UK: Is The Future Still Fruitful? The Company That Steve Built

Last Updated: 29 August 2014
Article by Arun Verma

Most Read Contributor in UK, August 2017

A famous man once said that those who are "crazy enough to think" that they can change the world, are the ones that do. It was a mantra upon which Steven Paul Jobs built his empire, challenging, innovating, and reshaping the world as we knew it.

His company changed the face of the world as we know it1, but in the absence of their founder and much fêted leader, the road has not been as smooth. Has the bubble burst?

A simple question, yet the answer can only be provided when you consider the true breadth of the firm, considering its software, hardware, and overall strategy.

Chaos theory suggests that when any firm is on the slide, we often see mutiny, backlash, and a severe decline in innovation. Yet, in a small, serene part of San Francisco, the technology revolution continues. The recent Apple Worldwide Developers Conference (WWDC) was heralded as the touch-point which laid the foundations for Apple's next "three very big plays".2 Along with the concept of the digital wallet, incorporating the Touch ID fingerprint sensor, we were also introduced to the concepts of HealthKit3, turning your Apple device into a one-stop shop for all your health and fitness information, and HomeKit, which is intended to turn your device into the hub for the 'connected home', controlling lights, security switches, and anything and everything else in your household. Add to that iCloud Drive, and an improved iMessage service, which will no doubt rival Dropbox and Whatsapp, and it's clear that the Apple cogs continue to turn at an astounding rate.4

But, how useful is new software when you can't sell any hardware to go with it?

The following figures are set against a backdrop of a market in which tablet and smartphone ownership have both risen between 2012 and 2013, by 20% and 10% respectively5; consumers are focusing on 'Design', 'Handset Reliability' and 'Brand', when making purchasing decisions.

Apple's Q2 2014 results showed that Apple sold 43.7 million iPhones in the quarter, up 6.3 million from 2013. In fact, it was the "strongest non-holiday quarter ever".6 One-half of iPhones sold were to new iPhone users (no doubt, partly due to the tie up with China Mobile, a carrier with over 790 million subscribers).7 However, these sales come in a market where Samsung remain the largest smartphone vendor. Despite their market share having dipped slightly from the same time last year (32.3% to 25.2%), mainly due to competition from localised smartphone forms, such as Huawei in China, Samsung still shipped the most handsets in 2014 Q2 (74.3 million).8

While onlookers may cite the iPad's drop in sales (circa 20 million in 2013, to 16.4 million)6 as proof that there is a chink in the armour of Apple, but even this must be taken into context: the iPad is Apple's best-selling product ever; the iPad is also selling in a market in which there is less room for growth, and a much longer upgrade cycle.10

They have sold over 210 million iPads, more than seven times as many iPods, and twice as many iPhones that were sold in the corresponding time-frame.11 While iPod sales have, naturally, fallen, the company's flagship products are still breaking records and receiving rave reviews.

However, Apple is much more than a smartphone/tablet device, as shown in recent months. Not only is Apple the number two online retailer12, it is actually growing faster than Amazon, which is astounding for a firm who focuses much more heavily on its retail store efforts, than it does on online sales.

And then, of course, there was the astounding $3 billion acquisition of Beats. While the motives of the move have been put into question, this will undoubtedly provide Apple with entry into another market, with an existing subscription base of 250,000.13 Last year was the first year, since iTunes was launched, that digital album sales actually dropped worldwide, yet streaming continues to rise (6% drop compared to a 32% rise),14 and this move gives Apple a way in to the burgeoning market.

We can best sum-up Apple by borrowing a quote from Mark Twain, "Reports of my death have been greatly exaggerated".

Just let this thought sink in: Apple, are richer than the US government15; the house that Steve built is alive and well.

Footnotes

1 Willis, 2011, Steve Jobs: the five Apple products 'that changed the world', The Telegraph

2 Kahney, 2014, Why Apple's WWDC keynote was its most important in years, Cult of Mac

3 Apple Developer Homekit

4 Miller, 2014, Apple takes on Dropbox and WhatsApp with integrated apps, BBC

5 Deloitte, 2013, Global Mobile Consumer Survey

6 Allsopp, 2014, Apple financial results: iPhones, iPads & Macs sales for Apple's Q2 2014, plus shares to split, Macworld

7 China Mobile, 2014, Selected Unaudited Key Performance Indicators

8 Hong, 2014, IDC: Global smartphone shipments hit 295.3m in Q2 2014, but Samsung and Apple lost market share, The Next Web

10 Danova, 2014, We surveyed people about tablet ownership and usage and their answers reveal why the market is slowing down, Business Insider

11 Valezco, 2014, Apple's iPhone sales soar while the iPad slumps slightly, Engadget UK

12 Dormehl, 2014, Apple's online sales grew faster than Amazon last year, Cult of Mac

13 Wagstaff, 2014, The $3 billion question: Why did Apple buy Beats? NBC News

14 Bloomberg, 2014, Streaming music dominates US consumer habits, The Telegraph

15 Hepler, 2014, Apple, Microsoft, Google all (much) richer than the US government, report finds, Business Journal

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