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Apple Earns $27B But CEO Says This is Not Enough

To paraphrase Mark Twain, the early news of Apple’s stock market death is highly exaggerated. A lot of people have been saying that Apple is going to fall back into its old John Sculley era stock market stagnation. In fact, a lot of people are even saying that Apple might go back to the Gil Amelio days. It would be very interesting if that does happen but it doesn’t look like it. What it does look like is that Apple is fast developing itself into a luxury brand hardware device. Its buyers are basically buying the opportunity to have a product that has the Apple logo on it. We come up with this conclusion based on its moves regarding its operating system as well as its resistance to going through all the way and crashing the price of its hardware offerings.

We all know that hardware technology can easily become a race to the bottom and when that happens, profitability is usually the first casualty. Apple knows this. In fact, any competent hardware maker knows this that is why Apple’s strategy, which is really just borrowing from Steve Jobs’ earlier strategy, is to build hardware that people would have an extreme loyalty to and so far it’s succeeding. The latest indicator? Apple racked up $27B in revenue from the Chinese market. That’s China alone— talk about huge numbers.

The good news for Apple is the China market is still rapidly growing. It has a growing middle class and it’s not as saturated and settled as US market. There’s still a lot of room to grow in China. The bottom line, again, is how Apple will navigate the threat posed by Android. I think we are already beginning to see the Apple strategy. The Apple strategy is to really focus on its core strength which is its brand. The Apple logo packs a solid punch. Unless Apple really makes some serious missteps in the near future, we don’t really see Apple hurting as more and more Google Android crash below one hundred or below fifty bucks and maybe below thirty bucks. By that time, it wouldn’t really matter for Apple. Apple’s focus is its own distinct brand identity.

This is a very risky gamble because for such a brand mystique and equity to be maintained, you have to have some real, serious pioneering technology under your belt. The iPod, iPhone and iPad made it all happen but Apple really needs to hit the ball out of the park with its new product releases for it to maintain that brand premium.