last year, unit growth never returned: It turned out that was the peak: Apple would again miss forecasts with the iPhone 6S, but this time their mistake was expecting growth that never materialized, eventually resulting in a $2 billion inventory draw-down. That all culminated with the iPhone 6, when Apple’s forecasts were finally wrong - there was far more pent-up demand for larger screens than anyone anticipated. Growth was trivial: simply add a new country or a new carrier, and predict iPhone sales with eerie accuracy. When a product like the iPhone comes along - and make no mistake, there are very few products like the iPhone! - the goal is simply to hold on to a rocket ship.
In retrospect, the previous malaise around Apple should have been expected.
More importantly, I thought that sense of “going for it” that characterized the Mac Pro permeated the entire keynote: Apple seemed more sure of itself and, consequentially, more audacious than it has in several years. If you think that is absurd, or would simply rather buy a new car, well, you’re not the target customer.Īt the same time, here I am, leading with the Mac Pro, just like those headline writers, and I’m not incentivized by hardware driving clicks: it was fun seeing what Apple came up with in its attempt to build the most powerful Mac ever, in the same way it is fun to read about supercars. The Mac Pro starts at $6,000, and will be configurable to a number many times that. It is the nature of hardware that a computer the vast majority of Apple’s customers will never own was the headline from the company’s keynote at its annual Worldwide Developer’s Conference (WWDC). This article was previously title ‘Apple’s Audacity’