Apple reported killer iPad sales last quarter, and the reason has a lot to do with Tim Cook's master plan to tap into the $4 trillion business market (AAPL)


Tim Cook

  • On the quarterly conference call, Apple CEO Tim Cook outlined Apple’s master plan to sell more devices and services to a massive market.
  • He was talking about the enterprise market, which buys $4 trillion worth of IT every year.
  • Success with this market was one reason for Apple’s killer iPad sales.
  • Visit Business Insider’s homepage for more stories.

Apple has returned to the hallowed ground of a $1 trillion valuation, and one of the high points was its spectacular iPad sales

Apple sold $4.9 billion worth of iPads, it said. The iPad’s 22% year-over-year improvement “was our highest iPad revenue growth rate in six years,” CEO Tim Cook told analysts in at the quarterly conference call.

One of the keys to that was Apple’s increasing success in the $4 trillion enterprise market, he said. Businesses spend nearly $4 trillion each year on tech, and Apple has been steadfastly partnering with enterprise tech vendors and adding more business-friendly features to iOS devices to go after this market.

Read more: The most successful product Microsoft released since Satya Nadella became CEO just reached 100 million users

Apple has not discussed how much revenue it makes from enterprise sales in years, but back in October, an expert estimated that it was likely a $37 billion business for the company in 2018.

It’s an area that Cook is clearly watching. He said that Apple’s strategy wasn’t just to sell to more companies, but to “expand our reach and share within large accounts.” 

In other words, he’s trying to get his biggest business customers to buy more stuff from Apple, a strategy known as “land and expand.”

Cook dropped a few impressive stats to note the progress on that strategy, saying iPads are now being used in the cockpits of 450 airlines (he dubbed the iPad the “preferred choice”). That was a subtle dig at Microsoft Surface, which made headlines some years ago when a few airlines chose that device for their pilot cockpit needs. 

But Cook’s real point was that the pilot’s use of iPads have encouraged airlines to put iOS devices everywhere, allowing Apple to sell more devices and also more services.

“We’ve been making great progress expanding Apple’s footprint beyond the cockpit into the cabin, where more than half of the top 50 airlines have now implemented iOS to enhance the guest experience as well as enable a new use case with mobile point-of-sale,” he said.

For instance, iPads are being used by ground operations and flight maintenance. At some airlines, they are being used in the cabin, “growing adoption of Apple Pay for food and beverage purchases and in-flight access to Apple Music.”

ipad pro

Read more: Apple CEO Tim Cook says he made one simple change that helps him avoid becoming addicted to his iPhone

Having Apple’s business sell Apple’s consumer services to their own customers is an interesting idea. For the most part, enterprise companies are using these devices to give employees access to custom apps, often developed by partners like SAP.

And that’s still happening, Cook said, saying that usage of SAP’s software development tools for iOS have grown by 40% in the last six months. He also pointed out Apple has been slowly adding new partners here, too, like the partnership with Salesforce announced in September. Last quarter, Salesforce released its software development kit for iOS that lets programmers build iOS apps for Salesforce’s own massive number of customers.

This is on top of Apple’s partnerships with IBM, Cisco, Accenture, Deloitte, and GE, all of whom are helping businesses write custom apps — or, in Cisco’s case, helping those iOS apps work better on corporate networks.

Finally, Cook touted and explained Apple’s expanded partnership with AT&T. AT&T is helping to enroll Apple devices into Apple’s device management software — known as Apple Business Manager — when they purchase additional device management software from AT&T. While Apple won’t make big bucks on that software (Apple gives it away for free), AT&T will make money selling its additional services.

Cook sees this as another part of his land-and-expand strategy, a way to sell devices to even more businesses with AT&T’s help. From there, Apple can sell these businesses more apps, services and devices.

“AT&T will make it easy for more customers to choose the best Apple products for their needs in the enterprise and modernize their business,” he said.

SEE ALSO: A male Microsoft programmer who came from the military, not a university, describes how his career got tanked by the ‘brilliant jerks’ culture

Join the conversation about this story »

NOW WATCH: Elon Musk’s biggest challenge won’t be Tesla or SpaceX — here’s why