Apple’s mission is “to bring the best user experience to its customers through innovative hardware, software, and services.” And in a manifesto dated 2019, Tim Cook set the vision as “We believe that we are on the face of the earth to make great products, and that’s not changing.”
Still, in 2022, iPhone sales saved the quarter for Apple in the second quarter of the year.
In the middle of a downturn, the iPhone saved the day. And it’s not just about a product. The iPhone is a business platform.
Indeed, the iPhone is a piece of hardware that sits on top of the software, operating system, and marketplace, creating the whole Apple ecosystem.
What I like to define as a business platform.
iPhone sales in 2022 shot at over $205 billion, representing 52% of Apple’s revenues.
The other interesting aspect is the only other segment that grew was the services segment.
The service segment, in 2022, reached over $78 billion in revenues.
And guess what that means? The service segment comprises advertising, AppleCare, cloud, digital content, payment, and other services.
In 2022, the services segment primarily has higher net sales from advertising, cloud services, and AppleCare.
All services mostly exist thanks to the iPhone (the Apple mobile ads market wouldn’t make sense without the iPhone).
When you factor in all the ancillary services and products (wearables, accessories, ads, care, cloud subscriptions) that Apple sells as companions to the iPhone, its contribution to the overall company’s financial success account for around 70-80% this year!
The iPhone was launched in 2007.
This makes Apple’s domination in the mobile market a 15-year run so far.
Apple today is worth over 2.5 trillion dollars!
Thus, you can understand what it means from a financial standpoint for a company to be able to build the next business platform.
Why does Apple’s mission matter?
Understanding the mission and vision that drives an organization is the first step to appreciating how that company moves toward its short and long-term objectives.
Indeed, where a mission statement focuses more on the business objectives and how to reach them. The vision is about how that same company sees itself in the long term.
Thus, for any organization, it is critical to understand how the mission and vision are formulated to understand how they think about the future.
The simplest way to define a mission and a vision is by setting up a mission and vision statement. We’ll look at the mission and vision statement of Apple.
Breaking down Apple’s mission statement
The Company is committed to bringing the best user experience to its customers through its innovative hardware, software and services.
Apple points this out in its annual reports. Understanding the elements of Apple’s mission statement is critical:
Therefore, at Apple, user experience comes first; this gives great power to design and designers over engineers.
Not surprisingly, Apple products are beautifully crafted. Everything about Apple products has to be designed with maximum attention to detail.
At the same time, Apple has leveraged software and integrated it into the hardware, making its products more valuable for users.
Understanding Apple’s platform strategy as a key driver for its mission
On January 9th, 2007, on the stage, at Macworld San Francisco 2007, Keynote Address, Steve Jobs explained:
This is a day I’ve been looking forward to for two and a half years.
Every once in a while a revolutionary product comes along that changes everything and Apple has been well first of all one’s very fortunate if you get to work on just one of these in your career.
Apple’s been very fortunate it’s been able to introduce a few of these into the world in 1984. We introduced the Macintosh, it didn’t just change Apple it changed the whole computer industry.
In 2001 we introduced the first iPod and it didn’t just change the way we all listen to music, it changed the entire music industry.
Well, today we’re introducing three revolutionary products of this class:
the first one is a widescreen iPod with touch controls.
The second is a revolutionary mobile phone.
And the third is a breakthrough internet communications device.
So three things: a widescreen iPod with touch control, a revolutionary mobile phone, and a breakthrough internet communications device
an iPod, a phone, and an internet communicator,
an iPod, a phone
are you getting it?
These are not three separate devices, this is one device and we are calling it iPhone.
Today Apple is going to reinvent the phone
This is how Steve Jobs introduced the iPhone!
Yet, the real, more silent revolution came the year after, in 2008, when Steve Jobs introduced the App Store:
As Steve Jobs explained at the time:
So you’re a developer and you’ve just spent two weeks or maybe a little bit longer writing this amazing app.
And what is your dream? Your dream is to get it in front of every iPhone user and hopefully they love it and buy it, right?
That’s not possible today, most developers don’t have those kinds of
resources.
Even the big developers would have a hard time getting their app in front of every iPhone user well we’re going to solve that problem for every developer big to small and the way we’re going to do it is what we call the app store.
This is an application we’ve written to deliver apps to the iPhone and we’re going to put it on every single iPhone.
With the next release of the software and so our developers are going to be able to reach every iPhone user through the App Store.
The Company’s business strategy leverages its unique ability to design and develop its own operating systems, hardware, application software and services to provide its customers products and solutions with innovative design, superior ease-of-use and seamless integration.
And a set of business objectives to be achieved:
As part of its strategy, the Company continues to expand its platform for the discovery and delivery of digital content and applications through its Digital Content and Services, which allows customers to discover and download or stream digital content, iOS, Mac, Apple Watch and Apple TV applications, and books through either a Mac or Windows personal computer or through iPhone, iPad and iPod touch® devices (“iOS devices”), Apple TV, Apple Watch and HomePod.
Furthermore, through a clear mission statement, the company can identify the key stakeholders to involve in the growth process and allow its products to be successful:
The Company also supports a community for the development of third-party software and hardware products and digital content that complement the Company’s offerings.
Also, it can leverage resources to achieve the business goals defined within its mission statement.
Indeed, part of the “best user experience” implies a high-quality buying experience where the whole process is controlled and customized:
The Company believes a high-quality buying experience with knowledgeable salespersons who can convey the value of the Company’s products and services greatly enhances its ability to attract and retain customers.
One strategy that Apple chose to create this high-quality buying experience is via its stores as a part of its distribution strategy:
In 2022, most of Apple’s sales (62%) came from indirect channels (comprising third-party cellular networks, wholesalers/retailers, and resellers). These channels are critical for sales amplification, scale, and subsidies (to enable the iPhone to be purchased by many people). In comparison, the direct channel represented 38% of the total revenues. Stores are critical for customer experience, enabling the service business and branding at scale.
Therefore, the Company’s strategy also includes building and expanding its own retail and online stores and its third-party distribution network to effectively reach more customers and provide them with a high-quality sales and post-sales support experience.
The Company believes ongoing investment in research and development (“R&D”), marketing and advertising is critical to the development and sale of innovative products, services and technologies.
Breaking down Apple’s vision statement
We believe that we are on the face of the earth to make great products and that’s not changing. We are constantly focusing on innovating. We believe in the simple not the complex. We believe that we need to own and control the primary technologies behind the products that we make, and participate only in markets where we can make a significant contribution. We believe in saying no to thousands of projects, so that we can really focus on the few that are truly important and meaningful to us. We believe in deep collaboration and cross-pollination of our groups, which allow us to innovate in a way that others cannot. And frankly, we don’t settle for anything less than excellence in every group in the company, and we have the self-honesty to admit when we’re wrong and the courage to change. And I think regardless of who is in what job those values are so embedded in this company that Apple will do extremely well.
Back in 2009, when Steve Jobs was on medical leave, Tim Cook set the stage for the Apple manifesto, a long-form vision that also set the mission the company had to accomplish after the death of its legendary founder!
This vision set in stone follows a few key and core beliefs:
And if at all, a product like the iPhone became successful primarily thanks to a proper platform (and distribution) strategy.
This also justifies the wide premium the company can still sell its products.
It costs Apple $501 to make an iPhone 14 Pro Max, and the company sells it at a base price of $1099. This makes Apple’s base markup on the latest iPhone model at 119% Apple is the only tech company able to sell its tech products at a such a premium, thanks to a combination of hardware, software and marketplace.
This is the fruit of what I like to call a business platform strategy, where the product becomes a platform for a business ecosystem to build up, and as a result, the company enjoys wide margins for years:
Below also another graphic that explains that:
Apple’s multi-sided value proposition and the push into privacy as core to its value proposition
Apple is a tech giant, and as such, it encompasses a set of value propositions that make Apple’s brand recognized, among consumers. The three fundamental value propositions of Apple’s brand leverage the “Think Different” motto; reliable tech devices for mass markets; and starting in 2019, Apple also started to emphasize more and more privacy to differentiate itself from other tech giants.
Starting in 2019, Apple started to emphasize more and more over privacy, to strongly distinguish itself from other companies, especially the Google-Facebook duopoly, which business models are based on advertising.
This process was speeded up when Apple implemented massive privacy policy changes to its marketplace.
More precisely, Apple added an opt-in policy; each time, there was the chance a user might get tracked (for various reasons).
This shifted the previous policy upside down. Where users accepted tracking by default, now they need to opt-in.
This is what an Apple’s privacy policy warning looks like to the user:
Image Source: The Verge
This led to the destabilization of the whole Facebook advertising machine, which the whole revenue model got based on tracking users across various platforms.
Indeed, Facebook quickly rebranded into Meta, and it’s trying to build a platform on VR so that it can break free from Apple’s marketplace.
Yet, the Facebook advertising machine is already losing billions of dollars, and it might sink billions for years before a VR platform takes off.
Starting as a social experiment, at Harvard University, back in 2004, Facebook quickly expanded to reach over 1 million monthly active users by the end of the same year. By early 2005, Facebook was already present in 800 college networks. By 2012, as Facebook got ready for its IPO, the company reached over a billion monthly active users.
Indeed, the Facebook rebrand into Meta and its swift move into the Metaverse isn’t a vision; it’s a survival move.
Apple has a business model that is divided into products and services. Apple generated over $394 billion in revenues in 2022, of which $205.5 came from iPhone sales, $40 billion came from Mac sales, over $41 billion came from accessories and wearables (AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch, and accessories), $29.3 billion came from iPad sales, and $78.13 billion came from services.
In 2022, Apple is worth two and a half trillion dollars. Apple generated over $205 billion from iPhone sales in 2022, which accounted for over 52% of its net sales—followed by services revenues at over $78 billion, wearables and accessories at over $41 billion, Mac sales at $40 billion, and iPad sales at over $29 billion.
iPhone and Services sales represented the main revenue drivers in 2022. Within the service revenues, the fastest growing sub-segment was the advertising business Apple built on top of the App Store, followed by the Mac, Accessories & Wearables, and the iPad.
Apple has a business model that is divided into products and services. Apple generated over $394 billion in revenues in 2022, of which $205.5 came from iPhone sales, $40 billion came from Mac sales, over $41 billion came from accessories and wearables (AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch, and accessories), $29.3 billion came from iPad sales, and $78.13 billion came from services.
Apple can leverage a strong consumer brand and set of successful products as a strength. Yet the company is still too reliant on the iPhone as a primary revenue stream. Though Apple is working to open up new markets as an opportunity, it has to make sure to sustain its stores’ sales.
Apple is a tech giant, and as such, it encompasses a set of value propositions that make Apple’s brand recognized among consumers. Apple’s brand’s three fundamental value propositions leverage the “Think Different” motto; reliable tech devices for mass markets. Starting in 2019, Apple also emphasized more privacy to differentiate itself from other tech giants.
It costs Apple $501 to make an iPhone 14 Pro Max, and the company sells it at a base price of $1099. This makes Apple’s base markup on the latest iPhone model at 119% Apple is the only tech company able to sell its tech products at a such a premium, thanks to a combination of hardware, software and marketplace.
It costs Apple $501 to make an iPhone 14 Pro Max, and the company sells it at a base price of $1099. This makes Apple’s base markup on the latest iPhone model at 119% Apple is the only tech company able to sell its tech products at such a premium, thanks to a combination of hardware, software, and marketplace.
In 2022, most of Apple’s sales (62%) came from indirect channels (comprising third-party cellular networks, wholesalers/retailers, and resellers). These channels are critical for sales amplification, scale, and subsidies (to enable the iPhone to be purchased by many people). In comparison, the direct channel represented 38% of the total revenues. Stores are critical for customer experience, enabling the service business, and branding at scale.
Apps in the Apple Store follow five primary business model patterns: the free model, where the app might make money via paid ads. Freemium model where the app charges for premium features; subscription-based model, paid model, and paymium model is a mix of paid and freemium.
When looking at the Apple Business Model, it is easy to assume that it is solely a product company which sells devices that are beautifully crafted. However, there would have been no success for the Mac without its OS operating system. There would not have been iPod success without iTunes. And no success for iPhones without the Apple Store. What’s next for Apple’s success?
Adidas’ mission is “To be the best sports brand in the world.” Adidas AG is a German multinational initially founded in 1924 by Adolf Dassler who developed spiked running shoes out of his mother’s house. Today, the company is the largest sportswear producer in Europe and the second largest globally behind rival Nike.
Tesla’s vision is to “create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles,” while its mission is “to accelerate the advent of sustainable transport by bringing compelling mass-market electric cars to market as soon as possible.” Tesla used a transitional business model as its ecosystem grows.
Amazon’s mission statement is to “serve consumers through online and physical stores and focus on selection, price, and convenience.” Amazon’s vision statement is “to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices.”
Apple’s mission is “to bring the best user experience to its customers through its innovative hardware, software, and services.” And in a manifesto dated 2019 Tim Cook set the vision specified as “We believe that we are on the face of the earth to make great products and that’s not changing.”
Netflix’s core mission, strategy, and vision are that of “improving its members’ experience by expanding the streaming content with a focus on a programming mix of content that delights members and attracts new members.”
Coca-Cola’s Purpose is to “refresh the world. make a difference.” Its vision and mission are to “craft the brands and choice of drinks that people love, to refresh them in body & spirit. And done in ways that create a more sustainable business and better-shared future that makes a difference in people’s lives, communities, and our planet.”
Starbucks highlights its mission as “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.” And its vision is to “treat people like family, and they will be loyal and give their all.”
Microsoft’s mission is to empower every person and every organization on the planet to achieve more. With over $110 billion in revenues in 2018, Office Products and Windows are still the main products. Yet the company also operates in Gaming (Xbox), Search Advertising (Bing), Hardware, LinkedIn, Cloud, and more.
Walmart’smission can be summarized as “helping people around the world save money and live better – anytime and anywhere – in retail stores and through eCommerce.” While its vision is to “make every day easier for busy families.” Walmart defines “busy families” as the bull’s eye of its business strategy.
Nike vision is “to bring inspiration and innovation to every athlete in the world.” While its mission statement is to “do everything possible to expand human potential. We do that by creating groundbreaking sport innovations, by making our products more sustainably, by building a creative and diverse global team and by making a positive impact in communities where we live and work.”
Google mission statement is to “organize the world’s information and make it universally accessible and useful.” Its vision statement is to “provide an important service to the world-instantly delivering relevant information on virtually any topic.” In 2019, Sundar Pichai emphasized a renewed mission to allow people “to get things done!”
Gennaro is the creator of FourWeekMBA, which reached about three million business students, executives, and aspiring entrepreneurs in 2021 alone | He is also Head of Enterprise Sales for a high-tech startup, which he helped grow at a double-digit rate since the onset | In 2012 Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
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