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What every enterprise needs to know about Apple’s $91B quarter


Apple announced a record $91 billion quarter yesterday and told us that 84% of business buyers looking to purchase smartphones in the next quarter will buy iPhones. What else can enterprise users learn from the results?

Apple remains focused on healthcare

As he always does, Apple CFO Luca Maestri shared fresh details about Apple’s performance in the enterprise space. This time, he focused on health. Fully 100% of Fortune 500 companies in the healthcare sector now use Apple tech in, “areas such as patient experience, clinical communications and nursing workflows,” he said.

Maestri also highlighted some of the smaller healthcare firms using Apple tech , including Apple Developer Award winner Gauss Surgical and medical imaging company Butterfly Network.

It's interesting he focused on health, given Apple CEO Tim Cook’s recent assertion that Apple will most be remembered for its contribution to healthcare. I’m not one to second-guess Apple executives (actually, that’s not true), but these coded messages are getting louder.

Digital services are now mainstream

With more than 418 million paid subscribers across its services (which includes iCloud, Apple’s media operations, payment services such as Apple Card, App Store and Apple Care), Apple pulled in $12.7 billion.

That’s all jolly good, but enterprises should see this as proof that consumers are ready to embrace unique digital services. Such services can emerge as profit centers in their own right or be introduced strategically to support existing offerings.

Subscription services are also achieving growth and consumer acceptance, which should help more traditional digital business models migrate to apps.

Apple expects to hit 500 million paid subscribers in the current quarter and 600 million before the end of 2020. This implies the company may have a few hands to play as it strives for that 20% adoption growth rate.

Meanwhile it continues to generate a billion dollars each week at the App Store, while overall its business operations draw in $1 billion daily.

The logic is inescapable. Digital services have become mainstream and digital is where your customers now are.

Developing markets are growing fast

iPhone sales saw double-digit growth in Brazil, China, Thailand, India and Turkey. That’s neat from Apple’s perspective, but should also be seen as positive proof that it is well worth spending the time it takes to build business in these markets.

Enterprises should consider the opportunity. What is your business strategy to break into these markets? What unique product or service can you provide that is relevant to them and what local partners do you need to work with to reach customers there?

Bear in mind that enabling partnerships for smaller firms to enter these markets is also an opportunity for B2B firms helping clients reach consumers. Localization matters. There should be an app for that.

Apple’s wearables have become viable platforms

Apple’s wearables sales shot up. “This product category is now the size of a Fortune 150 company,” Cook said, citing strong demand for AirPods and Apple Watch – and admitting demand for AirPods Pro was greater than anticipated.

Apple Watch Series 3 supplies are constrained, with 75% of watch purchasers being new to the platform.

Away from the breathless optimism within these statements, the message seems to be:

  1. Apple dominates the wearables space with perhaps hundreds of millions of customers.
  2. A big chunk of these now use Series 3 models or later, which should give developers some idea of the kind of apps that may succeed in the market.
  3. It may be time for enterprise users to look again at the potential for Apple Watch apps, given the proliferation and processor power the platform now offers in comparison to the first iteration.
  4. AirPods are also very popular, which suggests Voice-first solutions should also be on the radar.

Sectors that may benefit: Retail, health, warehousing, industrial, finance.

Contactless payments have hit prime time

“For Apple Pay, revenue and transactions more than doubled year-over-year with a run-rate exceeding 15 billion transactions a year,” said Cook.

Apple Card monthly installments also drove iPhone sales, he said, stressing his optimism for these services.

Enterprises across the U.S. will be feeling growing customer pressure to equip their POS terminals to handle contactless and mobile payments as expectation that such services will be available grows. In the UK, pretty much every (smaller) transaction you make can now be made using Apple Pay.

This will be the new normal across every enterprise.

Apple as a service

Creeping up in the slow lane, it’s becoming increasingly easy to see a route toward “Apple as a service," with Apple Card acting as the pivot. The card has proved very popular, contributing both to Apple’s services income and Apple Pay adoption.

With the iPhone 11, Apple introduced a new scheme that lets customers purchase a new iPhone on an interest-free monthly payments basis.

Cook noted: “Retail stores did fantastic on iPhone, very strong double-digit growth in iPhone from a year-over-year point of view."

“And one of the factors that enabled that was getting to a monthly payment on the Apple Card to make it very simple. Of course, that's U.S.-only at this point, but the U.S. is a very key market for us. And so, it was an important part of it.”

At what point will consumers be offered similar purchasing schemes across all Apple products? While doing so may cut revenues on a quarterly basis, they would also make for more predictable revenue models, another step away from the feast or famine product-led business that once characterized Cupertino.

How can other hardware-based enterprises migrate to predicable subscription-based models?

Preaching beyond the converted

Apple is reaching new customers.

While this varies from country to country, Cook confirmed 75% of Apple Watch customers are new. In China, 75% of Mac purchasers are new to the platform as are   almost two-thirds of those buying iPads.

This suggests that Apple continues to reach beyond its installed base, which essentially implies its base market – and accessory/service attachment potential – continues to grow, with much of this growth driven by the so-called "iPhone halo."

(Cook said Apple now has 1.5 billion iOS users worldwide.)

This growing platform remains a potential cash cow for any enterprise smart enough to create a successful product or service within it. This remains an international market comprising hundreds of millions of the most engaged, most affluent, consumers.

AR promise remains a promise

Augmented and Virtual Reality still both seem a little like markets in which the hype outweighs the significance, though consumer and enterprise solutions that use these technologies continue to emerge.

Cook explained that part of his “excitement” around AR is that there are both consumer and business usage cases to be explored.

“The reason that I think it’s going to pervade your life is because it’s going to go across both business and your whole life,” he said. “I think these things will happen in parallel.”

But this also means this hasn’t quite happened yet.

What can Apple do to spur adoption?

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Copyright © 2020 IDG Communications, Inc.


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