In praise of a sinful Apple

Apple's quarterly results are stellar, with the promise of much more to come

There are many good criticisms of Apple to be made. The company is arrogant. It is unresponsive to consumer wishes. It exploits open source. It is manipulative, secretive and uncompromising, with staff and customers alike.

It is also hugely successful, by dint of creating outstanding products sold through outstanding marketing, putting quality and usability at a premium in a market that often appears to forget about such virtues altogether. Yesterday's quarterly figures demonstrate how well that works.

By plausible analysis, in just 15 months the iPhone has become Apple's leading source of revenue — despite strong growth from both computer and iPod divisions. In the same 15 months, or two years if you count the unusually early disclosure of the device before launch, there has been no coherent response from the competition. (About the only sour note comes from Intel, which seems to be saying that the iPhone's disappointing performance is due to a mistaken adherence to ARM chips. We could all do with that sort of disappointment. We should be so lucky to make such a mistake.)

How many cards does Apple have left to play with the iPhone? The signs are bad for its competitors: after nearly eight years in the market, iPod sales continue to grow on the back of a carefully managed programme of hardware and software enhancements, and model repositioning. Likewise, the iPhone is limited in many ways by the exclusive deals with network operators, limitations that are especially restrictive for the enterprise. Lots of room for change there, at a time and place of Apple's choosing.

Then there's the App Store, which now looks less like a incremental development of the iTunes store and more like a stroke of insolent genius that defines a whole new model for revenue generation. Apple has never forgotten what Visicalc meant to the Apple II: the mobile industry, it seems, never even noticed.

What could go wrong? The major threats are largely outside Apple's control: the flash memory market is notably unstable, the economy doubly so. These could combine to increase the material cost of building the devices while making Apple's premium pricing strategy less attractive, especially with the rest of the market learning to live on much leaner margins. How long can Apple charge £50 for 8GB of flash — five times the retail rate? Not as long as it would like.

For now, we have nothing but admiration for Apple's continued focus on technology that sets the gold standard, and demonstrating that such an approach can pay off handsomely. In a world so beset by over-sold, second-best shabbiness, that is a result worth praising.


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