Apple’s results from last quarter are mind boggling, and a testament to incredible business execution across all phases of the game (to use a football metaphor in Super Bowl week). Some of my highlights, both from Apple itself, and from the bloggers/analysts who’ve been digesting the numbers since:
- Android switcher rate is going up. There are several explanations for this, including Android users, captured at the entry level, moving “up”; to there being a weaker Android ecosystem/UX lock-in. Another reason, perhaps less intuitive, is one proposed by Ben Thompson: that smartphone adoption has moved through the Geoffrey Moore groups — Early Adopters to Visionaries to Pragmatists to Conservatives — and this giant group, the conservatives, are finding the simplicity of the iPhone more to their liking. A brilliant line from Ben’s blog post: “Delight is a real thing, as is annoyance; not feeling stupid is worth so much more than theoretical capability.”
- The success of Apple Pay is real, but it’s slow. Yes, they are capturing 2 of every 3 dollars, and there’s been a 400% increase in usage. But it’s still a tiny proportion of off device purchases, and I think that it’s still a year or two away from hitting a tipping point. I often ask retailers about the usage of Apple Pay, and it’s still pretty sparse. It will get there, but I just don’t think there’s enough currently understood value differentiation versus, say, swiping a credit card (which we’re obviously very good at).
- Some people are doing new math based on the blowout iPhone numbers, it looks like the iPhone base could be as high as 625MM worldwide. In my Apple Watch integration piece from last October I was trying to be conservative about the installed base that the watch could be “attached” to. But it might be twice as large as I was thinking.
- AppleTV: the installed base is 25MM, and the tenor of the comments about this was not overly positive. If there is a blockbuster TV announce on the near horizon, they were doing nothing to chum the water (it’s probably more of a holiday announce thing anyway, but still).
- It’s probably unlikely that we are ever going to get a real design/form factor surprise regarding iPhone again. We all know the supply chain has been leaky, but the reality of delivering enough units to fulfill a 70MM+ quarter is such that it means, probably, spending the majority of a year manufacturing the components.