Apple Saves the World Economy

OK, maybe the headline is a little over the top. But Apple did just have the best quarter in corporate history, with a profit increase of 37% percent leading to over $70 billion in sales. And pretty much all of this was done on the back of demand for the new iPhone 6.

So how did this happen? After all, while we’ve had mainly positive things to say about the iPhone 6 and its larger sibling the iPhone 6 Plus, we’ve also made a fairly persuasive argument that you don’t need to upgrade to the iPhone 6, especially if you already possess an iPhone 5.

But somehow, Apple has made these kinds of arguments moot, and for a pretty large percentage of the population.

It used to be that Apple popularity was based on a fairly small but highly devoted base of fanbois. These Mac-o-philes would jump on any new Apple product available, whether it was good or bad, and would even change opinions based on what Apple was doing at the time (for example, “The fact that every Mac comes with a Firewire connection shows how smart Apple is about providing fast connections for power users” to “Firewire is no longer on any new Macs? See, Apple knows when to ditch a dying technology!”).

But the popularity of the iPhone is tapping into something new. There have been periods in the history of tech when people always upgraded to the latest and greatest. But usually this was driven on need. In the 1990’s, upgrading to the newest PC technology was necessary to use the latest software and play the coolest games.

However, with the new iPhones, the only really key new feature is size. And was that enough to drive this massive spike in iPhone sales (especially after years of Apple fanbois mocking Android phablets)?

To some degree, the boost in Apple profits is due to increased sales in China. But the North American numbers were also very good. And in many ways this is due to Apple tapping into the user’s need to upgrade.

How many times in recent months have you seen this conversation. Friend or colleague with iPhone 6 talking to someone with an iPhone 5. And the iPhone 5 user is full of envy and talks about how they are definitely picking up a new iPhone as soon as possible. But if you ask them why, they can’t put their finger on it. In many cases, if you ask them if the bigger size is a reason, they will actually say that the size is actually what held them back. But they just have to have the new one, or they’ll continue to feel inferior.

This is what you call success in sales. Release a very good new product, but not exactly one that is so far superior to previous versions that an upgrade is a must. But users feel they must upgrade anyways.

If Apple could figure out a way to productize that, they’d have businesses lining up to pay them millions (and their spectacular profits would be even more spectacular).

For more on the evolution of mobile read the Aberdeen report Flash Forward: Will the Future of Mobility Include Smartphones?