That’s the general meme about Apple Inc and AAPL health from members of the technorati elite politburo these days. Unfortunately, negative headlines are what the interwebs is all about, and politburo members love to bash Apple wherever they can.
There’s just one problem with all that negativity bias going on these days.
The real numbers do not match the rhetoric. In other words, Apple’s performance in nearly every metric that matters should tell the tale but nattering nabobs of negativism pay little attention.
Fortunately, someone does. Horace Dediu wrote about how Apple is on the move in The Pivot. Simply put, Apple is in constant change, constantly adjusting to market conditions, always remaining Apple, but moving in many directions at once.
The iPhone is the most successful product of all time. Over 1.6 billion have been sold. Including the iOS products it spun off, the total is over 2.2 billion. Of those 2.2 billion sold, 1.5 billion are still in use.
So what, right? Isn’t the smartphone industry in the doldrums right now? Isn’t Apple struggling to maintain smartphone dominance.
Uh huh. So what? iPhone still dominates and brings back to Apple most of the industry’s revenue and profits. Samsung is far behind. Everyone else is even farther behind.
What does that say.
What makes a business great is dynamism. The idea is to constantly maneuver for a new or enhanced way of doing business as technologies enable entrepreneurs to fundamentally change how value is captured or allocated.
Woe is Apple. The company is the iPhone company and smartphones are dying. Or, so the meme goes, despite Apple’s 1-billion iPhone customers. Sales are down. Mac, iPhone, iPad (down from record highs a few years ago).
While the critics howled because Apple didn’t have an earth changing, universe denting new product to match the iPhone, the Cupertino company remained on the move.
In 2006, the year before the iPhone launched, Apple customers spent $3.3 billion on iTunes, Software and Services. By 2018 the spending rate was $80.5 billion/yr. It’s very possible that this year’s spending rate will reach $100 billion/yr
One of the methods a company can employe to increase revenue is the simple McDonald’s sales technique.
You want fries with that?
That simple phrase sold billions of french fries, and Apple continued to pile similar digital french fries into the Services group of App Store, iTunes, Apple Music, Apple Pay, et al.
What do those numbers say?
Apps are also allowed to offer paid subscriptions, and that total has reached 390 million, growing at 30 million a quarter with an expected total of 500 million by 2020. That amounts to one subscription for every other iPhone in use.
How are Apple’s numbers not given consideration by members of the technorati elite politburo or nattering nabobs of negativity?
Does not Samsung, Huawei, Dell, HP, and hundreds of other competitors put the squeeze on Apple’s product margins, thereby resulting in lower sales, lower revenue, lower profits?
What do the numbers say?
Apples’s business has high margins (64% gross margin for services, 34% for products), has been resilient over 12 years while attracting hundreds of imitators at lower price points, and has loyalty and satisfaction which results in more than 90% re-purchase rates. Cyclicality is driven by seasonality and product lifespans, not competition.
Good golly, Molly.
Who makes more money from fewer products than Apple? Which competitor continues to evolve a product line that remains integrated to an entire ecosystem?
Dediu doesn’t mention it, but Apple just invented another line of products that tops iPad revenue, and is close to topping the Mac, and makes up another leg on the chair. Take a look at this list.
- $31.05 billion iPhone
- $11.45 billion: Services
- $5.51 billion: Mac
- $5.13 billion: Wearables, Home and Accessories
- $4.87 billion: iPad
Yep, that’s from the most recent quarter. Wearables are a thing. A big thing. Growing fast, highly profitable, and a worthy leg on the chair.
Ignore the negativity bias you see so prevalent on the interwebs. Real numbers matter.