Apple is building a billion dollar daily business by making you happy
I once again hand it to Asymco’s Horace Dediu. He’s figured out some pretty key metrics impacting Apple’s business — the biggest take away being that one day Apple will have a billion customers. The other observation being that these are happy customers who are willing to spend cash on its products — and will one day earn it a billion dollars a day.
In his own words:
“What is more significant that the specific count is that these customers mostly chose to be customers individually. Some may be have been given the products as gifts, but the vast majority bought the items for themselves. Apple benefitted from hundreds of million of individual purchase decisions.”
Please note that it wasn’t so long ago most people weren’t even thinking about the importance of Apple’s moves to build a recurring income stream. Apple, however, knew it had to transition its business from one of being almost completely dependent on churning out innovation on an annual basis in order to make its business sustainable.
Today’s Apple is not dependent on a hit product in the same way as 2007. Or even 2010.
Way back in 2010, Piper Jaffray analyst, Gene Munster observed: “Apple is effectively building a recurring revenue stream from a growing base of iPhone users that upgrade to the newest version every year or two.”
Dediu’s deductions show how far the company has gone on this journey. It does this without coercion, and it’s loyalty — not marketing — that helps its business grow.
It is that same loyalty that drives the company itself to attempt to break down barriers between itself and its customers, and it is that same loyalty that compels it to stand up for values and vision. Why? Because consent is critical, and even though competitors and critics haven’t quite woken up to the 21st century sociological sea change, Apple has.
And that’s why it is on the way to creating a billion dollar daily business, while competitors scrabble for scale on the basis of unsustainable low price product sales.
Innovation isn’t just about hardware, you know. It’s also about software, relationships and business structure.
What’s changed now in comparison to 2007 (when iPhone first appeared) is that Apple now has a hefty recurring income from which to sustain itself as it returns its corporate focus to the other thing it frequently proves itself good at — creating highly successful products that match popular need.
“Apple is not there yet, but a billion dollars a day from a billion customers is not inconceivable,” said Dediu.
It’s signals like these that convince me Tim Cook’s Apple is in the cat bird seat for future growth.
You could argue that the company’s biggest product innovation in the last few years is the most intangible thing of all, one others will find hard to imitate, if at all: Trust.