Apple released impressive financial results that exceeded Wall Street’s expectations for its revenue and profit on November 2. Apple’s CEO, Tim Cook, was able to alleviate concerns that it would not be making enough iPhone X to meet customer needs.
But behind the sales and profit figures, Tim Cook has also solved two of Apple’s most nagging problems: the Company’s over-reliance on the latest iPhones to increase profits and lack of products. are cheap to help people with limited wallet see the benefits of joining the Apple ecosystem.
And all Cook did was stop the policy from the Steve Jobs era, always killing old products when new and better ones came out.
To see the effectiveness of the above step, we only need to pay little attention to the Company’s current product policy. In addition to the iPhone X, the company also maintains 5 other iPhone lines, something unprecedented in history.
The iPhone X attracted most of the media’s attention during the shopping season. However, the iPhone SE, which is an update to the iPhone 5, hit the market five years ago, is what makes the difference. It retails for just $ 349 and appears to have played a pivotal role in doubling Apple’s sales in India, a key market for it.
Tim Cook told investors on Thursday’s financial results release (2.11) that “a large number” of iPhone SEs are sold in India, which is where it is made, in part. in Apple’s agreement with the Indian government to access this market.
Steve Jobs had a reason not to maintain Iphone SEs. He co-founded Apple and saw its rapid rise in the late 1970s and early 1980s, including the introduction of the Macintosh in 1984. But he was forced out of the company because of conflict. with then-Company CEO John Sculley about the Company’s development direction in 1985.
Over the next decade, Apple gradually lost its dominance in the personal computer market due to the rise of Microsoft’s Windows line of computers. In an attempt to regain market share, Apple expanded its product line, with no success at all. After Jobs returned as CEO of Apple in 1997, he is known for shrinking the Company’s product line to only a handful of products he believes Apple can do best.
And even after the company’s financial health rebounded in the early 2000s, Jobs didn’t hesitate to launch a new, better product and kill the old ones. The honeymoon period of the iPod Mini, a hit product, lasted just a year and a half. Jobs killed it and replaced it with an even smaller iPad Nano.
Accordingly, Apple still has stable profits, but the prices of the company’s products are still very expensive and the product line is also limited. Analysts warned that the Company should launch cheaper product lines, and in fact it has absorbed these opinions. The iPad Mini, launched in 2013, for a while helped increase iPad sales, but the iPhone 5C was blamed by analysts.
But Tim Cook’s strategy of keeping old products and reducing prices seems to be working. Apple sold 46.6 million iPhones in the fourth quarter (according to its fiscal year) that exceeded analyst expectations, albeit at a lower average selling price.
That doesn’t mean Apple is dropping its own profits. By contrast, selling more phones has helped spur other services, including Apple Music and the App Store. The services above brought the company $ 8.5 billion in revenue this quarter compared with analyst estimates of $ 7.5 billion.
The cheaper phones also help boost sales of new Apple products like the Watch, Airpod wireless earphones and Beats headphones. The company’s managers forecast revenue from these products to reach $ 6.7 billion in revenue next year.
The strategy that Tim Cook is applying to Apple is to launch cheaper products to attract more users to the iOS operating system, and they will spend more money on the Apple ecosystem, even if they cannot buy its most expensive products. And so far, this strategy is working.
Hoang Phuong / Reuters
* Source: Investment bridge