The Apple Core Grows: It's About iOS and iCloud Now

by , Apr 25, 2012, 8:19 AM
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Iphone-4S-SmartphoneChalk up another one to Apple’s monster brand. The company’s Q1 earnings silenced (for a minute) stock market worrywarts who had been punishing the company’s stock prior to last night’s report.

The iPhone continued its relentless march, with 35.1 million in sales -- far above most estimates. Recent reports from AT&T and Verizon suggested a softening in iPhone growth here, but fueled in part by booming international sales, the Apple smartphone saw sales go up 88% compared to the same quarter last year.

There has been some concern that carriers are being squeezed by the higher subsidies they must pay for the iPhone and will begin to push alternatives. A Verizon executive recently revealed that the carrier would get behind the Windows 8 launch aggressively, for instance. Cook addresses the worries during a Q&A, saying that the actual difference between iPhone and other subsidies was not that great.  

The one place where Apple came in a bit below expectations was in iPad sales. While many had expected 13 million in unit sales, according to reports, Apple came in at 11.8 million. Supply constraints may be to blame here. CEO Tim Cook said they are selling the new iPads as quickly as they can get them. I will bear witness. There are still lines every day outside my local Apple store to buy out the available in-store inventory.  

The penetration of the iPad into enterprise and education markets is especially encouraging, they claimed. The lower $399 price for the iPad 2 appears to be unlocking some sales in education as well as international markets.

Well, I will be among the handful of grousers who should interject that I am on my third new iPad. I continue to search for one that will give me a relatively acceptable, even color balance across the otherwise pretty Retina Display. Dim and yellowish patches seem to plague a number of the LEDs of many units I have seen. For the ordinary consumer, this probably is not noticeable. To a persnickety veteran of countless devices, I am not convinced that Apple really has managed its quality control.

But my own guess is that nicely “forked” Android tablets will follow Amazon’s lead this year and not eat into the iPad market so much as temper its growth. I have to admit, after years of iPad use, I prefer the lighter and more compact Kindle Fire or Nook when I have to hold onto a device in bed.

The overall iOS metrics may be the most impressive. There are now 365 million iOS devices that have been sold to date, 57 million of which are iPads. According to Apple, it took 24 years of Mac sales to reach that level of penetration.

What Apple’s ecosystem has achieved is an interwoven and increasingly seamless skein of devices. Apple understands that the game is not one of selling the most devices in any given category so much as increasing the overall iOS and iCloud environment. When I get a message from my wife and daughter, who are also on iOS devices, my iPad and iPhone all register the messages in a series of bings that come from different corners of the house. The music, movie and TV content I buy on any one of the devices now shows up on the Apple TV box.

While irritating in some respects, the Photo Stream assembles all of my device-made imagery in one place. In the future, I expect Apple to make it as easy as possible for me to move or share any content across all access points. It is interesting that so few people complain in recent years about the “closedness” of Apple’s ecosystem. “Open” platforms, once seen as drivers of innovation and creativity, don’t seem to have quite the same luster they once did. Totalitarianism has its privileges.   

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