Tuesday, April 28, 2015

Can Apple Keep Rising

After reporting yesterday another quarter of results that beat expectations, the news today is whether Apple can continue to grow at such a pace or will it see less growth.  If that question sounds old, it is because it seems to be asked each time Apple releases its financial results.  The truth is that growth depends on innovation and adoption and in both cases, Apple seems to excel.

The focus is on the iPhone, and this past quarter Apple sold more phones than ever before.  Thanks to the international market and the appeal of the iPhone 6, consumers are both upgrading and switching from competing brands.  At the same time, Apple has created a closed universe that achieves simplicity by tying together each of Apple's other products, from the mac to the iPad, from the iPod to the just released Apple Watch.  They all are meant to work seamlessly together.  And they do.

And all these products are tied together by the infrastructure known as iTunes and their App Store.  From software to music, from books to video, users can easily rent or buy.  And it is the content that makes all these devices essential to our daily lives.  The more devices that Apple sells, the more content that needs to be purchased and downloaded. 

As to the future success of Apple, the market worries that iPhone sales will dip.  But history has shown that the longer trend is that sales continue to rise over time.  For as technology improves, so does the next iteration of the iPhone model.  Yesterday it was the 5, today the 6 and next year the 7.  And as the Apple Watch enjoys a greater percentage of adoption, improved models and lower price points, it will grow as well.  And as to the next likely new product, much speculation is that Apple will announce a subscription TV service that will be tied to an improved Apple TV box.  That might just be the next game changer and revenue driver for Apple. 

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