The Trillion Dollar Company: Apple Business Model In A Nutshell
With a market capitalization of over a trillion dollar at the time of this writing, Apple is among, if not the most valuable brand in the world.
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From an analysis done by howmuch when Apple didn’t reach yet the trillion-dollar valuation, it was already not comparable to any other brand in the world:
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While Apple has already passed the one trillion market cap.
Amazon is very close to it:
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I wonder when it will be the turn of Google!
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If we take the US GDP figure for 2017 at over 19 trillion, this means Apple represents 5% of the total economic output of the wealthiest country on earth.
If we take Apple, Amazon and Google market cap combined (over $2.8 billion), they represent almost 15% of the total economic output for the US.
Of course, nothing compared to the 1930s, when J.D. Rockefeller personal wealth represented about 1.5% of the US economic output. Yet, there is no doubt that for a few the Internet has represented the new oil.
As large political organizations (I believe states and nations will not be able anymore to slow down those tech giants) like the EU or the US federal government will regulate more and more, the so far not so regulated web, those companies might shrink in size.
However, one might also argue that instead, we live in the era of tech giant corporations, which are political organizations for their own sake (they influence the lives of billions of people). What if they keep growing?
The Apple business model
Apple’s business model is mainly based on the sales of tech products. However, it cannot be understood from that standpoint alone. Apple is both software and hardware, which is also what made it successful. No doubt the iPhone is an icon of our days. Yet, the iPhone is also a device that works pretty well thanks to its software.
Apple’s products
Three main products represent the line of Apple:
iPhone
iPad
Mac
Apple’s operating systems
Those products are run by Apple Operating systems:
iOS
macOS
watchOS
tvOS
Apple-related services
And supported by a set of related services:
Digital Content and Services
iCloud
AppleCare
Apple Pay
Other bets and products
Apple has over the years bet on several new products. It is also diversifying its products portfolio with:
Apple TV
Apple Watch
iPod touch
Apple’s Distribution strategy
The Company sells its products and resells third-party products in most of its major markets directly to consumers and small and mid-sized businesses through its retail and online stores and its direct sales force. The Company also employs a variety of indirect distribution channels, such as third-party cellular network carriers, wholesalers, retailers and value-added resellers. During 2017, the Company’s net sales through its direct and indirect distribution channels accounted for 28% and 72%, respectively, of total net sales.
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