What is Apple’s revenue limit?

A report released on January 28 shows that Apple generated revenue of $ 111.44 billion in the first fiscal quarter of 2021, exceeding the expected $ 103.28 billion, up 21%. compared with the same period last year. This is also the record Apple ever achieved.

With a market value of nearly $ 2.4 trillion, Apple’s performance is still described as strong and showing no signs of decline. Although the decision to remove the charger that comes with the iPhone has been criticized, but the environmental protection strategy helps “the Apple family” save its face.

iPhone is still the main source of revenue

Before the business results report is released, expected revenue from the iPhone is $ 59.8 billion and the final figure is up to 65.6 billion, up 17% over the same period last year. This represents about 59% of Apple’s total revenue for the quarter. The iPhone’s ability to base market stability is a key reason why Apple’s Q1 revenue exceeded $ 100 billion.

The market share of the iPhone has been narrowed under the pressure of Android manufacturers, the lack of innovation has become the main reason for many negative reviews. But when Apple changed its strategy and launched some relatively cost-effective products, the iPhone once again reaffirmed its position.

Specifically this quarter, sales growth was clearly related to the release of the iPhone12 series. The latest iPhone 12 models, including the iPhone 12 mini and iPhone 12 Pro Max, are still affordable. Despite its emphasis on 5G, Apple is trying to find ways to lower the cost of products, including using cheaper components and removing the included charger.

In addition to the iPhone, Apple makes money on other hardware

Some say that what Apple sells is an expensive product that can be taken out, such as an iPhone or a headset. While products like the HomePod mini that can only be used at home are cheap and cost effective.

Is this judgment true or false? Compared to other Android phones in the same location, the iPhone is really expensive, but in terms of maintenance value, Apple is considered by consumers as a brand that holds value and has competition. Many other Android phones on par with the iPhone are often difficult to maintain after a year.

Hardware other than an Apple phone basically includes a Mac computer, iPad, Apple Watch, and Airpods. Although this revenue added only 30 billion USD, less than half of the iPhone category, each category has maintained growth rates of more than 20%.

Behind the high growth rate is the success of Apple’s market strategy and product prowess. For example, at Apple’s 3rd press conference after launching the iPhone last year, Apple released its own M1 desktop chip based on ARM architecture and a chip compatible with all three Mac lines. .

The improvement of the Mac thanks to the M1 chip is obvious. Not only increasing performance and helping the operating system to communicate between Mac OS and iPad OS smoother, the M1 series chip also optimizes product configuration and helps the device have a longer battery life.

In fact, the iPad’s revenue growth was the most obvious, with $ 8.44 billion in the first quarter, up 41 percent from the same period last year. Unlike the tablet market using Android and Windows operating systems, Apple has always maintained significant ambitions in tablet products.

In terms of hardware, the iPad Pro launched last year is equipped with A-series chip that is more powerful than the iPhone of the same generation, supporting the use of Apple Pencil on many new iPads. In software, a more efficient iPad operating system is launched simply and a lot of patents are devoted to communication to help users be productive.

In addition, the new Apple Watch released at the same time as the iPhone 12 series continues the relative cost-saving strategy of the iPhone SE2. The cheaper Apple Watch SE still comes with blood oxygen monitoring and other functions as a difference. The 29% increase in revenue once again proves the product is effective as long as Apple dares to do it, consumers dare to buy.

Services are also potential businesses

The undeniable fact is that Apple is focusing more and more on software revenue. Whether it’s the Fall 2019 Conference or the Hardware-Free Conference in the first half of 2020, it’s clear Cook is signaling making money from the ecosystem.

The number of iPhones sold currently exceeds 1 billion, plus other hardware, Apple’s total number of users is over 1.65 billion, which means the potential for huge returns from the ecosystem. Apple’s services business revenue this quarter reached $ 15.76 billion, up 24% year-on-year, becoming an efficient business segment with rapid growth.

Right now, Apple’s services business income streams are diverse, such as streaming Apple Music, Apple TV +, Arcade games, Apple Pay for payments, and iCloud for cloud services.

In the service business map of Apple created by Cook, Apple orientates an online media business through content. While it is uncertain whether Apple has the ambitions to become Netflix or not, higher and more stable margins are enough for Apple to continue.

From a revenue structure perspective, Apple still relies on selling hardware to make money, and the revenue is getting better, but in the past two years, Apple has been more interested in income from iOS software, Mac. Of course, Apple Care is a service to watch out for when it not only generates revenue, it also reflects the prolongation of the user replacement cycle and the decline in replacement rates.

The important reason why users choose to buy hardware products will be an important fulcrum for Apple to increase revenue and optimize revenue structure. So the only uncertain thing is probably where Apple’s revenue limit lies? When will there be an Apple Car other than the self-developed chip business?