apple-vs-google

Apple vs. Google Business Models In A Nutshell

Following a comparison between Apple and Google business models that looks at the financial metrics of both companies to understand how they differ from the business strategy standpoint.

apple-vs-google-revenues

Apple business model in numbers

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In 2022, Apple was worth two and a half trillion dollars. Apple generated over $191 billion from iPhone sales in 2021, which accounted for over 52% of its net sales—followed by services revenues at $68.4 billion, wearables and accessories at $38.3 billion, Mac sales at $35.2 billion, and iPad sales at $31.86 billion.

Apple’s business model is based on the sales of its products. In fact, as of 2021, the iPhone is the most sold product, adding to over sixty percent of the company’s overall revenues.

The iPhone’s strength also derives from Apple’s ability to own the whole supply chain.

how-does-apple-make-money
Apple’s made over $394 billion in revenues in 2022, of which over $205 billion or 52% of its total revenues came from the iPhone. Yet, the iPhone isn’t just a hardware product; it’s a business platform that combines hardware (iPhone), an operating system (iOS), and a marketplace (the App Store). Thus, the company still makes most of its money around a single product which powers up an entrepreneurial ecosystem.

Although this strategy has worked so well, it is also quite risky.

If Apple’s sales slowed down in the future, this would trigger a domino effect too on its business model.

However, things like services and other products also increased.

By looking at revenues and operating income, the Americas (North and South America) represents the most profitable segment for the company.

If Apple loses its market dominance in the future, it will pose a severe financial risk to its success.

apple-business-model
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.

Google business model in numbers

google-business-model
Google is a platform, and a tech media company running an attention-based business model. As of 2021, Alphabet’s Google generated over $257 billion in revenues. Over $209 billion (over 81% of the total revenues) came from Google Advertising products (Google Search, YouTube Ads, and Network Members sites). They were followed by over $28 billion in other revenues (comprising Google Play, Pixel phones, and YouTube Premium), and by Google Cloud, which generated over $19 billion in 2021.

A well-designed business model has to create value for the stakeholders and not just for the shareholders.

Google allows each day for billions of people to find the answers they need. Businesses can enhance their revenues through AdWords by tracking their spending, conversion, and opportunities.

Content creators can easily monetize their content by allowing Google to show targeted ads within their “web properties.” In fact, as of 2021 over 80% of Google’s revenue come from its advertising networks. 

how-does-google-make-money
Google (now Alphabet) primarily makes money through advertising. The Google search engine, while free, is monetized with paid advertising. In 2021 Google’s advertising generated over $209 billion (beyond Google Search, which comprises YouTube Ads and the Network Members Sites) compared to $257 billion in net sales. Advertising represented over 81% of net sales, followed by Google Cloud ($19 billion) and Google’s other revenue streams (Google Play, Pixel phones, and YouTube Premium).

The Facebook advertising model vs. the Google advertising model

facebook-statistics
A FourWeekMBA Analysis shows that in 2021, the growth of Facebook’s revenues was driven by the US & Canadian users’ monetization due to a 24% price per ad increase in 2021.
YearAppleGoogle
2016$215.64B$90.27B
2017$229.23B$110.85B
2018$265.56$136.82B
2019$260.17B$161.86B
2020$274.51B$182.53B
2021$365.8B$257.64B
FourWeekMBA Intelligence – Data: Financial Statements

Read Next: Apple Business Model, Google Business Model, Google Subsidiaries, What Happened To Google Glass?, What happened to Google Plus?, How does Google Maps make money?, Who Owns Google?, How Does YouTube Make Money?, History of Youtube, How Do YouTubers Make Money?

Related Case Studies

Google Business Model

hidden-revenue-model-google
A hidden revenue business model is a pattern for revenue generation that keeps users out of the equation, so they don’t pay for the service or product offered. For instance, Google’s users don’t pay for the search engine. Instead, the revenue streams come from advertising money spent by businesses bidding on keywords.

How Does Google Make Money

how-does-google-make-money
Google (now Alphabet) primarily makes money through advertising. The Google search engine, while free, is monetized with paid advertising. In 2021 Google’s advertising generated over $209 billion (beyond Google Search, this comprises YouTube Ads and the Network Members Sites) compared to $257 billion in net sales. Advertising represented over 81% of net sales, followed by Google Cloud ($19 billion) and Google’s other revenue streams (Google Play, Pixel phones, and YouTube Premium).

Apple Business Model Evolution

apple-business-model-evolution

Apple Business Model

apple-business-model
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 Value Propositon

apple-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. 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.

Economics of the iPhone

how-much-profit-does-apple-make-per-iphone
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.

Apple Business Growth

apple-business-growth
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.

Apple Distribution Strategy

apple-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.

Apple PESTEL Analysis

apple-pestel-analysis

Apple Organizational Structure

apple-organizational-structure
Apple has a traditional hierarchical structure with product-based grouping and some collaboration between divisions.

Apple SWOT Analysis

apple-swot-analysis
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.

Market Expansion Theory

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How do Apps Make Money

how-do-apps-make-money
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.

Apple Business Strategy

apple-business-strategy
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?

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