Pixel Envy

Written by Nick Heer.

Apple’s Success Through the Pandemic Is Thanks to Decisions Made Years Before

Josh Centers, TidBits:

The cascading crises of 2020 — with retail store closures, a shuttered Apple headquarters, and broken supply chains — were the ultimate test of Tim Cook’s leadership. In short, Apple not only survived, it’s once again shattering records (see “Apple’s Q3 2021: Still Making Money Hand Over Fist,” 27 July 2021). Mac sales are stronger than ever, and have been setting records for the past four quarters. After a nearly decade-long slump, iPad sales are higher than they’ve ever been apart from their 2012 peak. The iPhone 12 continues to be a smash hit near the end of its product cycle. Services and Wearables both continue stratospheric growth.

Tim Cook has transformed Apple into a truly antifragile company that actually improves under adversity.

Centers thoughtfully explains how the successes of the first paragraph were made possible due to a decade of planning. But I do not think the second paragraph is truly proven.

Apple is more successfully diversified today than at any point in its history. But I do not think it is true that its balance of products and services is such that, when one declines, another will necessarily rise:

Apple has not just a diverse portfolio, but a diverse portfolio of strong products backed by both physical and online distribution options that keep revenues balanced even in the toughest times. A brick-and-mortar retailer like Dollar General would be devastated by store closures, but for Apple, it was only an annoyance that could be mitigated by the Apple online store. Netflix lives or dies by its subscriber figures, but a dip in Apple TV+ subscriptions is mitigated by a music service, a credit card, warranties, and even a fitness service. HP is nothing without PC and printer sales, but the Mac can coast along at times thanks to Apple’s other offerings.

That Apple’s overall revenue can increase while some individual product offerings may decline does not make the company “antifragile” so much as it is simply “big”. Centers shows that Apple was able to avoid many of the stressors that impacted other industries and companies, but not that the stressors produced gains differently than at other large technology companies in similar lines of business. Because of in-person restrictions, this pandemic made technology companies very rich if they could in any way benefit from remote work or socializing. PC makers like Lenovo (PDF), ASUS, and Acer (PDF) all posted large revenue and profit gains. Software giants like Microsoft and Salesforce are booming, and the pandemic’s effects made Zoom a household name.

This is not a demonstration of “antifragility”. Apple was able to avoid many of the pandemic’s knock-on effects due to good long-term planning. But there is no reason that a different revenue mix will still show gains overall, or that a stressor that does not require a large-scale investment in new technologies will benefit Apple’s businesses. Apple is a robust company, certainly; it has not been beleaguered or fragile for decades now. So, while great long-term planning has demonstrated Apple’s resilience, I do not think the effects of this pandemic prove that it has insulated itself in the way Centers describes.