How Apple makes money: iPhones and Services

“Nobody holds a candle to Apple when it comes to consumer technology,” The Motley Fool writes.

“With its emphasis on minimalist design and a simple user experience, the company has defined product categories like the tablet, the smartwatch, and of course, the smartphone,” The Motley Fool writes. “The iPhone is the device that made Apple one of the largest companies in the world and is responsible for most of Apple’s sales. But it’s not the only way Tim Cook and company make money.”

The Motley Fool writes, “In this video, we’re going to break down how Apple can turn a profit on hardware, and how it makes more money from its users once they have an Apple product in their hands.”

Read more in the full article here.

MacDailyNews Take: Yup.

Again, units don’t matter. There are only so many quality users on the planet. Keeping them happy, as every measure of customer satisfaction shows Apple has amazingly well done to date, is what matters. As long as the users buy apps on the App Store, subscribe to Apple Music, add iCloud storage, use Apple Pay, etc., they can replace their hardware with Apple hardware at their own pace.

iPhone has higher customer satisfaction than Android, meaning that Apple gains iPhone users from Android via normal churn as users graduate to real iPhones.MacDailyNews, January 21, 2019

Yes, the iPhone replacement cycle is lengthening, but with so many iPhone (and iPad) users and with customer satisfaction so high, it really doesn’t matter. The market is mature and there are only so many quality users on the planet. Apple has that market cornered. The types of people who’ve settled for Android aren’t likely to buy as many apps or subscribe to services. They want free. They’re not worth much after the sale. The iPhone knockoff peddlers like Samsung can have them.

This is, of course, Apple’s point with ceasing the reporting of unit sales. It’s the user base, the quality of the user base, and services that matter more now. That’s where the growth is and where it will be for many, many years to come.MacDailyNews, January 5, 2019

1 Comment

  1. Revenue and profit mean nothing if there is no innovation in consumer technology.

    Currently, it’s all about which company has the most attractive folding smartphone. The news media has thrown down the gauntlet. They say Apple is finished unless they can come up with a better folding smartphone than Huawei or Samsung. Apparently, $2000+ folding smartphones are on everyone’s buy list in 2019. Will Apple be the first company to offer a $3000 folding smartphone to the masses? /s

    Some people say that it’s OK if Apple doesn’t report iPhone sales, but those aren’t the people who matter. There are plenty of articles out there saying how quickly the iPhone is falling out of favor and big investors are truly frightened. Let’s see which direction Apple’s share price goes before saying iPhone sales aren’t that important anymore. Many analysts are tying Services revenue to iPhone sales and that will present quite a problem for shareholders. It’s being said any loss in iPhone sales represents a loss in Services revenue. Only time will tell if that’s true.

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