Apple CEO Tim Cook may not be a master showman on stage, but he's masterfully engineered Apple's most profitable quarter in history By Gadjo Cardenas Sevilla
Any doubt or cynicism on CEO Tim Cook’s leadership in the post-Steve Jobs era evaporated after the news of Apple’s US $18 billion profit, the most profit ever reported by a publicly-traded company.
Under Tim Cook’s leadership, Apple once more managed to shatter earnings expectations and post record highs in revenues and profits behind the surging popularity and sales of the iPhone 6 line which is now the company’s biggest earning product and which secures its place in the mobile industry in the markets where it is sold.
Strong Leadership
Any doubt or cynicism on CEO Tim Cook’s leadership in the post-Steve Jobs era evaporated after the news of Apple’s US $18 billion profit, the most profit ever reported by a publicly-traded company. Success amid constant scrutiny and woeful “Apple is doomed,” sentiments by some financial analysts makes Apple’s successful earnings even sweeter for the company.
A lot of work has gone into maintaining its pole position in the markets. Under Tim Cook, Apple has been hiring top-tier talent relentlessly to bolster its various product lines and ecosystems. The company’s R&D spending is up and they spent almost US $2 billion on research and development in the first fiscal quarter of 2015.
Apple has also been making more acquisitions than ever before. While the buyout of Beats Music from Dr. Dre may have been its most expensive at US $3.2 billion, and its highest profile buy, there are dozens of companies being strategically swallowed up by Apple either for talent, patent portfolios or technology that will later on factor in its products and services.
What Tim Cook has really pushed for are key strategic partnerships, like the historic team-up with legendary rival IBM to bring curated iOS-based solutions to enterprise backed, by a respected and security-focused portfolio. Cook has also spearheaded Apple’s profitable entry into China and similar emerging markets where Apple is highly valued despite a steady increase in locally-based competitors like Lenovo, Huawei, Xiaomi and ZTE.
Super 6
By going big and offering larger iPhones at 4.7-inch and 5.5-inch sizes, Apple’s iPhone saw a surge in sales while rival Samsung’s multifarious model lines suffered from lower than usual sales. The iPhone 6 and iPhone 6 Plus came to market last fall to large demand, with lines forming at Apple Retail Stores for days, and even weeks as people clamoured for the biggest change in iPhones since the product was launched in 2007.
The iPhone 6 and iPhone 6 Plus were different enough from their predecessors that many users wanted to experience them first hand.
Apple isn’t expected to dramatically change things like screen size every year, so the great success experienced by iPhone 6 might just be a one-time thing, or it may signify that Apple is reclaiming market share on the strength of product, app ecosystem and its unflagging popularity.
Apple is gaining market share back from Android and it is also expanding in emerging markets without having to succumb to releasing cheaper devices. Analysts see China as Apple’s second largest market in the coming years and it has just started selling its devices there.
Apple’s oldest product line, Mac desktops and notebooks, are also picking up and enjoyed their biggest profit ever with 5.5 million Macs sold in the past quarter, which is against the downward trend the PC market has been facing for some time now.
The iPad’s sales may have been cooling for some time and the reason for this isn’t that competition isgaining on Apple’s tablet, it is that the market has slowly and steadily saturated. Unlike iPhones, which Apple needs to dramatically innovate on a year-to-year basis, users tend to hold on to iPads longer, or pass them down to members of their family or friends.
Apple also updates its IOS operating system on a yearly basis and many features do make it down the line to older models which gives users incentive to keep their devices for a year or two more. I can personally attest to the longevity of the iPad.
My four-year-old iPad 2 has been passed down to my wife and later on to my young son. It runs the latest version of iOS 8 and for my son’s needs (videos and some educational games) it is still better than many competing one or two year old Android tablets out there.
My favourite tablet is the 2013 iPad Air and it still has more power, features and functionality than any other tablet sold by competing companies in the market right now.
Something New
Since its resurgence under Steve Jobs, Apple has always had a three-pronged product approach to sustain itself as a business. With the iPad on a plateau, the iPod as less of a factor, and the Mac not expected to dramatically increase in sales, new product lines are needed for long term success.
Apple Watch, which is the first wearable and an entirely new platform plus Apple Pay, which is a bold new approach at mobile payments. Apple Watch is slated for an April release, which means it will have enough of its own prime time in the news cycle to really make an impact.
In typical Apple fashion, the Apple Watch is considered late to market as wearables and specifically smart watches have been around for three or so years, but Apple Is expected to completely redefine the market with this one product just like it did with iPod for MP3 players, iPhone for smartphones and iPad for tablets.
It’s just the type of high-stakes, winner takes all game that Apple loves to play but with such a nascent category as smart watches, it is a completely new area for Apple to carve a niche for itself. Apple Watch could be the biggest tech story of 2015, or it could be a cautionary tale.
We will know more once the actual product comes to market and the full scope of its features are known. Until now, it remains one of the most exciting announcements to expect this year.