The WSJ reported today, Apple “grappled with the first prolonged slump in iPhone sales since the product was introduced in 2007.” True enough, but I remain bullish about Apple. The company shipped 40.4 million iPhones in the quarter: 449 thousand every day, 19,000 every hour, 312 per minute, 5.2 per second. Nothing can go straight up to the moon–as we learned from Sun, Cisco, Microsoft, and many others–but Apple still has a long way up, in my opinion.
The reason is not the profit margin, although surely they will remain quite profitable. The point is they make their products easy to use, cherished by users, and with great customer support. The point about ease of use is profound. The financial analysts don’t seem to fully appreciate the seamless integration Apple offers. You take a picture with your iPhone and then you pick up your iPad to look at it. Or you visit iCloud.com to look at it, or on your Mac, or your Apple Watch. Or your friend or family member can look at it in the Photo Stream you have shared with them in iCloud. You can text a friend from your iPhone and then when you get back home to your Mac, you can continue the dialog from the desktop or on your iPad. If you are out for a walk and your iPhone rings, you can answer it with your Watch, like Dick Tracy.
None of these things require knowing much. As Steve Jobs used to say, “it just works”. Apple products’ ease of use creates loyalty. Loyalty creates growth in services including Apple Music, iTunes songs and movies, fees from Apple Pay, and sales of apps. Annual services revenue is a $20 billion business and growing at double digits. There are now more than one billion Apple devices out there. If half of them spend $10 per month on services, the annual revenue would be $60 billion, triple what it is currently. Services could eventually surpass the iPhone as the largest source of revenue for Apple.
Read about how mobile devices are revolutionizing healthcare in Health Attitude and watch for Election Attitude, coming in August.