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Last year, Apple (AAPL) was the first publicly traded company to be valued at one trillion dollars. The technology giant has been an innovator since its inception and has disrupted almost every segment in which it has established itself.
We know that the co-founder of the company, Steve Jobs, has always talked about creating an Apple ecosystem. He envisioned a company with products that lock customers into its ecosystem. And AAPL was very successful at doing that.
Income diversification pays off
AAPL has been relying on its iPhone for several years to generate revenue growth. We have seen here how Apple is trying to move away from its flagship product. The company wants to diversify its income. While the iPhone accounted for 66.3% of sales in 2015, the device accounted for about 48% of sales in the June quarter.
Global smartphone sales have matured. It has been declining for three consecutive years now. IPhone sales have fallen in the last two consecutive quarters, but this should not worry investors. However, AAPL will still have a loyal customer base for its devices, especially in developed markets.
Service growth is essential for Apple. The service business has been gaining ground over the years and accounted for almost a quarter of all sales last year. While AAPL launched three new iPhones at its annual event last week, it also unveiled the Apple TV + and the Apple Arcade. This excited the investors.
Apple TV + is a subscription platform and Apple Arcade is a game subscription service. Both services are priced at $ 4.99 per month. They should therefore gain in popularity over the years.
AAPL focuses on entertainment
When you think of Apple, you think of a technology giant. But the Apple ecosystem attracts customers and captivates their imagination by gaining ground on the avenues of entertainment. Apple has entered the space of broadcast online with Apple TV +, whose value is estimated at billions of dollars. Reuters estimates that video streaming will reach $ 83.4 billion by the end of 2022. Similarly, as subscription games begin to engage gamers, AAPL will benefit from double-digit global growth in global gaming. over the next few years.
Apple Music has brought an endangered industry back to life. It is one of the most popular music streaming platforms and has more than 60 million users. It seems that the AAPL covers three popular avenues of entertainment. In addition, Apple TV + is a streaming device where customers can pay for subscription services and is another fast-growing segment.
Apple TV + and Apple Arcade will be available on devices such as the iPhone, the iPad, the MacBook and the Apple TV +. While state-of-the-art AAPL products have attracted buyers, these entertainment services will certainly stimulate and complement product sales in the future.
Apple Pay and Watch are very popular
Apple Pay is the payment application of the company. In June, AAPL launched the Apple Pay payment card in China for DiDi, which will significantly boost growth. Apple Watch is already leading the apparel market while AirPods are in high demand.
The new products and services help AAPL offset the decline in revenue generated by well-developed business segments. Although the slowdown in iPhone sales leads to a decline in sales of 2.6% in 2019, analysts estimate that it is expected to increase 4.5% over the 2020 fiscal year (coming to an end in September).
Some doubted Apple's ability to maintain growth after Steve Jobs died in October 2011. But AAPL continued to launch innovative products and services. There have been misfires, like Apple Maps, but AAPL continues to create wealth for its shareholders and increase customer value.
The Apple ecosystem manages to retain its customers. Somehow, Steve Jobs is impressed.
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