Apple posts huge gains in its $25 billion enterprise business
Apple CEO Tim Cook
Image: CNET/CBS Interactive
On the back of the iPhone 6 and 6 Plus, 2015 was the biggest year in Apple’s history by a huge margin. In fiscal 2015, the company generated $53.4 billion in net income on $233.7 billion in sales. Year-over-year, Apple’s sales and net income jumped 28% and 38%, respectively.
That’s big growth and a nice chunk of that came from Apple’s enterprise sales. On the quarterly earnings call with analysts, Tim Cook revealed that enterprise markets contributed around $25 billion to Apple’s bottom line, up 40% from the prior year. That’s outpacing Apple’s overall corporate revenue growth significantly.
“The enterprise business is not to be underestimated,” said Cook. “I doubt very many people knew that we have a $25 billion enterprise business that we’ve quietly built in not too many years. Our penetration is low, but we have significant actions going on to really deepen that.”
I doubt very many people knew that we have a $25 billion enterprise business that we’ve quietly built in not too many years. Tim Cook
The enterprise sales growth is outpacing the rest of the company, thanks in part to a partnership last year with IBM, as well as another one with Cisco earlier this year. Cook revealed that IBM has released 55 iOS apps for its Mobile First platforms, across a wide number of verticals. Apple has also partnered with 75 other enterprise-focused vendors to offer more targeted iOS and Mac solutions to companies.
Cook noted that while Apple has a limited direct sales force for enterprise, many of the companies that it partners with (like IBM and Cisco) do have significant sales forces that Apple will leverage to get its product into the enterprise. “I don’t envision having a large direct sales force,” said Cook.
With the new iPad Pro, the gigantic business-focused iPad, coming next month, Apple could see its enterprise business receive another boost. According to the company, the iPad has more than 70% penetration in the enterprise tablet market, and the 12.9-inch iPad Pro should only help that. The iPad Pro has a price tag to match its huge screen, starting at $799 and going north of $1,000 fully loaded.
Apple also revealed that IBM is saving $270 for every Mac it rolls out to its workforce, thanks to lower support costs and higher resale value. Big Blue is issuing some 1,900 Macs to its employees every month.
But it’s not just additional sales channels that are juicing sales. Last quarter, Apple saw the highest rate ever for Android switchers — 30% of customers who purchased an iPhone last quarter and replaced a smartphone switched from an Android device. Also, 69% of existing iPhone owners who owned a phone prior to last September have not upgraded to the iPhone 6 or 6 Plus.
Since Steve Jobs returned to Apple in 1996, the company has generated $1.1 trillion in revenue, and nearly $230 billion in net profit. With well-reviewed products up and down the product line, along with rumored products like an electric car, Apple seems well positioned for the next trillion in revenue. I bet it won’t take Apple 20 years to do it, though.
What do you think of the state of Apple? Let us know in the comments.
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