evolution-of-apple

Evolution Of Apple Sales By Products

iPhone and iPad sales represented the main revenue drivers in 2021. Followed by the service business (which comprises the advertising business) and wearables/accessories, and Mac.

A long-term perspective on Apple’s sales

Taking a long-term perspective on how companies’ revenue streams evolve is interesting to understand also how their business strategy changes over time.

By taking a long-term look at the decade 2008-18 four main products (iPod, iPad, iPhone, Mac) and its other products, a few insights are coming up:

evolution-of-apple

  • Over the years Mac remained a stable product. However, Apple, which started as a computer company had in the range of 10-15 years convert itself to become an entirely new company, powered up by a new business model and a whole new set of products. The Mac was once the main product of the company, which made up most of its revenues. Over the years became a “niche” compared to the iPhone. In 2018 all the Mac products made up about 10% of the total net sales for Apple. While we can expect the Mac to still be relevant in the coming decade in the professional world, its net sales might remain relatively stable over time. It might be possible that its sales share in comparison to other products might get smaller and smaller.

mac-sales-as-percentage-of-total-sales

  • The iPhone has been a massive success. Nothing new about it. Yet it is interesting to notice how the iPhone cannibalized the iPod. Whereas in conventional business strategy, cannibalization is something to avoid in most cases. In this particular scenario, the iPhone did cannibalize the iPod, yet it also opened up a much broader market. This blue ocean made Apple reach a completely different scale, by bringing it into the hands of mass consumers. Today the iPhone represents 63% of Apple’s net sales
  • From 2011-14 iPad and related products and services surpassed the Mac. This might have given the impression that the tablet market was ready to take over the portable computer market. Yet, that didn’t happen, or at least not as imagined. Starting in 2015, the Mac picked up momentum, and in 2018, the Mac still generated more sales than the iPad. Therefore, Mac and portable computers, in general, have shown a resilience that made them a relatively stable product for Apple
  • The iPod has been a massive success as Apple also introduced a new way of consuming music via iTunes. But the iPod eventually has become more of a transitioning product that has ultimately led to the iPhone and iPad. Today the iPod sales are comprised of other products
  • The other product sales in 2018 more than doubled compared to 2014. Other products comprise AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch, and other Apple-branded and third-party accessories. Some of those products might turn out to be hidden gems

How did things change through and post-pandemic? 

apple-business-model
Apple has a business model that is broken down between products and services. Apple generated over $365 billion in revenues in 2021, of which $191.9 came from the iPhone sales, $35.2 came from Mac sales, and $38.3 came from accessories and wearables (AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch, and accessories), $31.86 billion came from iPad sales, and $68.4 billion came from services.

After the pandemic, the iPhone, with the launch of new releases, went back to become one of the key growth drivers for the company, at least in terms of revenue generation. 

Indeed, with a smartphone market saturated, it’s critical for Apple to keep a large distribution for its iPhones.

That is why the company leverages both a direct and indirect distribution strategy, as explained below:

apple-distribution-strategy
In 2021, most of Apple’s sales (64%) 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 a larger number of people). While the direct channel represented 36% of the total revenues. Stores are critical for customer experience, to enable to provide the service business, and for branding at scale.

As of 2022, Apple still manages to have wide margins on its products. For instance, the company generated over $191 billion from the iPhone in 2021, and on the new product, the iPhone 13, the company still keeps a 75% markup, which, for a tech product, is extremely high. 

This is thanks to branding, a powerful distribution strategy, and an incredible hardware product, with a powerful chip, coupled with a marketplace that enables users to get the most of the things they need for free.

how much profit does apple make per iphone
It costs Apple $570 to make an iPhone 13 Pro, and the company sells it at a base price of $999 to $1499.

What’s next? 

Chips shortages and supply chain issues, created by macroeconomics and geopolitical instability might also 

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