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Apple takes a bite out of the market

Business | Technology

After a stunning quarterly performance during which the business seems to have laughed in the face of supposed weak consumer spending, Apple demonstrates how to execute on a clear strategic vision.

It all started with the iPod which was the right product at the right time unlike the previously ill-fated Newton tablet. With the iPod firmly establish the timing of the iPhone was again excellent, even though the execution on the winning concept was only good enough. But that was just an opportunity to start an accelerated upgrade cycle that has seen 3 iPhone generations in 2 years. Meanwhile iTunes is established as a major content portal with solid annuity revenue streams and as icing on the cake, the Mac computer platform that for so long has been relegated to niche home and creative/design markets gets a new lease of life.

And now the business portfolio is aligned and firing on all cylinders – pardon the motorsport pun! The components clearly fit together and provide a compelling offer for consumers.

In a market where most businesses are struggling for any growth in volume or revenue, Apple has just announced 25 % revenues growth on the back of a 17% unit increase of Mac computers and a 7% increase in iPhones. I think the former is the particularly telling figure, especially if you consider the question of where did the 25% revenue growth come from? The 3GS iPhones were priced roughly the same as the earlier generation. Either another part of the business such as iTunes grew through the roof or I suspect that the 17% increase in Mac shipments was actually hiding a greater increase in sales of the more expensive models.

So while pc vendors bring the prices of laptops and netbooks down to significantly less than an iPhone, Apple is managing to skew the growth in sales of Mac’s even further towards high end £1000+ machines. Quite impressive!

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