What is Apple doing to shore up these flagging product lines? We’re about to get hit with a barrage of new hardware to close out 2016 with upgrades across the line. iPhones remain the number one source of revenue and profits, Mac sales are declining along with Windows PC sales, Watch users await a new model. What about iPad?
Double Down On Up
Instead of promoting the sagging iPad line the old fashioned way– cut prices to increase demand– Apple has moved in the exact opposite direction an doubled down on the premium end of the line with two iPad Pro models.
The result? iPad sales continue to fall but Apple actually made more money thanks to the iPad’s increase in average selling price this past quarter, attributable to the iPad Pro line. Going upscale made Apple more money than cutting the price and selling more units to mainstream users.
Apple has never made much effort or had much impact into enterprise sales. It’s not in Apple’s DNA to do what businesses love to see– dependable product upgrades, discount pricing, special support.
Yet, thanks to the iPhone, the enterprise has embraced Apple– thanks to better-than-Android security, like clockwork upgrades and updates, and iOS software that helps corporate users, well, use Apple’s iPhone and iPad better. Apple says about 10-percent of the company’s total revenue comes from direct enterprise sales. 10-percent doesn’t sound like much, but big numbers are a part of Apple’s DNA these days, and total sales for the past year hit around $250-billion so $25-billion of that came from enterprise sales, or more than HP’s market value, about a third of Google’s annual revenue, and not much less than HP’s PC business.
That’s not exactly shabby, is it?
Slowly and quietly Apple has been setting up deals with large corporations all over the world. IBM, Cisco, SAP, and more banks than you can shake a stick at. Even Apple Pay seems to be coming into its own and accounts for 75-percent of all contactless mobile device payments.
What’s going on?
Apple’s executives are not stupid, and while I worry about Tim Cook’s future at Apple, it’s obvious they recognize that iPhone is a once in a lifetime product not easily repeated or replaced so the company is doubling down on what it does best– provide high quality user experiences with premium products that are easily upgraded and maintain high security. Exactly the kind of product that many large corporations want.
Instead of cutting prices and pushing products downstream to the great unwashed masses of Android and Windows PC users, Apple has doubled-down on premium instead of expanding product lines where each unit is less profitable than in the past.
In other words, don’t look for a lower priced iPhone, cheaper iPad, or less expensive Mac any time soon.