Few technology companies are as scrutinized and criticized as Apple Inc. Apple is the same company that gained a trillion dollar valuation as it is now having lost a chunk of that same value. What’s going on?
Investors and critics are shortsighted. Apple is a company made up of many components and few critics seem to understand some of the underlying principles of such numbers. Let me call them Apple’s crazy numbers. Crazy? As in crazy valuable, mostly ignored, often misunderstood.
Yes, iPhone makes up nearly 60-percent of the company’s revenue and an outsized portion of profits, but guess what that means to the entire smartphone industry?
Apple’s iPhone revenue also constitutes more than 60-percent of all smartphone industry revenue, and more than 80-percent of the entire industry’s profits. Samsung gets the majority of the leftovers. What do those numbers say about the health of the rest of the industry?
Yet, which company takes the public beatings?
Yes, you’ll read nattering nabobs of negativism and their kin, members of the technorati elite politburo, and how Apple must be hiding something by no longer divulging quarterly unit sales (forget the fact that no competitor has ever divulged similar numbers) but they paid no attention anyway. iPhone sales have been flat for years. iPad sales have rebounded some, but Mac unit sales are stagnant, too. Apple is a hardware company and hardware sales are not growing.
Yet, Apple’s Services business is growing faster than hardware, and that leads some of the aforementioned prognosticators to assume Apple is transitioning to a services-based or subscription-based company.
Apple is a hardware company. How is this for a crazy number? Apple has nearly 1.5-billion iPhones, iPads, and Macs installed worldwide; over 180-million iPhones in the U.S. alone. Almost unconsidered by Apple’s many critics is the value of that user base. You see a tip of the iceberg in Apple Music subscriptions, iPhone Upgrade Program, but especially in the growing trend of subscription applications from the App Stores. Apple gets an ongoing cut of the revenue every year.
Apple will not become a services company in the traditional sense– Services are dependent upon a base of hardware– but few have the ability to leverage that customer base the way Apple can and does. Yes, Apple will be the so-called iPhone company for years to come, but every product in the ecosystem– hardware or services– is a huge money maker.
Google can’t say that about Pixel smartphones. Apple has 10-times the installed customer base as Amazon’s Prime subscription service, and the company has yet to venture into streaming television and movies to match Amazon, Sling, Sony, Hulu, Netflix, and others.
Beyond the quarterly unit sales, Apple has enormous numbers that dominate their industry segments and make competitor offerings pale in comparison. One estimate put Apple Watch customer base at 50-million, and Apple AirPods at 30-million and growing. What would happen to that revenue and profit stream if Apple added blood glucose monitoring to Watch and a built-in hearing aid option to AirPods?
More big numbers. Crazy big numbers.
Don’t get excited about the quarterly unit sales nonsense. Apple has some crazy numbers that the nattering nabobs of negativism and members of the technorati elite politburo never write about, and never compare to the competition.