May 7th, 2008
07:11 AM GMT
NEW YORK – With the economy teetering on recession, you would think it would be a terrible time to be a retailer... of any sort.
So I was struck when I read that Steve Jobs is busy expanding Apple's empire. Tuesday, Apple announced a deal with Vodafone to distribute the iPhone in 10 countries.
In Italy the company will work with two providers, Vodafone and Telecom Italia – a first and perhaps a sign of things to come. Apple says it wants to sell 10 million iPhones this year. It is an extraordinary goal given that the price tag is much higher than rivals.
It may not be as crazy as it sounds. If the company changes its strategy and starts partnering with multiple operators, as it has in Italy, it would remove a big purchase hurdle.
In the U.S. iPhones are sold exclusively through AT&T.
A lot of people I know have been reluctant to buy an iPhone because they don't want to change mobile phone carriers. And there is another force at work that may do even more to help Apple reach those lofty goals.
Consumers, in love with their iPods and Macs, are asking their bosses to switch to Apple products at work. At least that is what the cover story of the latest BusinessWeek magazine claims.
The article cites a Yankee Group survey of 250 companies that showed 87 percent now had some Apple computers in their offices, compared to 48 percent just two years ago.
What is stunning about that number is that Apple does not market to corporations. This is purely a word of mouth phenomenon.
If it turns out to be true, it could mean huge things for Apple. The corporate computer market is worth billions. Apple has just a tiny fraction of that. Any increase would be a nice boost to the bottom line.
There are, of course, many reasons to be skeptical. Microsoft is the dominant player in the corporate market and is not likely to cede any market share without a fight.
Servicing corporate clients requires a big support staff and is expensive. And then there is the question of Jobs himself. His return to the CEO post revitalized the company. Some worry Apple is too dependent on his vision.
Those are all valid concerns. But Apple has an unparalleled ability to connect with consumers and build loyalty.
Ten years ago this month, Jobs and his design team unveiled the first colored iMac, the Bondi Blue. It wasn't technically that much better than its rivals, but it looked amazing. People flocked to it. And Apple hasn't looked back.
People buy one product and they want more. Analysts call it the halo effect and I have to admit, I believe it. Six years ago I broke down and bought an iPod. The experience has been so satisfying that the next computer I buy will be a Mac. If my company offered it, I'd jump at the chance to have an iPhone.
The headlines may be full of doom and gloom predictions about the consumer, but Apple seems to be bucking the trend. Yes, the company warned the third quarter may be tough, but analysts think they are being overly conservative. The consensus is that the stock, which has already rallied sharply, still has further to run.
I would love to hear what all of you think of Apple now that the iPhone is going to be widely available in Europe.
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