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 and reliable tech devices for mass markets. Starting in 2019, Apple also started to emphasize more and more privacy to differentiate itself from other tech giants.
As the author of the recently-published innovation book,The Value Mix, I’ve designed and gathered a range of tools that product managers and entrepreneurs can use to create new products and services.
In this article, I want to focus on the value proposition of Apple and how it has changed over time.
Many people see Apple as being the inventor of the iPhone. But the brand has more to offer.
Value Proposition n°1: “Think different”
Apple started to build a name for itself when Steve Jobs released one of the most famous TV ads, Apple’s Think different.
At the time, Apple was selling the MacIntosh, a simple personal computer.
It positioned itself as an alternative to the status quo led by IBM.
The ad itself was a response to IBM’s slogan: “Think.”
Apple was speaking to creatives–the people who want to think differently. For years, the brand followed through. It gained traction among professional designers and movie makers. Every advertising agency was equipped with Apple products.
Obviously, the tech and its software were good. But it wasn’t just about the technology.
Apple was selling something else:
A signal that if you were using Apple products, you were part of the cool kids. This is why every advertising agency had to have an Apple computer. It was a signal they were sending to their clients (we’re creatives and have cool ideas) as well as their employees (here’s a cool place for work).
In many cases, it’s also interesting to define your audience by who you aren’t targeting. In the case of Apple, they weren’t interested in the laggards.
At this time you would never see an Apple product in an investment bank or a law firm. These people stand for serious and old-fashion. IBM was perfect for them.
Value Proposition n°2: Tech that works
The releases of the iPod and iPhone were a tipping point for Apple.
The brand moved from appealing to Early Adopters to addressing the mass market. At this time, we started seeing more and more people adopting Apple products. And in many cases, the iPod and iPhone became entry products to sell more laptops.
Apple started standing for something else.
It wasn’t about being and thinking different. It became about choosing technology that would just work.
Apple was just a better alternative to Microsoft + Intel (for laptops) and Samsung or HTC (for smartphones).
Yes. By choosing Apple, you chose less customization. But what you were saying about yourself was that you didn’t care about the freedom to set up your phone or laptop. You just wanted something that worked.
“The old Apple promise was that you don’t have to worry if the tech works. The new promise is you don’t have to worry if the tech is scamming you.”
Apple’s main products today are the iPhone and iPad.
They make most of their money when you subscribe to one of their services (such as iCloud or the new Apple News), buy a new piece of hardware, or download a paid app.
They want to create a safe, reassuring ecosystem that makes users want to remain part of it. Now that Apple has a more significant market share, they focus on growing its customer share.
So today, Apple’s most recent value proposition seemed to be geared towards privacy protection and being part of a safe ecosystem.
In short, Apple’s “implicit promise” is to create a smooth experience, as long as you are within Apple’s ecosystem.
This is what enabled Apple to become a multi-trillion-dollar company.
Apple has a business model that is divided into products and services. Apple generated over $383 billion in revenues in 2023, of which over $200 billion came from iPhone sales, $29.36 billion came from Mac sales, $39.84 billion came from accessories and wearables (AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch, and accessories), $28.3 billion came from iPad sales, and $85.2 billion came from services.
In fact, also when you look at the iPhone, that is way more than a device, that’s the physical platform powering up the App Store:
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.
Indeed, when Apple launched the iPhone in 2007, it was a revolutionary device, a leap frog, many times over, with respect to existing devices, at the time.
Yet, the most important, a bit more silent revolution (developers instead understood the importance of it from the first day) was the launch of the App Store.
As Steve Jobs, explained at the time, in 2008, as he launched the App Store:
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.
Another key ingredient, to make sure, the iPhone could become the physical platform, to power up and be powered up by the App Store, was Apple’s distributionstrategy.
In 2023, most of Apple’s sales (63%) 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 37% of the total revenues. Stores are critical for customer experience, enabling the service business and branding at scale.
In fact, Apple has masterfully leveraged indirect distribution channels, to enable the iPhone to become a mass-adopted device.
Not by chance, still today, the iPhone makes up more than 50% of Apple’s revenues.
Apple is a product-based company fuelled by platform business models (like Apple Store), in which sales still primarily come from the iPhone. However, the company has also transitioned toward a service company (with Apple Store, iTunes now called Apple Music and advertising services) and as a wearable product company, which is the fastest-growing segment.
Key Highlights
“Think Different”: Apple’s initial value proposition focused on appealing to creatives, positioning itself as an alternative to the status quo led by IBM. The “Think Different” motto resonated with professional designers and creative individuals.
Tech That Works: With the release of iPod and iPhone, Apple transitioned from targeting early adopters to addressing the mass market. The value proposition shifted to offering technology that “just works.” Apple became a better alternative to competitors like Microsoft, Intel, Samsung, and HTC.
Seamless Experience: Apple’s recent mission statement emphasizes providing the best user experience through innovative hardware, software, and services. The company aims to deliver a seamless and integrated technology experience to its customers.
Privacy Emphasis: In recent years, Apple’s value proposition expanded to include a focus on privacy. Apple positions itself as a safer alternative to tech giants like Facebook, Amazon, and Google, aiming to protect user data and privacy.
Ecosystem-Based Value: Apple’s value proposition is built on its ecosystem, where customers experience a seamless and integrated tech environment. This ecosystem approach contributed to Apple’s growth as a multi-trillion-dollar company.
Diverse Revenue Streams: Apple’s business model spans products and services, generating significant revenue from iPhone sales, Mac sales, accessories and wearables, iPad sales, and various services.
App Store Revolution: The launch of the App Store was a silent revolution alongside the iPhone’s release. It transformed the iPhone into a physical platform powered by the App Store, enabling developers to reach every iPhone user.
Distribution Strategy: Apple leveraged indirect distribution channels, such as third-party cellular networks, wholesalers/retailers, and resellers, to enable the mass adoption of the iPhone. This strategy contributed to iPhone’s dominance in Apple’s revenue.
Transition to Services: While still driven by product-based revenue, Apple has transitioned toward becoming a service company with offerings like Apple Music, Apple Store, and advertising services. The wearables segment is also a growing segment for the company.
As of 2024, major Apple shareholders comprised Warren Buffet’s Berkshire Hathaway with 5.92% of the company’s stock (valued at nearly $170 billion as of February 2024). Followed by other individual shareholders like Tim Cook, CEO of Apple, with about 3.3 million shares, and Artur Levinson, chairman of Apple, with over 4.5 million shares. Top institutional investors comprise The Vanguard Group with 8.27% ownership and BlackRock with 6.66% ownership.
Apple has a business model that is divided into products and services. Apple generated over $383 billion in revenues in 2023, of which over $200 billion came from iPhone sales, $29.36 billion came from Mac sales, $39.84 billion came from accessories and wearables (AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch, and accessories), $28.3 billion came from iPad sales, and $85.2 billion came from services.
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.
In 2023, most of Apple’s sales (63%) 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 37% of the total revenues. Stores are critical for customer experience, enabling the service business and branding at scale.
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.
By February 2024, Apple was worth nearly three trillion dollars. Apple generated over $200 billion from iPhone sales in 2023, which accounted for over 52% of its net sales—followed by services revenues at over $85.2 billion, wearables and accessories at over $39.84 billion, Mac sales at $29.36 billion, and iPad sales at over $28 billion.
In 2023, iPhone sales represented 52% of Apple’s net sales, the same in 2022. Yet in 2023 revenue from the iPhone slightly slew down to over $200 billion in sales, compared to over $205 billion in iPhone sales in 2022, still a growth compared to almost $192 billion in iPhone sales in 2021.
Apple generated nearly $97 billion in profits in 2023, compared to almost a hundred billion dollars in profits in 2022, $94.6 billion in 2021, and over $57 billion in 2020.
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.”
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.
While Apple Tim Cook’s salary has been $3 million since 2016, most of Tim Cook’s compensation is performance-based. For instance, in 2023, while the salary of Tim Cook was $3 million, he had total compensation of over $63.2 million, which comprised stock awards and other incentives and bonuses.
Tim Cook’s net worth is primarily comprised of his Apple stocks. As of 2024, he owned 3,28 million shares of Apple worth over $600 million at the current rate. However, Tim Cook has sold part of his Apple stocks over the years for hundreds of millions of dollars, making him a billionaire.
Guerric de Ternay is an Inventor at ?What If! where he helps Fortune 500 companies invent and incubate new businesses and design innovative products/services. As a founder at GoudronBlanc, a brand that men love for its elegant T-shirts, Guerric designs elegant T-shirts for men who wear these as their everyday outfit. He also co-founded GO Blackwood Ltd. As an executive member of The International Alumni Council (IAC) is an advisory board of London Business School he seeks to develop, enhance, and support relationships between alumni, students, faculty and the School.
