Apple Inc’s quarterly results demonstrate the results of the company’s competitive advantages; namely great design, innovation (both incremental in terms of product improvements, as well as periodically radical when a groundbreaking product comes to market), and intense efficiency. Apple’s entry to China has been instrumental to revenue growth, and the upside potential in revenues from this market is very significant. At the same time, economies of scale and scope led to even greater efficiencies. Combined with a higher selling price for the iPhones, operating profits are up to nearly 40% of revenues, unprecedented in consumer electronics.

Even though iPad sales are falling, overall the product portfolio of Apple is balanced in terms of stages of the product life cycle. The strategic implications of ApplePay have not been appreciated by most people. Not only the revenue potential is huge and Apple’s offering already benefits from Apple’s existing market penetration of its devices; margins are also very healthy and the service has synergistic effects with the iPhone and the iWatch, helping to solidify Apple’s strategy of building and controlling a product and service ecosystem. Similarly, the iWatch will provide a further boost in growth and will buttress the ecosystem when it comes to market.

Apple’s strategy displays related diversification. Those who argue that its success is down to a single product do not appreciate the considerable synergies across Apple’s products and services, nor the continued development and strengthening of Apple’s ecosystem. More information can be found here : Quantum Strategy at Apple Inc.

Notes to editors:

Professor Heracleous does not own any Apple Inc shares. Professor Heracleous is available for interview and can be contacted on loizos.heracleous@wbs.ac.uk

Issued by Ashley Potter, Press & PR Executive, Warwick Business School,The University of Warwick, t:(0)24 7657 3967, Mob: +44 (0)7733 013264, Email: Ashley.potter@wbs.ac.uk