On Thursday, Apple announced its most recent quarterly results. Compared to the rest of the tech industry, the numbers were pretty good. Apple’s profits were down 11 percent from the same period last year but the company beat estimates and still managed to set a record for third-quarter revenue.
Considering the challenges facing the entire economy, those numbers are pretty remarkable. The tech industry has been hit especially hard over the past few months due to things like a shortage of computer processors, inflation, and weakening demand.
Apple isn’t immune from any of those problems, but it managed to weather them far better than its peers. The reason is actually pretty simple, but it’s not what you might think.
You might think it has to do with the success of its products. Apple is known for making cool products that become a part of pop culture. The iPhone is a great example. The Mac, also, has been making a comeback with brand new designs for the company’s most popular laptops and desktops powered by Apple Silicon.
But, it isn’t the cool products that made Apple the most valuable company on earth. In reality, it’s something much more boring.
“Our June quarter results continued to demonstrate our ability to manage our business effectively despite the challenging operating environment,” said Luca Maestri, Apple’s CFO, on the company’s third-quarter earnings call.
First of all, in CFO-speak, that’s about as brutal a takedown of every other tech company as you’re ever going to hear. Basically, Maestri is saying “we’re facing the same challenges as everyone else, we’re just better at managing our business.”
To be fair, he has a point, and that single sentence sums it up perfectly. Apple’s strongest asset–the thing that makes it so valuable–isn’t its products alone. It is Apple’s ability to manage its operations.
That makes sense. Apple can design the world’s greatest products, but if it can’t get the right parts, turn them into iPhones, sell them in stores, and ship them to customers, none of that really matters.
But, it turns out, Apple is really good at those things. Even in a quarter when several of those pieces were challenging–like getting enough components to meet customer demand, Apple did better than its competition.
According to CEO Tim Cook, the Mac and iPad were “so gated by supply that we didn’t have enough product to test the demand.” There were more people wanting to buy those products than Apple could make. If you’ve tried to order a new MacBook Air, or an iPad in the past few months, there’s a chance you might still be waiting.
And yet, Apple still posted its best third quarter ever. It turns out, Apple doesn’t just design some of the most iconic products in the world, it’s also better at managing its business than almost any other company.
That’s not surprising. Tim Cook has long been considered an operations guru and not a product guy. That doesn’t mean Apple doesn’t have a lot of really talented people designing really nice products, but it does mean that the guy at the top spends his time making sure it can actually build and deliver those products as profitably as possible.
The end result is that, even as the economic outlook gets more challenging, Apple continues to focus on its strength–managing the business–and it’s working. To put it in perspective, Apple is more valuable today than Microsoft and Meta (Facebook) combined. With a market cap of more than $2.6 trillion, it’s also more valuable than Amazon and Tesla combined.
Having great products makes a company interesting. Being able to make and deliver them is what makes Apple the most valuable company on earth.
That’s not just true for the world’s largest company, by the way. It’s true for every business–even small ones. It’s not just about having great ideas. Success is about managing your business in a way that you’re able to deliver on those ideas.