IPhone 6 a success even as device proliferation threatens to undercut iOS

While the iPhone 6 is a success, driving record quarterly sales for Apple, the company will find itself increasingly challenged to hold onto market share as the number of connected devices continues to proliferate.

As the number of smart devices continues to proliferate with wearables and the Internet of Things, one of Apple?s biggest challenges in 2015 and beyond will be convincing consumers to stick with its brand exclusively as they invest in new hardware. 

Apple reported strong results yesterday, with the iPhone 6 helping to drive a new record for iPhone unit sales. While the numbers underscore the brand?s ongoing strength with consumers, the popularity of the iPhone 6 Plus may be the undoing of one of the brand?s other devices ? the iPad mini, which has driven the majority of shipments for iPad products, a product category that took a big hit during the most recent quarter. 

?The iPad mini momentum that Apple has had across all geographies is in influx,? said Jeff Orr, senior practice director for mobile devices, content and applications at ABI Research, Oyster Bay, NY. 

?IPad mini had a really good portfolio positioning for Apple in that it is a relatively mobile device even though the majority are connecting through Wi-Fi,? he said. ?With the introduction of the iPhone 6 Plus, it shifts of that demand over to the phone form factor. 

?While it has a been a boon for the whole product line, it puts more questions around the positioning of the iPad mini in the overall portfolio.?

74 million iPhones
The iPhone 6 is a hit for Apple. 

Apple reported that it sold more than 74 million iPhones during its fiscal first quarter, up 46 percent from a year ago. IPhone revenues were up 57 percent from a year ago. 

It was a different story for the iPad family. 

Apple sold more than 21 million iPads during the quarter, a drop of 18 percent from a year ago. Revenues for the iPad dropped 22 percent. 


Other mobile-related results include a 41 percent revenue increase on the Apple App Store.

Apple Pay continues to grow, signing a deal with USA Technologies to bring the mobile payments solution to vending machines. 

Overall, Apple posted record revenue of $74.6 billion for the quarter ended Dec. 27, 2014, up from $57.6 billion a year ago. 

The company had a net profit of $18 billion, or $3.06 per diluted share, up from $13.1 billion or $2.07 per diluted share a year ago. 

Enterprise opportunity
One of Apple?s biggest opportunities this year will be in driving content for the enterprise, which will help extend the brand?s reach. 

Last fall, Apple teamed up with IBM to develop more than 100 apps in the enterprise. 

Several enterprise customers have already signed on, including Miami Dade County and American Eagle Outfitters. 


?While only a handful of the apps have become available, it leaves the opportunity this year if Apple can develop the relationships it needs to be able to build content success,? Mr. Orr said. ?Or will organizations ultimately try to ignore the  operating system and develop Web apps to meet their needs - that is an open debate. 

?That is a significant opportunity for Apple to build out its ecosystem and see the same kind of success it has had with consumers with the business audience.?

Multi-device households
The biggest challenge for Apple could the growing number of multi-device households. 

There are a growing number of households with smartphones, tablets, portable computers and wearables. Going forward, many of these will also have smart appliances, connected cars and other devices. 

Apple is addressing this challenge with CarPlay, which  will bring iOS to 30 car brands this year, and HomeKit, the brand?s home automation technology that it expected to be integrated into products this year. 

The company also said it is on schedule to start shipping the Apple Watch in April. 

?As more and more of those multi-device households occur, Apple will find it increasingly difficult to have an Apple exclusive environment,? Mr. Orr said. ?If you think about across the entire household, you are likely not see entire households looking to a single brand so how can Apple get a bigger share going forward. 

?It needs to message about what synergies occur when you do have all Apple products,? he said. ?What other solutions can someone who embraces Apple be able to get as well? 

?How can Apple continue to grow beyond itself and have an ecosystem that makes people come back and say, I want my next product to be an Apple product. That is increasingly a challenge.?

Final Take
Chantal Tode is senior editor on Mobile Marketer, New York