It’s Apple’s world, we are just living in it

Apple is uniquely positioned selling more mobile devices than anyone else

So not only did Apple sell 3M New iPad’s in the first weekend (at a margin of around $300 a pad, that’s $300M cash in the bank) but they announced their first dividends, and a new stock-buy back plan. Here’s my question though – who (in their right mind) would sell their Apple stock?

Apple’s stock is near $600 a share right now. Over the past year, it has almost doubled (sat at $350 this time last March). What Apple has been working on (and succeeding in) is increasing the barrier of ditching their ecosystem. We here at CTOVision have brought up the value of ecosystems (and maintaining adherence to one) in the past. Apple has done this in a few ways:

  • create developer desire to create unique (and quality applications);
  • create partnerships with top content producers;
  • provide interoperability across platforms;
  • ensure access to purchased content across platforms;
  • update hardware at known intervals to ensure demand and forecasting

The Apple Appstore has become one of their biggest revenue streams right now. It’s on every Mac (Mountain Lion suggests you only allow installs from the Appstore), iPads/iPhones/iPods and Apple TV. It’s an install base of over 300M devices, with Apple receiving 30% off the top.

One of the biggest partnerships that Apple has is with Netflix, via their Netflix app you can stream all their content to your device (in applicable quality). It’s also possible to rent or purchase movies and TV shows in varying qualities (including 1080p now).

Apple provides a full-service ecosystem for almost all consumer electronics needs

Apple’s interoperability across the their platforms is a huge factor in their success. The Airplay capability allows you to share what is on your screen to any other Apple device. Wireless printing and file-sharing are easy across their platforms as well.

Because the Appstore is available on all their products, so is your purchased content. Depending on the amount of purchased content, this can greatly increase the willingness of a user to switch ecosystems. That said, it is extremely simple to share your iTunes music with your Android phone, via Winamp.

These have all been important to Apple’s success, but one of their biggest differentiators has been their 1 year device lifecycle with annual refreshes. They support their devices with software updates for 2 years, all but forcing customers to upgrade. However, the marketing machine makes you want to upgrade every year (with minor, but much publicized upgrades). The continuous upgrade cycle (combined with software updates) has created a sales juggernaut like no other.

Right now, Apple is sitting pretty with a huge amount of cash, and everyone’s favorite smartphone and tablets. As they increase the sum total of their ecosystem offerings, there will be fewer and fewer reasons for users to switch. The deeper their ecosystem, the stronger

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Corey McCarren

Apple is viewed as the pinnacle of tech achievement right now, and until anyone can come close to taking that crown from them they will remain on top. I’m an Android user myself and I often wonder if switching to Apple would be the right choice. It’s hard to tell how much it’s Apples marketing machine that makes their products look superior as opposed to how much better the products actually are compared to their rivals.

I think another reason why Apples model is so successful is that they use Google’s mobile model of advertising and having people pay for apps in addition to actually charging for the physical product.