Apple, I tip my hat to you


Apple today announced a new milestone. They earned more than US$7 Billion in one quarter! To put that in perspective, it is more than double what the Commonwealth Bank made in the months of July to December 2010. I use that compariso, because every time an Aussie bank announces a profit, they’re accused of  ripping people off. However, if you’re a shareholder you just sit back and relax and wait for the dividend cheque.

But, back to Apple. The staggering thing about Apple is the small number of products that they sell – or lack thereof. iPhone, iPad, iPod, Mac computers, Apple TV, the odd accessory or two, and software. They also publish Apps for their devices, sell music and other entertainment content, and are currently rolling out cloud-based subscription services. They also recently added advertising solutions to their devices with more on the way. That is about it.

Compare that to Samsung or Microsoft. Samsung make everything from TVs to fridges, phones to oil tankers. Microsoft has a wide product offering targeting many fields of technology consumption. MS sell software for consumers, enterprise, video game systems and software, cloud services, content driven websites and much more. In fact, sometimes when I meet someone from Microsoft and ask ‘what do you do’, they begin to tell me of an area in the company I never knew existed. The key thing here is a far wider product offering, yet both are lower valued companies that Apple.

The success of Apple is staggering; my family got one of the first model macintosh computers in 1983 or 84, I can’t remember, I could barely type. I stopped using Macs in 1999. I wanted to review PC games and Mac was not going to cut it in the games area. I built the PC myself, and thought “wow, this is so easy to do and so much cheaper than a Mac”. “Apple you are gone!,” I thought. Steve Jobs had returned and Apple was basically broke, and had to go to none other than Bill Gates to get some money. That support was in the purchase of non voting shares by Microsoft, but that little investment of $150 mill USD was sold in 2001 as Apple started to build a healthier business.

Fast forward to today, and Apple can buy and sell anyone in the tech business. They have a product line up that owns the consumer, and if you want access to them you must do it under their terms.

“You want to sell an App on itunes? This is the deal.”
“You want to stock their product in your retail outlet? This is the deal.”
“You want to sell an iphone to your mobile phone network customer? This is the deal.”

Never have I seen a tech company able to play the game the way they say it is to be played. And why can Apple do this? They make stuff people want to buy, and those people are prepared to pay a small premium for it compared to competing products in the market.

I tip my hat to them, however this does not mean I have changed my mind about using iPhone.