How Apple Wins by Sensing and Responding

Apple no longer sits at the cool kids’ table. It runs the table. 

The company recently reported quarterly revenue of $91.8 billion, an increase of 9 percent from the year-ago quarter and an all-time record, and quarterly earnings per diluted share of $4.99, up 19 percent, also an all-time record. Apple continues to make fools of analysts who’ve questioned the company’s relevance, especially amid a slump in iPhone sales. Well, guess what: iPhone sales are doing just fine after all. And so is Apple’s stock price year over year:

Now consider this:

  • Siri, once the weak sister among smart voice assistants, has the world’s largest market share, even more than Amazon Alexa, Google Assistant, and Microsoft Cortana. Turns out the never-say-die iPhone and the release of AirPods Pro have helped propel Siri to a wider base of users.

What do all the above statistics tell you? Apple is defining its market as well as it always has, just in different ways that are perhaps not as earth shattering as the launch of the iPhone in 2007. (Let’s face it: the iPhone was like Van Gogh’s “Starry night over the Rhone” – a masterpiece and highwater mark that is seldom if ever matched again). For example:

  • Apple saw the rise of wellness care coming and positioned the Apple Watch not as a cool wearable but as a healthcare device. As CNBC reported, “Apple’s wearable category which includes the Apple Watch and AirPods wireless headphones, has been growing strongly. In the December quarter, that division brought in over $10 billion in net sales, a near 27% year-on-year increase.” In a newly published Hacker Noon article, I dig into the reasons why the Apple Watch has flourished in context of Apple’s strategy to be the data backbone of healthcare. 
  • Apple saw a growth opportunity in services (as opposed to hardware sales). Its Services division reported an all-time high in revenue growth for the most recent quarter, $12.7 billion versus $10.8 billion year over year. For its fiscal year 2019 (ended September 28, 2019), Apple reported $46.3 billion in Services, a 16 percent year-over-year increase. 
  • Apple got out in front of the rise of the voice-first world and introduced Siri in 2011, beating Amazon Alexa to the market by three years. (But Amazon completely outflanked everyone, including Apple, in the smart speaker market with the launch of the Amazon Echo in 2015.)

What’s next for Apple? Becoming a credible player in the streaming wars. Apple TV+, launched in November 2019, has a long, long way to go. Apple TV+ is being met with the same derision that Apple Music once faced. And whereas Apple Music could play catch-up by developing an formidable library of someone else’s music, Apple TV+ needs to develop original content to compete with Amazon, Prime Video, Disney+, and Netflix. 

But don’t ever underestimate Apple. The company has a huge reservoir of cash, and it’s willing to dip into it an example being the recent hiring of Former HBO CEO Richard Plepler to run Apple TV+. 

Do you really want to bet against Apple?

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