The Power of Apple

The Power of Apple

March 21st, 2011 // 3:39 pm @

apple

Starting a company on April 1st (April Fools Day) might seem like a joke, but 34 years later this company has sales of over $65,000,000,000, and $40,000,000 in cash, plus net profit margin of over 20%, no one could describe Apple’s success as a joke.

The world’s largest technology company, a high level of profit, huge cash reserves, and a brand we all know and love. This is about as good as it gets in the commercial world.

So what drives this powerhouse? The recipe is simple:

  • Clear understanding of what we do – Microsoft is a technology company. Apple knows it is a benefits company, selling what technology does, not how.
  • Tenacity / Focus – Choose the markets where technology will drive change and fiscal rewards, and stick with it until you win.
  • Fiscal Muscle – Use size to drive down costs, and retail prices up.

Apple when it sells us an iPhone, talks only about what it can do with all its Apps, and we love it. They call it a phone, for our benefit, but they know it is just a small computer.

Tenacity in staying with a market it knows will work one day is a trait of Apple. It has been working on Apple TV since 2006 without much success, but it knows one day all TV will come via the Internet, and it will be ready with the right technology and iTunes, which now has 10,000 movies online. Renting movies without the need for DVDs and a thousand retail outlets is going to be very profitable.

But aside from a clear business vision, great product development and marketing, Apple is not afraid to use its fiscal muscle. Apple does not make your iPhone or your iPad, it buys them from suppliers where due to its size it has massive buying power, and uses that to drive down prices. The iPod Nano, yours for something over $150, costs Apple around $40, the $499 iPad costs around half of that to Apple.

So if costs are low, retail prices are high, Apple does not price as a percentage on top of cost, they understand what the market will bare, who would have thought we would pay up to $800 for a phone! People will give you free phones with a contract, yet many of us only want an iPhone.

If the retailers of magazines want to distribute them online, Google will take a 10% fee, Apple a 30% fee, because they can.

The Apple formula is simple, they bring the benefit of technology to consumers, and they will use their size to push costs down and revenue up.

Simple but brilliantly executed, Steve Jobs is worth the Gulfstream V the company bought him, and so much more.


Category : Blog &Companies

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