10 million iPhones prove Apple has learned to multitask
In 2006, Apple announced the long-awaited next generation of its Mac OS X desktop operating system, 10.5 Leopard. With breakthrough features like parallel workspaces and automatic Time Machine backup, Leopard built on 2004’s Tiger to take Mac in new directions. The OS was expected to ship in summer 2007, but something happened at MacWorld in January that would alter Apple’s product roadmap for the foreseeable future. Apple announced iPhone, and pulled development resources from OS X to build out the first-of-its-kind iPhone OS, later rebranded iOS. This massive reallocation pushed Leopard’s release date into the fall, and spoke to Apple’s difficulty juggling its many new product developments.
In 2014, however, a different Apple has already shipped two new iterations of its iPhone, launched a massive new version of iOS, teased an entirely new product category—and it’s still anticipated to revamp its iPad lineup, unlock a completely new payment platform, and release a ground-up redesign of OS X this fall. Apple sold 10 million iPhone units this past weekend—besting its previous record of 9 million iPhones 5c and 5s last year—and its just-released iOS 8 is already approaching 50% adoption among the company’s hundreds of millions of iOS customers. This goes beyond “walking and chewing gum at the same time”—Apple’s products have reached an audience whose scale its founders never could have imagined, and the company has put its immense weight behind streamlining development, design, and manufacturing processes to accommodate them.
Walking
In 2008, Apple attempted to simultaneously launch the iPhone 3G, its second generation of iPhone OS with the App Store platform, and a cloud-based synchronization service called MobileMe. Because of the unprecedented influx of iPhone activations and software downloads to millions of devices, Apple’s servers were entirely overwhelmed, and users waited for hours-late activations, lost access to many of their @me.com emails, and failed to take advantage of Apple’s new app ecosystem. These were the days when multi-gigabyte iOS updates required a tethered iTunes download and OS X installs came on physical DVDs sold in Apple Stores. Not only has Apple grown its server capabilities to accommodate the load, but it’s also streamlined the download and activation process altogether.
Today, Apple has transitioned to an over-the-air update system for OS X and iOS, and millions of users are able to seamlessly download each on day one. Granted, the large installer size for iOS updates might prove challenging to users with 8 or 16 GB devices, but the accessibility of updates from Apple servers is never in question. Apple and its carrier partners are able to process millions of iPhone activations simultaneously, and a new cloud infrastructure even allows users to restore gigabytes of iCloud backup data moments later. As Apple works to deliver a cloud platform that users prefer to Google’s web-enabled services, the company has amassed an enormous server infrastructure in Nevada and North Carolina to securely store and serve its users’ millions of terabytes of data.
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This new focus on uptime and scaleability has served Apple well—within a week of its introduction, iOS 8 is already approaching 50% adoption among Apple’s install base. While much of this is a testament to the operating system’s persistent reminders to upgrade, it also reflect’s Apple’s ability to serve multi-gigabyte software versions over the air to approximately 50 million iOS customers. This convenience puts iOS orders of magnitude ahead of Android, whose well-storied struggles with software fragmentation put its latest version, 4.4 KitKat, at around 25% adoption after nearly 11 months.
Chewing gum
When the first iPhone was announced on January 9, 2007, Steve Jobs disclosed the vague release window of “June.” As it happened, the iPhone was finally available for purchase on the last weekday of June, June 29, at 6 p.m. EST—virtually the last possible moment for a product release to still qualify as “June.” Three years later, as the iPhone 4 was introduced in the summer of 2010, VP of Global Marketing Phil Schiller announced that a white iPhone would coincide with the black version sometime shortly after launch. As it turned out, the white iPhone 4 didn’t ship until spring 2011, shortly after the Verizon CDMA iPhone launched and mere months before the iPhone 4s was set to replace it. The company has routinely struggled to keep up with its products’ immense demand, and has historically delayed shipping dates internationally to ensure availability in its primary markets. This trend has been attributable to manufacturing limitations and part availability, and provides for frustrating customer experiences as shipping schedules for preordered new products slip by weeks and months.
This year, Apple introduced two new models of the iPhone 6 generation, each sporting a new display size and entirely redesigned form factor. Not only did Apple successfully deliver its new products on time and nearly at scale, it did so to the tune of 10 million shipments a scant 10 days after the initial announcement. For its recent iPhone launches, Apple has followed a predictable pattern: announce the product on a Tuesday, open preorders on that Friday at midnight Pacific Time, and ship the units the following week. One day, nobody knew what the iPhone 6 would look like. Two weeks later, it was in 10 million pockets. How could a scale like this happen?
Apple’s strategy to success has been twofold. First, Apple has become smarter about managing its partnerships and leaving little to change. In addition to strategic partnerships with display manufacturers Samsung and Sharp and investment in aluminum processing plants, Apple has made strategic acquisitions to bring many of the design and development procedures in-house. The company’s purchase of semiconductor firm P.A. Semi allowed them to nimbly design and manufacture tens of millions of custom systems-on-a-chip for every iPhone since 2010—the A4 through A8. These chips power its iPhone, iPad, and iPod touch product families, and—while manufactured by Samsung—give Apple a competitive edge as it iterates new generations of iOS devices.
Its Apple Watch, too, was announced to feature a unique S1 board that integrates all essential functions of a computer into an absolutely minute enclosure, which will surely see long-term iteration as the Watch product line evolves. Apple’s acquisition of a sapphire processing plant in Arizona will position the company to deliver sapphire crystal elements on its primary product lines—including sapphire lens covers and Touch ID sensors for iPhone and sapphire crystal displays on certain Apple Watch models.
Second, Apple has found crafty ways to repurpose and take fuller advantage of existing supply chains. When the company introduced the first-generation iPad mini in 2013, the display didn’t meet its “Retina” specifications—instead, it shared the same 163 pixels-per-inch density as the company’s just-replaced iPhone 3Gs. Because LCD panels are manufactured in large sheets and then cut to appropriate dimensions, Apple was leveraging its long-established display supply that dated back to the original iPhone. When the iPhone’s resolution doubled to meet “Retina” specifications, so too did the iPad mini’s—Apple began using the higher-resolution 326 ppi panels on both iPhone and iPad mini with Retina display devices.
On the other hand, this year’s iPhone 6 Plus features an entirely new 5.5-inch “Retina HD” display, which bumps the handset’s pixel density to a whopping 401 ppi (versus the iPhone 5s and 6’s 326 ppi). This discrepancy might account for the iPhone 6 Plus’s limited availability, but both devices’ popularity underscores Apple’s ability to deliver new form factors at scale. Not to mention, iOS 8 has been completely retooled to make sense on the larger displays, with “Reachability” features to make the displays’ uppermost corners accessible and special landscape views on the 6 Plus. And it’s paying off—because of this year’s dual-model introduction at both the $649 and $749 off-contract price points, Apple’s average revenue per iPhone has likely increased dramatically. Assuming an average of $700 per phone makes its 10 million unit weekend an incredible $7 billion weekend for revenue.
Apple operates on a scale of its own, but its hardware supply chain isn’t perfect—shortages of gold iPhone 5s and limited availability for the iPhone 6 Plus are a testament to its unrivaled demand landscape. But these procedural improvements over the years put the company further into its own league, delivering millions of units on launch weekends without so much as breaking a sweat. Tim Cook’s transition from COO to CEO might have a lot to do with Apple’s operational finesse in recent years, but it’s not the entire story. The company has invested its immense cash horde into procedural improvements that directly impact the availability of its products and the experience of its customers, allowing it to make huge plays like this year’s Apple Pay and the continuing expansion of iCloud. In coming years, expect Apple to leverage its manufacturing resources and strategic partnerships to make industry-changing moves in new directions. 10 million might be the tip of the iceberg.