Churning through the analysis of Apple’s earnings call yesterday, there was one bit of data that evoked a “Holy Shit!” moment.
The data pertained to year-over year Mac sales, and the fact that they are up 51% this year compared to last - a rate of growth that is 3.5X better than the PC industry.
Think about that one for a moment, and what it means to Apple’s execution of their strategy.
On the one hand, it is tempting to caveat this data by noting that Apple is growing from a relatively tiny base of the PC market (they have a six percent market share).
But, the fundamental truth of the matter is that growth is growth, and the bigger the ripple, the bigger the wake.
Even more, when that ripple is GOOD GROWTH (i.e., high margins, product differentiation, customer lock-in/leverage via multi product buys, Apple's penetration into real and virtual sales channels), look out as true ‘halo effects’ start to play out that are self-affirming (i.e., success in one area feeds success in another).
In other words, the more the Mac business grows, the more gravity becomes Apple’s friend in mobile, media, online services and the like. And vice-versa (growth in those areas drives people to buy Macs).
This got me thinking about the fundamental TREND BETS that Apple made and has executed on. Why? When you can get in front of the right trends and actually execute, gravity has a strange way of becoming your friend.
I would summarize these trend bets as follows:
- Make mobile Internet caveat-free. EXPLANATION: Before iPhone, mobile Internet was the proverbial dog walking on its hind legs. Impressive that it could be done at all but not compelling. No more.
- Rich media is the ‘MY STUFF’ bucket that matters. EXPLANATION: What we personalize, choose to listen to, watch, save or digitize is what we keep. As a result of this fact, iPod (and now iPhone) have established a hard to emulate position as part of our online DNA, and this can be grown into all sorts of interesting product directions.
- Everything is a platform. EXPLANATION: Having specific methods for extending and integrating your offerings, as well as providing tools that enable an ecosystem to coalesce around your platform trains customers that investments today will be rewarded in spades over time, creating customer loyalty and enabling high margins. This used to be Microsoft 101 (before they started chasing Yahoo’ish windmills to Vistas unknown), but now it's Apple’s domain (read: iPod and the music industry; iPhone and mobile carriers; and soon, iPhone SDK).
- Everything is integrated from device to PC to online service. EXPLANATION: When you have the ability to look at an application as the optimal composite of what a general-purpose PC does well, combined with what a highly specialized iPod/iPhone/Apple TV does well and can weave in the dynamism of online services, you can operate in three dimensions, which is a beautiful thing. When you are adept at things like workflow and usability, as Apple is, it is breathtaking; a game-changer.
- Everything is derivative. EXPLANATION: Understanding the different “jobs” that customers hire your products for and segmenting your offerings accordingly enables you to provide optimized solutions while maximizing leverage. This, in turn, enables domination of specific segments while delivering the economy of scale needed to build high margins. The latest wrinkle to this is that Apple is starting to get good at taking innovations from one product (e.g., Multi-Touch on iPhone) and baking it into others (Multi-Touch on MacBook Air). Cross-pollination in an innovative company like Apple bears all sorts of unanticipated fruits.
Now if only Apple can figure out how to get in front of the social media/social networking trend, my Facebook page might start to hyperventilate. :-)
Related Links (from my blog):
- iPhone SDK: Mobile reasons for optimism
- The Chess Masters: Apple versus Google
- Comparing Microsoft's challenges to the fall of Communism
Related Links (other sites):
- Gone Indie: an excellent post by an ex Apple engineer both affirming what makes Apple great and why it was time to leave. Also, supports my comment on Apple being slow on social networking uptake. His post was written some time back so not suggesting our comments influenced one another just connecting dots from an Apple insider to an Apple outsider (me).
- Valleywag: On BusinessWeek story indicating that out of 250 surveyed companies, 87 percent report owning Apple computers. That's up from 48 percent in 2006.
