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:
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.
Apple and Mary Meeker agree: we’re living in an increasingly voice-first world. But how well is Apple adapting?
On May 30, Kleiner Perkins venture capitalist Mary Meeker, one of the most influential pundits in digital, released her annual Internet Trends report. The uptake of voice-based digital interfaces was a significant theme. She identified voice as one of nine areas where innovation and growth are occurring as U.S. internet usage continues to growth.
“With voice, we’ve hit technology liftoff with word accuracy and we’ve certainly hit product liftoff with Amazon Echo’s install base estimated to be around 30 million plus,” she said, as she presented her report at the 2018 Code Conference. And she presented slides to illustrate her point.
It’s worth noting that in her 2016 report, she quoted Andrew NG, chief scientist at Baidu, who said, “As speech recognition accuracy goes from say 95% to 99%, all of us in the room will go from barely using it today to using it all the time. Most people underestimate the difference between 95% and 99% accuracy – 99% is a game changer . . . “
According to Meeker’s 2018 report, we’ve now approaching that point where accuracy rates will trigger widespread adoption.
As Meeker noted, sales of the Amazon Echo have been phenomenal – an example of a technology company identifying a need that people did not know they had. And the Echo is an important, but not the only, barometer of voice’s uptake. Businesses such as Amazon, Continue reading →
Three years ago, Apple looked like a music dinosaur. The company was reeling from the embarrassment of foisting upon iTunes customers digital copies of U2’s Songs of Innocence – an incident that laid bare Apple’s reliance on downloading at a time when the music industry was marching inexorably toward streaming. But Apple has regained its groove, and the purchase of irresistibly fun and popular music discovery app Shazam is but one indication.
After licking its wounds in the aftermath of the U2 debacle, Apple focused its considerable resources on launching a streaming service, Apple Music, in 2015 — and then proceeded to show how quickly one of the world’s most powerful brands can right the ship.
Apple Music now boasts 30 million paid subscribers. Although its biggest rival Spotify has double that amount, Apple has eclipsed nearly everyone else in the streaming industry within 24 months, making it and Amazon the only alternatives to Spotify to lead the streaming music business. Just as remarkably, Apple had developed its own brand of cool by building a well-regarded catalog and affiliating itself with the right artists through endeavors such as Beats 1 radio.
A Deep, Well-Curated Catalog
Apple Music’s mix of algorithms and human curation appears to be working. The company put the right talent in place to curate its catalog, starting with Scott Plagenhoef, Apple’s global head of programming and editorial. Formerly editor of the oh-so-hip Pitchfork, he joined Beats Music in 2012, and then joined Apple in 2014 when the Apple bought Beats. And although Apple Music’s playlists haven’t gained as much acclaim as Spotify’s vaunted artificial intelligence-based curation, Apple is earning respect. Recently Apple Music scored a major coup when hip-hop tastemaker Andrew Barber agreed to curate Apple Music’s New Chicago playlist, which provides exposure for up-and-coming Chicago talent as Barber’s Fake Shore Drive blog has done for years.
No longer is Apple the brand that forced uncool U2 down our throats. Apple Music is now where you go to stream radio shows hosted by the likes of Charli XCX, Drake, Frank Ocean, Continue reading →
Jeff Bezos is the Abraham Lincoln of the business world: he doesn’t let critics stop him from making history.
The success of the Amazon Echo encapsulates his resiliency perfectly. eMarketer recently reported that Echo owns more than 70 percent of the market for voice-assisted devices, whose usage grew nearly 130 percent in 2016. During 2017, 35.6 million Americans will use voice-activated assistants at least once a month, which means 25 million of them will use Echo. And during the 2016 holiday season, Amazon sold nine times as many Echo devices as it did the year before. But the ascendance of Echo was hardly assured when Amazon launched the product in November 2014.
In fact, Amazon’s Echo caused a good deal of criticism, ranging from concerns about violations of personal privacy to skepticism over its value to do anything useful for its owners.
Echo Faces a Rocky Start
The Echo surfaced at a time when Bezos was fielding taking heat for the failure of the Amazon Fire phone, which Amazon had released earlier in 2014. And although the Echo made some positive impressions coming out of the gate, the product didn’t exactly overwhelm the media influencers. The voice-activated speaker inspired bemused reactions from publications that were not quite sure what to make of it, including The Verge, which described Echo as “a crazy speaker that talks to you.” An analyst at Wedbush Securities told Bloomberg, “I think it’s just a two-way speaker, but why isn’t there an app that lets me do the same thing without having to spend $99 on hardware? I think this is a solution that is seeking a problem.” And Consumer Reports criticized the Echo for being too rudimentary.
Mobile gave rise to the on-demand economy. But voice search will fuel its future.
Google demonstrated how voice will form the foundation of an on-demand search ecosystem when Google announced the Google Assistant intelligent search tool at the company’s I/O event in May. Then Apple, at its Worldwide Developers Conference June 13, showcased a smarter and more ubiquitous Siri voice-activated intelligent agent for using our voices to do everything from order an Uber ride to make restaurant reservations. Both developments underscore how voice is rapidly shaping the way we research and buy in the moment.
In a June 7 blog post, I discussed how mobile triggered an uptake in on-demand living by making it easier for consumers to use their phones to quickly find things to buy and places to visit. Google calls these moments of rapid decision making “micro-moments.” Uber sensed the popularity of micro-moments by launching its now wildly popular service through which we use mobile devices to get rides when we want them. Amid Uber’s ascendance, businesses ranging from Amazon to Walmart have embraced various models of on-demand commerce.