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Since the founding in 1976
by a business-savvy hippy and A nerd
Apple has had a unique place in the tech market.
Today, they’re a polarizing entity.
But historically, Steven Jobs has always made sure
that Apple products were accessible to non-technical people.
Making things easy to use
open up the door to a much wider market.
Despite the strategy,
things haven’t always gone that way.
In the 1990s,
Apple lost the PC Wars and were failing.
It would take Bill Gates till 1997 to save them
with a 150-million-dollar investment deal.
And lastly, Microsoft has made an investment in Apple.
Microsoft is buying 150-million-dollar worth of the Apple stock.
And I happen to have a special guest with me today
be a satellite downlink.
And if we could get him up on stage right now.
It would only be after the return of Steve Jobs
and the release of iPod in 2001
that would make Apple a tech culture icon for the 21st century.
The iPhone only solidify this.
As mentioned in the previous video,
Apple recently crossed 1-trillion-dollar mark.
This is more than the GDP of Mexico,
or Indonesia, or Turkey.
Although this is just a market valuation,
Apple does actually have stockpiles of real profit.
The question must be asked,
just how does Apple make so much money?
How does Apple make so much money?Part one: The iPhone
The original iPhone was a groundbreaking device.
The breakthrough of using your own fingers
to seamlessly navigate a pocket device with smart software
made the iPhone absolutely crash former mobile kings.
Nokia and Blackberry were obliterated.
And the mobile touch software combination spot to shift
that forced Microsoft and Intel to the sidelines.
As it turned out,
people just simply valued pocket computer that was easy to use.
After its launch in 2007,
the iPhone gradually replaced the iPod
as Apple’s biggest revenue driver.
With this being said, it shouldn’t be any surprise
that Apple makes most of this money from the iPhone.
About 70% of its profits come from this device.
Between 2008 and 2017,
the number of iPhone shipped surged
from 11.6 million to 216 million units.
During the same period,
Apple’s annual revenue soared over 600%.
In terms of raw profit,
Apple manages to produce iPhone for 370 dollars or less
and sell them for an average price of 720 dollars.
当然 iPhone X的价格已超过1000美金
And of course, the iPhone X shifts over 1000 dollars.
To support this high price,
Apple has positioned their products as luxury devices.
Other companies sell their devices at much thinner margins.
To give you an idea,
Apple ranks in 86% of the entire smartphone industry profits,
despite controlling just 24% of the global market.
Interestingly, the iPhone X alone takes in 35%
仅iPhone X 就占到了全市场利润的35%
of all profits of the entire industry.
IPhone success – the double-edged sword?
Okay, so that’s kind of interesting,
but we have to ask the question,
is Apple too relying on smartphone sales?
In reference of the smartphone market,
Tim Cook recently said in an analysis conference call,
“不管它是增长了1% 2%还是5% 或是萎缩
“Whether it grows by 1 or 2 percent, by 5 percent,
or shrinks, it’s still a huge market.”
And Tim is right,
as long as iPhone sales are rising year over year, things are good.
But eventually, iPhone sales will slow.
So you might be wondering,
how could I be so sure that they will slow?
Well, above all else, market saturation.
Simply put, pretty much everyone who wants a smartphone has one.
And to add to this,
with powerful Android phones coming out for as least as 300 dollars,
the market is more accessible than ever before.
Yes, some people might want to upgrade their phone every year.
But as phones gradually become good enough in everything in a few years,
less and less people are going to upgrade.
Not only this,
but the iPhone isn’t the only great phone out there right now.
There was a time when
the iPhone was miles ahead of anything else in the market.
But that’s simply not the case any more.
If Apple doesn’t make strategic changes,
after a short while,
the interest in the iPhone would only last so long.
When iPhone sales finally fade,
Apple needs new products and services to pick up the slack.
But in the meantime,
they have another way of making money.
How does Apple make so much money?Part two: Apple’s digital prison
I’ve heard so many of my friends say,
“I have had a few iPhones
and I’m liking them less and less
but I don’t want to change to Android
because I’ll lose all my stuff!”
Even though one of my friends has an iPhone,
she called Apple “the cult of the tech world”
for trapping her in the ecosystem.
The combination of Apple’s world software garden and brand loyalty
makes the iPhone ideal bait for growing Apple service business.
Apple services are things like the App Store,
iTunes, Apple Music,
“iBooks““Apple Care”以及“Apple Pay”
iBooks, AppleCare and Apple Pay.
After iPhone users start buying their apps and media
from the App Store and iTunes,
they are much less likely to live behind their purchases
by switching to Android devices.
Tim Cook is very aware of this,
and he has repeatedly stated
that Apple plans to grow software services
to offset the gradual slowdown of iPhone sales.
Cause of this,
the service section of Apple’s becoming more and more important
as time goes on.
As the smartphone market shrinks,
Apple has to make more money
out of the market they’ve acquired from iPhone users.
The company hopes to double their services revenue by 2020,
and appears to be on track to be doing so.
Apple’s locking strategy also helps as well.
Their upgrade program lets people pay for iPhones
on a monthly basis for 2 years.
After 12 months, users can switch to the latest iPhone,
and reset the payment process.
How does Apple make so much money?Part three: Dongles
Apple can make a bit of extra cash by selling accessories.
For example, some of the best-selling Apple products right now
aren’t the iPhone, but Dongles and AirPods
may only because of the removal of the headphone jack from the iPhone.
MacBook Pro的标准USB适配器 也是热销品
Standard USB Dangles on the MacBook Pro are also hot sellers.
How does Apple make so much money?Part four: Brand image
Okay, so, it’s going to put advertising as a reason for Apple’s success.
But I have a feeling
that Apple’s advertising isn’t working as effectively as it once did.
The direct advertising might not be as powerful,
but in the age of reality TV,
the status symbol aspect to the Apple’s brand is working.
Pretty much all major celebrities use iPhones.
And whenever this meida coverage on that celebrity question,
there they are, with an iPhone or Macbook.
After a while of this free advertising,
the Apple devices become a status symbol in their own right.
For impressionable people,
this may mean that iPhone is the only phone worth getting,
further driving Apple sales.
So I think the secret to Apple success is multipronged, but not entirely a surprise.
I think Tim Cook has pushed the company to a strikingly business altitude.
Under his lead,
Apple has found ways to generate more profit from higher margins,
aggressively keep consumers in the Apple ecosystem
and make Dongles a top-seller.
But that being said,
there’s a large part of me that wonders
where has the Apple of old gone?
The iPod, iPhone
and even Mac, or old transformed products,
it really has been a while
and I am sure consumers would love to see another major innovation.
The Apple Watch and HomePod would just not it.
Apple isn’t running out of money any time soon
so is not in trouble.
And it doesn’t really matter what they do in the end.
But the room is no longer empty.
Microsoft has called on to the idea of trying new things
with projects like the Surface line
and HoloLens or project Andromeda.
Maybe Apple has something be up their sleeve,
but the world isn’t going to wait forever.
Anyway, so that’s my take on how Apple makes so much money.
感谢收看 我是Dagogo 这里是ColdFusion
Thanks for watching, this’s been Dagogo. You have been watching ColdFusion.
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Alright, I will see you again soon for the next video.
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