How Apple made nearly $240 million in a single day
Looking back - 2016 wasn’t Apple’s finest year for product releases
2016 was a year of great expectations and yet for some analysts and customers Apple failed to deliver: an Apple Watch update that many argue should have formed the basis of the first release, an uninspiring update to the iPhone line in the form of the iPhone 7 and some pretty questionable reviews surrounding the latest MacBook Pro. To top it off, with the release of the Surface Desktop PC, Microsoft is looking pretty innovative on the desktop side of things which might put increasing pressure on Apple’s iMac desktop line-up.
Any other company that experienced such pressure would probably be apprehensive as they go into the new calendar year. Somehow I don’t think Apple will be.
Looking forward - Services as a source of growth
Whilst the hardware releases weren’t as impressive as some had hoped for Apple is still in the envious position of having over 1 billion users.
Their global user base combined with a global App Store enabled them to make nearly $240 million in sales on New Year’s day alone.
But this number is really just the tip of the iceberg when it comes to the services business Apple is building.
Apple’s services include:
- Apple Music
- Apple Pay
- iCloud storage
- iTunes for movies, music and books
- And the monster of them all… the App Store
As reported by The Verge, “Apple now makes more money from its services than selling Macs”. To put this in perspective, Apple’s digital services account for roughly $6 billion in revenue per quarter.
I’d be more than happy with that kind of financial performance as I’m sure many CEOs would be, so why the long face?
Maybe the criteria against which we judge technology companies is becoming distorted. I’ll talk more about that in future posts.
What does 2017 look like for Apple?
Other than the potential for an exciting 10th anniversary iPhone release it may be another year of platform services development and consolidation and if that’s all we get, it wouldn’t be such a bad thing.
A continued focus on services means Apple remains highly profitable which helps with the cash stockpiles. If there’s anything we can say for certain about technology it’s that R&D and product development take time and money. Apple has plenty of the latter. The real question is how it buys itself more of the former.
Buying time to focus on R&D and product development
For Apple to buy itself some time and breathing space it probably needs to do a combination of the following:
Buying R&D Time - Step 1 - Be clearer about its services vision and its success to date
This would likely calm investors and in turn excite customers. One of the greatest things about software is the ability to enrich hardware we already own further down the line in new and innovative ways via software updates.
Take Tesla for example which makes a habit out of delighting its customers and the market by turning on hidden features in its electric cars via over the air software updates. Apple could probably do something similar with its cloud-based services and the hardware we all own.
Apple needs to show us the power of its services vision by exciting us without requiring us to buy new hardware.
Buying R&D Time - Step 2 - Change the conversation and get out of the hardware race
Apple has nearly always lost out from a pure technical specifications perspective when compared with other hardware companies. Their stock answer to this point is that by controlling the hardware and software they can create engaging software experiences without the need to ship the latest and greatest CPUs and graphics cards.
The promise has always been that if you buy an Apple device you’ll just get a great experience.
Somehow Apple needs to return to this mantra and truly deliver on it because when analysts and customers start fixating on technical specifications rather than experiences something has gone wrong.
2018 and beyond
Parking 2017 (I know that sounds premature!) we need to accept that developing new products like the iPhone takes significant time and money.
We need to question any media outlet or pundit who thinks otherwise and demands the moon on a stick every 12 months. Technology has never worked like that.
Don’t get me wrong, I think Apple has made some mistakes in 2016 which are cause for concern.
However, just remember - Apple made nearly $240 million in revenue in a single day.
Lets give them a bit more time before we write them off.
Thanks for reading!
I’m the CEO of Calls9 and we build digital experiences for the web & mobile that drive business growth & increase team productivity.
We work for a range of businesses from SMEs to global corporations.
Please follow the links below to find out more:
