It’s not even a comparison of Apple’s riches vs. the losses suffered by Microsoft, Motorola, BlackBerry, HTC, or Nokia in the smartphone industry. Apple’s revenue and profits dwarf all but Samsung. So, what’s the problem?
Growth And New Money
There’s probably not a technology company that competes with Apple that would not want to have financial numbers similar to Apple.
Apple appears to be highly profitable at every turn. Mac, iPhone, iPad, iTunes Store (media content, applications, books). What’s not to like? Profit seems to be everywhere.
Even the diminutive Apple TV sells by the millions, and probably has total sales nearing a billion dollars.
That’s the problem. Apple’s success with iPhone and iPad– tens of millions of units sold every quarter– means the success of any new product will be judged by comparison.
Apple’s executives were wise to call Apple TV a ‘hobby,’ though any business pushing half a billion in annual sales has probably exceeded the hobby category.
Even the integrated Apple ecosystem is hugely profitable, with hundreds of millions of customers. Think iTunes music and movies, iPhone App Store, Mac App Store, iBooks.
What’s Next, Pussycat?
Whatever Apple decides to do next, as an encore for the runaway success of iPhone and iPad, needs to be an absolute killer product with instant worldwide distribution and acceptance.
I’m thinking iWatch and iGlasses are two products and categories which may resonate with customers in the numbers that Apple needs to mark a success. The company’s annual revenue is approaching rarified air– now over $170-billion a year.
10-percent growth per year means the company needs to come up with a staggering $17-billion in new business. It doesn’t matter if it’s a new product, or simply growth in the current product line, that’s a big number problem.
Any new product from Apple will receive instant glorification or immediate vilification from the tech and news media, not to mention the many millions of loyal customers who can voice opinions instantly via Facebook, Twitter, Google+, and many thousands of blogs.
Again, that means whatever new product Apple launches that’s not also described as a hobby, must be a big emotional, numerical, and financial win, a product that fits in well with other iDevices as a must-have gadget.
What products can Apple launch that would add a mere 5-percent to the company’s annual revenue? 5-percent of $170-billion is merely $8.5-billion. iWatch and iGlasses, priced at $250 each, would require annual sales of 17-million units just to add 5-percent revenue growth.
In my book, that’s a big number problem. Or, is it? The original iPad sold 14.8-million units in the first year. Apple now sells more than that number of iPads every quarter. All Apple needs is another iPad-sized hit.