Fortune’s headline last week read: “2014: The year Apple came roaring back”, accompanied by an image showing Apple’s stock up 42.30% for the year, beating the S&P 500 by an impressive 29% and bold text stating, “Apple was doomed at the start of the year. Now, it can do no wrong. What the hell happened?”
This presents a great question. Indeed, for a large part of 2013 and 2014, Apple was widely regarded as “doomed,” mainly by click-bait media outlets. This impression was sustained by some strong arguments largely surrounding a lack of innovation and corresponding weak stock performance. So, what was different about 2014 for Apple?
Here’s what Apple did right this year:
- Tim Cook. On September 9, 2014 in the historic Flint Center (the same venue where Steve Jobs first unveiled the Mac personal computer in 1984) Tim Cook took the stage with discernible confidence. In front of the famed “One more thing…” slide, Tim Cook introduced to the world the first post-Jobs Apple innovation, the Apple Watch. In addition to this career-defining keynote, Tim Cook also became the first the first and only openly gay CEO of a Fortune 500 company, announcing it in an essay published by Bloomberg’s Businessweek. His contributions to Apple, the equality movement, and the world were recognized, being nominated for TIME’s 2014 Person of the Year and being named CEO of the year by CNN.
- iPhone. For better or worse, Apple finally gave into the large screen hysteria. With the iPhone 6 and 6 Plus, Apple entered the “phablet” market and resolved one of the longest-standing Android user criticisms. From reports released by Wall Street analysts, it looks like this has paid off handsomely with record setting unit sales.
- Apple Watch. The first post-Jobs Apple product to be released, the Apple Watch was announced along with the iPhone 6 in September. Although it will be released in “early 2015,” we know a great deal about the wearable. Being deemed by Cook and Jony Ive as Apple’s “most personal device ever,” the watch seems promising in a flooded market of flops. According to statistics from Kantar Worldpanel Comtech and an app analytics firm, between 43% to 60% of iPhone owners are interesting in purchasing the Apple Watch. This would result in forecasted sales of 37M, with revenue equal to the iPad in its first 12 months on sale. If this turns out to be true, it will be a solid growth opportunity for Apple. There are a significant number of concerns that we and the tech world have regarding price, upgradability, and battery life, that will define the pace of mass adoption after Apple’s early adopters flock to the stores. We have our eyes set on the product launch and reception as a defining moment for Apple in 2015.
- Apple Pay. In that same keynote, Apple took the world by surprise and announced Apple Pay, a revolutionary mobile payment system for iPhones. With its ease of use and secure tokenization system, Apple Pay is vying to replace your credit card and ultimately your wallet. Much like the Apple Watch, it will be interesting to see how this solution gets utilized by the general consumer and not just early adopters. According to research firm ITG’s report, there is a “strong Apple Pay momentum” since its launch on October 20th. Apple Pay was responsible for 1% of digital payment dollars in November despite only being available on the newest Apple hardware, and being supported by a limited list of merchants only in the United States. Some other interesting stats from that report is that the average Apple Pay user made 1.4 transactions per week and customers who tried out the service for a particular merchant used it for future purchases at that same merchant about 66% of the time, proving “stickiness” of the solution. It will be interesting to see how Apple Pay develops, with its success potentially hindered by wider retailer and global adoption.
- Developers. With iOS 8, Apple finally gave into developers’ wish lists through a more “open” philosophy of its software. In addition to a whole new programming language, Swift, Apple made some significant changes to iOS 8 that are, “huge for developers. Massive for everyone else.” Apple added widgets to the notification center, third party keyboards to the native OS, open access to Touch ID and full access of the camera API. HealthKit, HomeKit, and CloudKit platforms were created with developers in mind to easily tap into and share information across applications, strengthening Apple’s ecosystem. This more “open” Apple is vastly different from what we’ve seen during Jobs’ reign and could result in greater functionality of iOS and apps. Personally, I have welcomed widgets, with the Phillips Hue app allowing me to control my lighting and the Verizon app allowing me to track my data usage with just a swipe down on the Notification Center. As with Apple Pay and Apple Watch, this is only the beginning and it will be great to see how developers take advantage of these new development liberties in 2015 and beyond.
- Finance. Wall Street has also been impressed with news from Cupertino. During its Q2 earnings call back in April, Apple announced crushing sales figures, a 7 for 1 stock split, an increased dividend, and the launch of the biggest share repurchase program in history. In addition to the 8.3% gain in after-hours trading, the stock has been on a tear ever since.
Although this was the best year for Tim Cook’s Apple, it wasn’t without its tribulations:
- iPad. As great as Apple’s September keynote was, the October one was quite the opposite. Centered around iPad, Apple revealed the iPad Air 2 and the iPad mini 3. With the tablet market in a downward spiral and strong competition from Microsoft’s tablet/computer hybrid, Surface, Apple needed to do something to reignite excitement in its tablets. However, we only saw meager improvements. Spec bumps, a gold option, and the long overdue addition of Touch ID were all that was in store for those seeking a new experience. Split-screen multitasking, multi-users, or anything else that was on our wish lists weren’t addressed. The iPad mini 3 is vastly considered the most boring product Apple has ever announced, with Gizmodo referring to it as a “terrible deal” and urging customers not to purchase it. For $100 more than the iPad mini 2 currently being sold, you get a gold option and Touch ID. “That’s it! That is the only difference between the two. The internals are the same. The display is the same. The size and shape and weight are the same. The camera is the same. It is the same thing, just with a gold option and a fingerprint sensor that is almost certainly not worth a 33 percent mark-up.” Maybe Apple is holding out for something big and have focused their 2014 energy on the iPhone, Apple Watch, and Apple Pay. In fact, there are rumors out for an iPad Pro with a bigger screen and hints in iOS 8 beta code for split-screen multitasking. Alongside primitive, small smartphones and heavy laptops, the iPad made sense in 2010. However, we live in a different world today and the iPad needs to adapt in order for it to have sustained relevance.
- Bendgate. Topping the list of YouTube video searches in 2014, “iPhone 6 Plus Bend Test” came in as the fifth most popular search. Shortly after the release of the iPhone 6, multiple users claimed that their new hardware was bending after normal use. Whether this was an actual design flaw or just overblown hysteria we will never know thanks to the brilliant work of Apple’s PR team. However, no matter which side you fall on, this wasn’t good for Apple and although it seemingly didn’t hinder sales, it definitely distracted some potential buyers.
- iCloud Hack. In late August, hackers gained control of a number of celebrity iCloud accounts and published personal photos to the world. As a result, the world questioned the security of iCloud and Apple took numerous measures to beef up their security around accounts. Just like bendgate, this threatened Apple’s brand integrity, one of its most valuable assets.
- Bugs. 2014 saw some embarrassing bugs from the team at Apple. Most importantly, iOS 8.0.1 was shortly pulled after its release due to a slew of bugs. Some even bricked devices! All HealthKit apps were pulled from the App Store moments before the release of iOS 8 due to the late discovery of a critical flaw. Finally, the live-stream of the iPhone 6 announcement was botched with several users reporting error messages, pixelation, delays, and even a different language translation! Apple has long been regarded as a company whose stuff just works. In 2014, that wasn’t the case. It’s important that Apple corrects itself going forward to reestablish this perception in order to succeed, especially with the launch of new product categories like the Apple Watch.
- U2. Following the September keynote, in collaboration with U2, Apple automatically pushed U2’s latest album, “Songs of Innocence” to iOS devices and iTunes accounts, much to the objection of users. Although a friendly gesture by Apple with good intentions, users did not like the album being “forced” upon them with an unclear explanation on how to remove the tracks. Since then, Apple has published a support article on how to remove the album.
Despite these problems, Apple had an incredible year, fueled by the introduction of the Apple Watch, Apple Pay, and iPhone 6. We hope to see how these innovations as well as those still in Apple’s secret pipeline will play out in 2015!