Apple posted its Q2 earnings yesterday with revenues at $8.16 billion, and profit of $1.21 billion. That’s a 15% jump in profits year to year. During these recessionary times, Apple seems to have bucked the trend, supported by strong sales of the iPhone and iPod. I am no financial analyst, but in the back of a few other that’s happening around Apple, this is the fruit of several efforts.
1. A unified business model and a focused, long term approach. Tim Cook, the acting CEO said this when quizzed about Apple’s loss of market share in the recent months:
“Yes we do care about market share, but cycles come and cycles go, and what we care about is making the best computers in the world, not making the most. We believe that if we do that over the long term, that we will gain share.”
This is the reason why they don’t rush into a category just because others have. On Netbooks, Tim Cook said: they are junky … not a consumer experience that we would put the Mac brand on. If we can find a way to deliver an innovative product … then we’ll do that.”
2. Don’t be reactive: when Microsoft got back at Apple (at least they thought they did) with their laptop hunters campaign, labeling Apple as over priced, poor value machines, Apple did not react directly. Anybody would have been tempted to defend their position. Instead, Apple chose to completely ignore the Laptop Hunters campaign and continue with their Get a Mac efforts. I thought it was classical, brilliant marketing stuff. Why give credence to a competitor who wants to rattle you? While Apple started the whole comparison game, Microsoft followed suit – they needn’t have given the position of relative strength they are in vis-a-vis market shares.
3. Keep the buzz going: the concept of App Store for the iPhone & iPod Touch has been hailed as revolutionary. It suddenly brought alive what it meant to have a real computer+internet device+phone in your hands, powered by the creations of thousands of developers. Other manufacturers have promised to launch their own versions. But with nearly one billion apps downloaded around the globe, Apple is making a song and dance about it, and rightly so.
I think this focus on ‘making ‘insanely great computers’ and chasing those who are willing to pay a premium for it is at the heart of Apple’s success in the recent years.