Apple’s Dirty Little iPhone Secret

Mac sales are off 3%. What will Apple do???

It’s not just the Mac, Microsoft just had their first quarterly decrease (6%) since they went public 23 years ago, blaming it on slow PC sales.

It’s the recession. It’s the economy. People aren’t buying computers anymore.

<PAUSE>

Let me take you away from Katie, Brian (etc) and the TV news for a minute, OK?

The missing puzzle piece

What did I leave out of that picture? A couple of things.

First, let’s look at Apple.

If you ignore the 3% downturn in Mac sales, there was a bit of good news from Cupertino recently.

First, the one billionth iPhone application was downloaded from Apple’s iPhone AppStore this week.

Look hard at that number. ONE BILLION mobile applications.

Even if 500,000,000 of these downloads are the iFart application, that’s still a really big number. In fact it’s enough to provide one iPhone app for every human being in the United States, Canada and Mexico combined.

If you use the one billion number, that’s one iPhone app for everyone in the United States, Canada, Mexico and Europe, combined.

Next, despite the 3% drop in Mac sales, the first quarter of 2009 (January 1 through March 31) was Apple’s best month EVER.

Best ever for revenue, best ever for profit. Best Ever. Not in the last few years. For the company’s entire lifetime.

What’d I leave out?

On April 20th, CNet’s article about Apple’s upcoming quarterly financial report was titled “Apple’s Recession report card arrives Wednesday“.

Seems like they’d already decided what was gonna happen.

When Apple announced results, it indicated that iPod sales were up 3% vs. the first quarter of 2008 (1Q2008) so that was kinda good news, but Mac sales were down 3%. Uh oh.

One more thing. Almost forgot… iPhone sales were up 123%.

Someone apparently forgot to send a memo to Apple about the “economic gloom”.

If you dig around a little, you find stories talking about the decline of the computer market and how Mac sales are off 3%, thus illustrating that it isn’t just limited to the Windows-based PC and it’s all because of the state of the economy.

But they forget one little thing: Left out of the sales numbers were 3.79 million Macs.

Shhh. It’s Apple’s dirty little secret

3.79 million iPhones, that is.

See, the iPhone is a small form factor Mac, not just a phone. It’s a computer.

Ask 100 people who sell mobile phones if the iPhone is their competitor and they will all likely say yes. Ask 100 people who sell computers if the iPhone is their competitor and I’ll wager that almost none of them will say yes. They’re dead wrong.

Meanwhile, Apple understands that the job of making a sale is to get a customer, not the reverse. They know that once you buy a Mac, you’re likely to be hooked.

The iPhone lowers the bar and entry objections by providing a nifty computer with applications that you can easily install. Oh and it just happens to be a phone too.

They teach you – in fact, prepare you – for owning a Mac using their phone.

They teach you the same thing using the iPod Touch, which is basically an iPhone without the cell phone, camera and microphone.

Job of a sale: To get a customer

Ask anyone you know who has an iPhone. I’ll bet none of them use it just as a phone.

Ask them if they’ve bought their first Mac yet. If they haven’t, do they say they’re thinking about it? I’ll bet you get a “Yes” to one of those questions.

With Mac’s now having dedicated retail space in Best Buy stores nationwide, that purchase will become easier.

Steve Jobs has to be laughing.

What about you?

Your job is to figure out how to get a customer. You know that once you get them to be your customer, they’ll love what you do so much that they’ll never leave.

All you have to do is get them into the family. It’s OK to start with baby steps like Apple does.

Quitting for the wrong reasons

Sometimes, it’s necessary to make the decision to close a business. It isn’t easy and it isn’t something that is done without pain and suffering in some form.

Yesterday in Small Business CEO, I read a story about a small business that was calling it quits due to “high oil prices and the economy” (my paraphrase).

A couple of comments in that blog post really rubbed me the wrong way, mostly because the owner appeared to be stuck in a mental trap about the state of the economy (more on that in a minute) and the economic conditions that she felt forced her to close up shop.

A poisoned mind

The first quote was the most poisoned thing I could think of that a business owner could get stuck in their head:

Small home based businesses like mine really donĂ¢??t stand a chance in the current market.

Horse hockey.

In the Great Depression of the 1930s, more than 25% of Americans were out of work. On the other hand, 75% were employed and continued to buy. While that doesn’t make life easier for the 25%, it does mean that the market didn’t simply disappear, even in times as bad as that.

For every stock broker who leaped from his Wall Street office window, there was at least one who did well, and the same for investors.

The reality is, a lot of businesses got started back then. In the so-called worst of times. In fact many of today’s most successful businesses had their roots in those “bad” days. Krispy Kreme, Saab, T. Rowe Price and many many more local businesses. Try Googling for “founded in 1930”, “founded in 1931” and so on. Tons of new businesses that exist to this day that were started during that period, more than SEVENTY years later.

They didn’t give up or quit because of their state of the economy. They saw opportunity in it.

BUT, thing is, the state of the economy really isn’t the point. Your market, your products, your clients and your prospects are. Your focus, your marketing, your creativity of thought and action. Those are far more important than the state of the market.

Raise prices or quit?

The second quote wasn’t much better, but I do have to admit that I have heard this from other businesses this year – from restaurants to craft-type businesses like this one:

Forced with the decision of either raising my candle prices sky high or temporarily closing, I chose the latter of the two.

The problem with this isn’t a lack of concern for the client, it’s that she is projecting her own mental limitations about her pricing onto her clientele. In other words, she’s saying “No” for them without giving them a chance to consider their purchase.

First of all, everyone understands that prices have gone up with fuel prices, either due to shipping, due to petroleum-based ingredients, or just because those two things roll downhill to the buyer. By making the decision to stop producing items because one of the component prices went up 40% assumes that the clients don’t feel the items are still worth that much without even asking them.

While these are primarily mental issues, there are also practical ones. Because I am tangentially involved in a business that uses beeswax, this isn’t armchair quarterbacking.

Due to Colony Collapse Disorder, I’ve seen 40-50% increases in the price of (among other things) beeswax over the last several years. In fact, prices have done so more than once. What was $3 something a pound is over $5 a pound. Not to mention that beeswax is dense. It’s heavy. Yes, Virginia – it costs a lot to ship.

Yet the clients who buy those beeswax-based products not only haven’t complained, but they’re buying more than ever. We didn’t make the decision for them, we simply raised prices to reflect the economics of the product line and let them decide. They decided to keep buying.

Sometimes quitting is the right thing to do. Just don’t do it for the wrong reasons. Don’t let the pundits, the media and Presidential candidates poison your mind.

Make decisions for the right reasons. I hope she decides to get back in the game for the right reasons as well.