Apple’s success explained

Apple shocked everyone yesterday announcing record quarterly results that exceeded analysts’ expectations. What was the reason behind their success?

I asked this question to Simon from Astute Photo, who argues that careful product management, genial engineerng, iconic design and great marketing are all reasons for their success.

These results also show that Apple’s waterfall effect works wonders, Simon says.

Read the interview here:

Q: Apple announced its best quarterly revenue and earnings in history today after it sold more than 22 million iPods and 4 million iPhones. What do you think were the factors for such a success?

A: There are many factors involved in the success of Apple products. The first and most important is that they have a very talented group of people who know what the consumer wants.

For example, in 2007, they knew that the mobile phone (especially the smartphone) needed to be re-invented so they delivered a phone that (quote Steve Jobs) “Works like magic”. This product was then improved in 2008 sending Apple fans all over the world crazy.

The iPod also saw a tremendous year of sales in 2008. We’re now seeing that the iPod and the iTunes music store are becoming really tightly integrated. The iPod line has fully matured and can now carry itself as its own brand.

The new MacBook, which is Apple’s best selling computer, is a great piece of engineering and design. With the unibody aluminium design, they’ve reinforced the consumer perception of high quality engineering.

But maybe the secret behind Apple’s success lies in the ‘waterfall effect’ it tries to create. This means that people who’ve had a good experience with the iPod or the iPhone, are more likely to want to try other Apple products, like their computers.

This is confirmed by Apple’s COO Tim Cook who said that half of the Macs they sold were to switchers.

The Apple TV, unfortunately, represents Apple’s failed attempt at trying to conquer the TiVo market. I’m not sure why this continues to perform so poorly, but it does – and I certainly don’t want one.

Q: What role did marketing, design and branding play in helping Apple achieve these results?

A: Apple have always had great marketing. It’s funny to think that a computer company can instill such sex appeal into their products. In 1984, they had a superbowl commercial that is arguably known as the best advert in television, ever. Watch it here

Apple can harness so much branding power. The Apple logo in instantly recognisable. It’s at the back of every iPod, every iPhone, every MacBook, every iMac. If you simply turn on one of these devices you’ll see no text, just the Apple logo.

The reason it’s so powerful is because of a careful strategy to embed it into all of their products.

They also manage to keep the brand so valuable through careful supply. They always gauge the industry demand and give them just about enough supply.

They also keep the brand valuable by refusing to flood the market. If they flooded the phone market, it would reduce brand value – even though they may make more money.

Now onto design. As you can no doubt tell, there is a strong lineage between Apple’s products. The products all look like they’re part of a big family, since they share similar design traits. It’s no question that in terms of design they are the industry leaders. And people want to buy the best designed products.

Q: Are these results a sign that Apple can survive also without its supremo, Steve Jobs?

Well this question is a little complex, but I would say yes.

First of all, Steve Jobs is saying he is only gone for 6 months. Companies like Apple have plans in the pipeline for at least the next 18 months, so nothing that Jobs wasn’t directly involved in will happen in the next 6 months.

I would not be surprised if he doesn’t return. It would be more difficult for Apple, to lose such an iconic leader. The immediate question is, who will replace him?

The best thing Apple could do is acknowledge the loss of an iconic leader, and not attempt to directly replace him.

If Apple formally acknowledges the loss of Steve Jobs, but make a brave decision to move forward, then yes they can survive, and they will do even better. The company is big enough to support itself.

I remind you you can follow Simon’s blog here.