By Jim Karpen on Mon, 04/30/2012
Here's an astonishing figure: in the most recent quarter Apple's profit of $11.6 billion was more than Google's total revenue of $10.7 billion. It's not official yet, until all the numbers are in after the close of 2012, but analysts are generally expecting Apple to rake in $45-50 billion in 2012, which would make it the most profitable company in the world, surpassing Exxon-Mobile, which brought in $30 billion in profit in 2011. What's even more astonishing is that Apple's profit on the iPhone alone in 2012 is expected to be in the range of $35 billion, which itself could surpass Exxon's profits.
Apple has transformed itself into a mobile platform, and mobile is the wave of the future right now. A great article on Forbes says that we're now seeing Web 3.0, and Apple is right at the center of it, raking in the profit. The author says that companies that epitomize Web 1.0 and 2.0 could be dead in 5-8 years. Web 1.0 is characterized by websites and Google. Web 2.0 by social sites such as Facebook and Flickr. Web 3.0 is all about mobile. Much of the interaction with the web now is via apps on a phone or tablet. Need information? Just ask Siri, rather than pointing your browser at Google.com.
I read in the past couple days that over 50% of new Internet users have never used a desktop computer: their experience of the Internet is mediated by their mobile device. Apple is succeeding because it has put itself at the center of this mobile revolution, creating a simple intuitive interface and making Internet content conveniently accessible via apps. And simplicity is the key. Steve Jobs's philosophy was that sophistication is simplicity. He pared down features so that his devices were more usable.
That simplicity extends to the interface, to Apple's product line, and to the environment that Apple created. If you want a new app for something on the Android platform, you have a number of Android marketplaces that you need to search. With iOS, you have just one: the App Store. And when you download an app, you know that it will likely work, because Apple vets every app. Some people complain that Apple is too controlling, but that control helps to create simplicity for users.
This is part of the reason why Apple is so popular. People like the devices because they're simple and fun, and because things tend to work better. There are simply fewer ways for the system to break down because of Apple's highly integrated vertical environment. And now the Apple brand is surging into China and other markets, with lots of headroom for increasing sales. Apple seems poised to grow even further, and will quite likely be the most profitable company in the world in 2012.
Apple also seems to be leading the way in making the cloud functional and useful. iCloud has lots of glitches, but hopefully Apple will continue to perfect it, just as they relentlessly focus on improving their hardware. They don't always get it right the first time, but they typically stick with it until they do.