A recent Wall Street Journal (WSJ) article states that Apple, the trendy computer and electronics company, is developing a new strategy to focus on small business to increase hardware and network sales. What does a $60 billion dollar company with $24 billion in cash and a bottom line of 20.7% know about small business, anyways? Lots, it turns out. Because they were one, once, a long time ago.
As a consultant to small business and entrepreneur, I run several Mac computers for my employees and myself, as well as iPhones and my new iPad. So, I’m biased (or, in Mac language, “i’m biased.”) Since both the Mac hardware and operating system are designed by the same company, they seem to work better together. We experience fewer technical problems than my former personal computers did. This maximizes uptime, reduces downtime, reduces repairs and expenses, and justifies the higher price charged by Apple. Actually, Apple has some of the highest margins on its computers in the industry.
I think Apple’s strategy to focus on small businesses is smart for several reasons.
Small businesses are the heart of the North American economy and will continue to lead in terms of new employment creation. New employees need computers, so there is a logical growth opportunity here. Financing for small businesses is still tight so Apple would be wise to offer creative leasing and financing programs.
Small businesses are more responsive to their employees preferences. If the employees already have iPhones and iPads, acquiring Mac computers is an easy learning curve and can establish the firm’s culture as more current and in line with mobile lifestyles. And, Macs are cool, or hot, or both. When my summer student, Léa, started her new job in May, and I handed her a new Macbook Pro, well, we created some employee engagement that day. In other words, you can use Macs as a recruiting and retention tool in your small business.
Large corporations, with their PC based infrastructure and legions of IT professionals, have prohibitive switching costs. However, I wonder how many of their executives (or their spouses) use iPhones for their personal cell phones?
Apple’s small business expansion strategy is consistent with its overall business strategy of providing innovative products that customers want and that generate higher margins. In a world of price discounting, Apple’s strategy demonstrates that courage creates cash!
If Apple can develop strategies for profiting from the small business segment, loosely designed as companies with fewer than a thousand employees, how can your business serve this market? After all, there are millions of entrepreneurs running small business, creating jobs and driving the economy. You just can’t see them all the time, they’re in the engine room.
Full disclosure: my spouse owns Apple shares. Unfortunately, not as many as we’d like.
Copyright 2010. Phil Symchych. All Rights Reserved.