Apple’s Massive Success Hinges On This Simple Strategy

All the wild and unprecedented Apple (NASDAQ:AAPL) sales statistics can be distilled into one simple strategy on behalf of the market leader: reel them in with bite-sized goodies. Analysis confirms that the company, which has grown exponentially over the last ten years, leads first-time consumers on with its lower-priced items (iPods, iPhones, etc.), and slowly turns them into loyal consumers who ultimately make the switch to higher-end devices like Apple’s desktop and laptop computers.

Recent research found that 82 percent of iPod owners surveyed said the music and media player was their first-ever Apple product. But with the popularity of the iPod somewhat diminishing in recent years, that coveted first-buy spot has been taken over by the iPhone, and more rapidly, the iPad.

“The halo that both of these products [the iPhone and the iPad] have produced for the Mac is incredible. We have expanded point of sales,” Apple chief executive Tim Cook said in the company’s post-earnings call on Tuesday.

The survey by the NPD Group found that while more than 70 percent of long-standing Apple owners started their brand relationship through the iPod, the number “declined to just 57 percent among those entering the Apple franchise in the past two years.”

The report added that about 25 percent of buyers in the U.S. now made the iPad their first-ever Apple product. “Newcomers to the brand increasingly turn to the iPhone or iPad as their first Apple device, which combined account for one-third of first-time Apple purchases since 2010,” the survey added.

Apple sold 35.1 million iPhone units during the January to March quarter, 88 percent more than in the year-ago period, and sold 11.8 million iPads, a 151 percent increase. The sale of 4 million Mac computer units was a 7 percent increase over the year-ago quarter.

The marked expansion in Pad sales, documented by the company in the earnings report, was mirrored in the NPD survey. “iPad sales are growing much faster than any other Apple product has this soon after launch,” NPD analyst Ben Arnold said. “In fact, one-in-five Apple-owner households has one — nearly equivalent to the number that own an Apple computer. This demonstrates the appeal of both the new form factor and Apple’s app ecosystem,” he added.

The iPad has also successfully become the go-to device in the enterprise market, on which Microsoft (NASDAQ:MSFT) had a death grip until very recently.

Jack Monti, an analyst with UBS Securities, wrote to clients that with the popularity of wireless in strengthening office connectivity, the new bring-your-own-device trend was likely to remain strong in enterprises, helping Apple considerably in an arena previously dominated by Microsoft PCs. “We believe these results are a primary driver of the strong growth in the enterprise wireless networking market with wireless devices proliferating (iPads, iPhones, tablets, etc.),” Monti wrote.

The unified hold that the Apple products ecosystem is beginning to exercise on consumers is still unmatched by Google (NASDAQ:GOOG) Android devices. Though Android devices account for a larger share of the smartphone market, no single device has nearly the sales that Apple has witnessed with its iPhone. Furthermore, Android tablets have left almost no impression on the market at all. Meanwhile, Microsoft may be losing out on its long-held domination of the laptop and desktop market, now even in enterprise markets, because it does not have a complementary mobile device.