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Apple Business Model Analysis

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.

Table of Contents

History of Apple in the early days

When Steve Jobs and Steve Wozniak launched Apple Inc. back in 1976, the match turned out to be one of the most successful.

In the early days, the man acted as a bridge between the two strong personalities, Ronald Wayne.

However, he got out very early from the partnership.

Wozniak and Jobs had known each other a few years earlier, and they had both love for technology and computing, but two very different personalities.

On the one hand, Wozniak was highly technical, an engineer by core, and only interested in the technology.

But, instead, Jobs was a business person by nature, trying to figure out how technology could be commercialized and marketed to the masses, with his obsession with aesthetics.

Indeed, one of its greatest achievements of Apple has been the ability to make technology adopted at scale, as its devices, once a symbol of “Think Different,” turned into status quo objects and then into a must-have.

In that sense, the story of how Steve Jobs turned Apple upside down is all but linear.

In fact, while the first computer Apple launched was successful, the company’s revenues stalled later on, and that is when Steve Jobs was ousted from the company he had founded.

To give a bit of context, in the years before he got ousted, Apple had brought in adult supervision in the hands of John Sculley.

John Sculley was first fascinated by Jobs and joined the company; then he became one of the people that wanted him out as Apple revenues started to slow down significantly.

When Steve Jobs had to leave a company that wasn’t on good terms, jobs sold his stocks, and went on to find NeXT computers and later also invested in Pixar.

How did he get back and turn Apple upside down?

It was the year 1997,  Apple  was experiencing a sharp sales decline:

apple-sales-decline-1997

Compared to 1996, the company’s net sales decreased by 28% and even more compared to just a couple of years before.

To understand the severity of the crisis, an  article from NY Times dated March 28th, 1996 , said:

Apple Computer said today that it expected to report a $700 million after-tax loss for its fiscal second quarter, a sign that the nation’s third-largest personal computer maker is in even deeper financial trouble than had previously been recognized. The company said that more than half of the loss it was projecting for the quarter, which ends March 31, would come from write-downs against more than $1 billion in unsold products. An additional 25 percent would be related to restructuring costs, the company said, indicating that another wave of layoffs is imminent.

In its annual report, Apple stated:

Macintosh computer unit sales and peripheral unit sales decreased 27% and 33%, respectively, during 1997, compared with 1996, as a result of a decline in worldwide demand for most of the Company’s product families, which the Company believes was due principally to continued customer concerns regarding the Company’s strategic direction, financial condition and future prospects, and the viability of the Macintosh platform, and to competitive pressures in the marketplace

Apple had lowered the prices of many of its products.

So even though the aggregate average revenue didn’t change much, it still contributed to the sales decline.

Amelio, which was supposed to be a turnaround master, was eventually replaced.

Indeed, Apple swiftly moved and removed Amelio as CEO, and that is when Steve Jobs joined the company again after being ousted in 1985.

Steve Jobs and Bill Gates recounted the transition from Amelio back to Jobs:

Jobs was going back to Apple, which wasn’t cheap for the company. As reported in the 1997 Annual Report:

In February 1997, the Company acquired NeXT. NeXT developed, marketed and supported software that enables customers to implement business applications on the Internet/World Wide Web, intranets and enterprise-wide client/server networks. The acquisition was accounted for as a purchase and, accordingly, the operating results pertaining to NeXT subsequent to the date of acquisition have been included in the Company’s consolidated operating results. The total purchase price, including the fair value of the net liabilities assumed, was $427 million of which $375 million was allocated to purchased in-process research and development and $52 million was allocated to goodwill and other intangible assets. The purchased in-process research and development was charged to operations upon acquisition, and the goodwill and other tangible assets are being amortized on a straight-line basis over two years.

Looking back at the Apple investment in NeXT and given its financial distress, it’s easy to understand that it wasn’t an easy choice. What made Apple go for it?

When Steve Jobs left Apple in 1985, it wasn’t on good terms. As soon as Steve Jobs left the company, he also announced he was going to start a new company, which would become NeXT.

As soon as Jobs announced,  Apple  followed up with a suit!

To understand the strategic importance of NeXT for Apple, as  appleinsider.com  pointed out

At the time, Apple was experiencing a substantial flaw in its software. Many fail to understand that the business success of Apple wasn’t just its hardware and aesthetics, but the software side played a key role.

When Steve Jobs pitched to Apple its NeXTSTEP (the software that powered NeXT computers); he won his way back to Apple.

As pointed out on  macworld.com :

Jump back to 1996, when Apple was looking for a replacement OS. Steve Jobs heard of this search and pitched NeXTSTEP to Apple executives. They liked what they saw, and in December of 1996, Apple announced it was purchasing NeXT with the goal of using NeXTSTEP as the foundation of a new Macintosh OS. Along with the announcement came news that Steve Jobs would be taking an advisory role in the company. In a stunning turn of events, the founder was back.

The team from NeXT that Jobs brought to  Apple  right away tried to adapt the software side from NeXT to the Apple OS. The project took the name of Rhapsody.

Long story short, Adobe (at the time a critical third-party developer for Apple at the time) didn’t support this project until Apple changed its plans. In 1998, Apple started to develop a new graphical interface for Rhapsody, called “Aqua,” which as pointed out by macworld.com  during that project “ the philosophical shift from Rhapsody to OS X took place.”

The shift to Aqua was critical to winning over the consensus of developers, that were and are a key ingredient to Apple’s success.

When Steve Jobs presented Aqua, the audience was stunned as it showed many new elements of the graphical interface. Apple understood it needed to release it and put it in the hands of as many people as possible.

What did Apple do? As  macworld.com  pointed out:

Apple set the price of “Mac OS X Public Beta,” as it was called, at $29.95—low enough for anyone could get it if they wanted, but high enough to exclude folks who might not be constructive to the beta testing process. The beta sold through Apple’s online store; the company later offered a $30 discount on the first full release of OS X (v10.0) when it shipped in 2001.

The way the company launched its beta is quite impressive. Rather than release a free version, Apple released its beta with a low price point, yet high enough to exclude those that would not be constructive and sufficient for future development.

However, what mattered was that finally, Apple had won over the consensus of developers, which started to test and report bugs, which made the software grow and improve quickly.

To understand the importance of that development, Apple’s entire software ecosystem has been built on top of that.

Not only desktops devices but also iPhone and iPods devices.

Therefore, Steve Jobs entered again in Apple as Interim CEO never left the company again.

To have a bit of context of the impact that Jobs brought to  Apple . In 1998 the company was profitable again.

However, Apple gained momentum in sales again in the 2000s when Apple laid out a strategy that saw the launch of new products that hooked the consumers.

apple-revenues-2002-2004

By 2004 the iPod would be a hit that fueled and got fueled by other music products consisting of iTunes Music Store sales, iPod-related services, and Apple-branded and third-party iPod-related accessories.

It was the fall of 2006 when Apple had been working on the launch of a product that would revolutionize the smartphone market.

Steve Jobs had remarked several times there was nothing “smart” to that market. True, these phones had improved a lot compared to previous phones. However, they were still hard to use, not practical and used primarily for business .

Not a consumer device.

Steve Jobs would put an end to all that with the launch of the iPhone, which would become a massive commercial success. Still, in 2017 iPhone sales accounted for most of Apple’s revenues.

The story of the iPhone and how it got to be – from the technological standpoint – has been told many times.

Thus, this time I want to focus on the business story. How Steve Jobs, rather than the greatest visionary we all think, might have been a great deal maker instead.

He was able to squeeze any industry he set up to disrupt with deals that took advantage of already-established oligopolies, cartels, and centers of power.

How he managed to do that is still a mystery to me. This time I want to focus on the deal that made the iPhone a wild success: the AT&T deal.

The iPhone’s success isn’t just about a technological device that innovated and was years ahead of its competitors.

This is the story of a tool, primarily subsidized by the carriers industry, which without it would have probably never taken off as he did, and it all starts with one of the most inaccurate predictions of our time, from Steve Ballmer, former Microsoft’s CEO.

Before Steve Jobs the iPhone changed the rules of the game, the mobile phone industry represented a multi-billion dollar industry where the mobile carriers saw the handset business as a commodity they could use.

While that strategy had paid back in the past to bring in new subscribers, the whole industry needed a shake.

And Apple was ready to give that. One of the first players that understood that the iPhone could be a potential hit – or at least could revitalize their brand was Cingular (later AT&T).

In an attempt to be branded as an “innovative company” and steal subscribers from its rivals, the time seemed right for Apple ‘s deal. Before we get to that point, there is another step of the story to understand here.

As the story goes, Steve Jobs understood he had to bet on the mobile market by producing its handset, which would be something in the middle between a phone and an iPod.

That phone was Rokr, and it was in partnership with Motorola.

When the Rokr came out – noted  cultofmac  – “ In the end, the Rokr E1 proved disastrous. With its cheap plastic design , poor camera, and a 100-song limit, it fell far short of the iPod’s promise of 1,000 songs in your pocket. Designed to make listening to your music easy, and pitched as the “iTunes phone,” it also failed on that front. The Rokr E1 required that users buy songs via iTunes, then transfer them to the device using a cable. “

The demo of Steve Jobs on the “iTunes phone” might well be considered the least successful one. Yet those mistakes would set the stage for the iPhone.

The Cingular team was the first to understand a change in the carriers’  business model .

Where before handsets providers were a mere commodity used to lock as many new subscribers with cheap phones. There was a chance now to be perceived as an innovator in the space.

And what partner would best fit this role than the company that had first disrupted the computer industry and then moved to the music industry?

Steve Jobs made a deal with AT&T, as reported by  Wired  “ i n return for five years of exclusivity, roughly 10 percent of iPhone sales in AT&T stores, and a thin slice of Apple’s iTunes revenue, AT&T had granted Jobs unprecedented power. “

However,  Apple  in return got a revenue-share model where it received $10 for every iPhone customer subscribing to an AT&T plan, plus total control over the design , manufacturing, and marketing of the iPhone.

That was an unprecedented deal! That was the beginning of the end for the mobile carrier’s dominance over the smartphone companies – or at least Apple.

As of December 31, 2009, AT&T served 85.1 million wireless customers, compared to 77.0 million on December 31, 2008. Part of this staggering growth was also due to iPhone’s success.

att-iphone-revenues-2008

As Apple introduced its App Store in 2008, this finally enabled the sales of iPhones, thus creating Apple’s unique feature of hardware, combined with a powerful operating system and a marketplace, to enable third-party to build their apps on top of the iPhone. 

This business model , which we give for granted today, was the real revolution of Apple. 

The Trillion-dollar empire

In August 2018, Apple was the first American company ever to be worth $1 trillion. 

By the end of October 2022, in the midst of the greatest financial crisis of the last decade, Apple is one of the last standing big tech fortresses. 

In fact, whereas most tech companies lost half their capitalization, Apple is a company worth over $2.5 trillion dollars!

top-companies-by-market-cap

Source: CompaniesMarketCap  

To gain a bit of context of how big Apple has become, i f we take the US GDP figure for 2021 at 23 trillion, this means Apple’s market cap represents over 10% of the total economic output of the wealthiest country on earth.

The Apple business model explained

Apple’s business model is mainly based on the sales of tech products. However, it cannot be understood from that standpoint alone.

Apple is both software and hardware, which also made it successful. No doubt, the iPhone is an icon of our days. Yet, the iPhone is also a device that works pretty well, thanks to its software.

If we look at Apple’s growth for 2023, it was still primarily driven by iPhone sales, together with service revenues. 

The interesting part? Within the service business , advertising revenues were the fastest-growing sub-segment. 

Followed by Mac, Accessories & Wearables, and the iPad. 

evolution-of-apple-sales

Therefore, as of 2023, while Apple has a diversified business model , the iPhone does represent the most important piece of the puzzle. 

In fact, the iPhone is the physical platform, on top of which Apple has built its operating mobile system (iOS) and its marketplace (App Store). 

Hardware, operating systems, and the marketplace together make up an incredible business ecosystem, which fifteen years after the iPhone’s launch still makes Apple the most valuable company in the world. 

Apple’s products

Apple sells three main products and a set of accessories and wearables (which are developing into a whole new set of products):

  • Wearables, Home, Accessories Devices.

Apple’s operating systems

Those products are run by Apple Operating systems:

Apple-related services

And supported by a set of related services:

  • Digital Content and Services.
  • Advertising .

Services revenues also have grown fast in the last few years, and they represented almost 20% of the overall revenues in 2022.

The most interesting part is that those revenues carry high profitability for the company, even more than its core products, as they follow a platform business model. 

In addition, within the services business , Apple has the advertising service sold via its store; this tells us that the advertising business (for which we don’t have a breakdown) is growing very rapidly, and it might be already now a multi-billion dollar segment. 

It’s very critical to highlight that for the sake of this analysis , I divide products and services into two separate business units. 

In reality, they are highly interconnected.

Indeed, there is no service business without the successful hardware products Apple has built over the years. And there is no service business without the iPhone. 

In fact, on top of the iPhone Apple also offers Apple Care, cloud storage, advertising (through the App Store), and more. 

In addition to that, the iPhone also spurs the whole accessory business for Apple. Products like the AirPods are great companions to the iPhone. 

It’s critical to keep that in mind.

Apple as a chip maker!

In November 2020, Apple launched the M1 chip, which would become the main component of its computers. This changed the whole supply chain of the chip industry.

Indeed, the M1 changed the whole architecture of Apple’s computers, making it possible for the company to create a whole line up of products based on these chips.

20220308183133_781517

This move was critical for apple to complete a process of vertical integration further, controlling a key component of its hardware.

Indeed, design has been, for years, the key element of Apple’s competitive advantage.

As the smartphone industry saturated, Apple moved further up the supply chain by internalizing the production of chips. This changed the whole industry!

The introduction of Apple’s chips is also critical for the development of the business platform of the future: AR. Indeed, a powerful chip developed in-house will be a critical component to enable powerful AR devices. 

Apple’s Distribution strategy 

apple-distribution-strategy

The Company sells its products and resells third-party products in most of its major markets directly to consumers and small and mid-sized businesses through its retail and online stores and its direct sales force.

The Company also employs a variety of indirect distribution channels, such as third-party cellular network carriers, wholesalers, retailers, and value -added resellers.

In 2023, the Company’s net sales through its direct and indirect distribution channels accounted for 37% and 63% of total net sales.

Where the indirect channel is critical for amplification and scale.

The direct channel is critical for the development of the service business, and as a branding tool at scale, it also plays a key role in the B2B sales side of the company.

It’s much easier for Apple to sell to other businesses through its owned stores, as it can provide the necessary support to them before and after the products’ purchases. 

Inside Apple’s iPhone Economics

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

To understand the economics of Apple, it’s worth looking at the economics of the iPhone.

For instance, based on the iPhone 14 Max Pro, Apple might spend about $501 to make it and sell it at a base price of $1099. 

This is a huge markup and premium for a tech product, and Apple is the only company on earth that can do it at such a scale. 

In short, the iPhone generated over $205 billion in revenues for the company in 2022 and has done it at wide margins.

And on top of the iPhone, Apple has built various business segments: 

  • App Store: apps enhance the iPhone’s capability, and the reason Apple can charge a wide premium on the physical product is also thanks to the apps available on the iPhone (see reverse razor and blade strategy ).
  • Service business:  on top of the iPhone and the other products’ lineup, Apple has built a set of services offered in its stores (insurance, assistance, education, and more). 
  • Advertising : within the service business, the marketplace that Apple has created also enables Apple to sell mobile advertising at wide margins. 
  • Marketplace revenue cut : within the App Store, the apps featured share a cut of the revenues with Apple. Also, the marketplace has become an incredible source of revenue at high margins. 
  • Accessories and Wearables : new products like ups, like AirPods and Apple Watch, have become extremely successful. And lately, the AirTags as well. Those devices pair seamlessly with the iPhone, thus enabling a smooth experience if you stay within Apple’s ecosystem!

In short, the iPhone isn’t just a hardware product; it served as the basis for developing what I like to call a business platform .

On top of this business platform, comprising hardware, an operating system, and a marketplace, Apple has built its success.

business-platform-theory

Apple’s business model recap:

  • Products : the products lines comprise things like iPhone, iPad, Mac, and wearable, home, and accessories devices (Apple Watch, AirPods, and more)
  • Services: the services business comprises   primarily: 1.   Digital Content Stores and Streaming Services,   comprising purchases on the App Store and subscription services like Apple Music and Apple TV. 2.   Other services comprise AppleCare+   (“AC+”) and the   AppleCare Protection Plan,   which are fee-based services that extend the coverage of phone support eligibility and hardware repairs. 3.   Apple’s Cloud Services   (iCloud), 4.   Licensing is  where Apple licenses the use of certain of its intellectual property and provides other related services. And 5.   Other services   include Apple Arcade™, a game subscription service; Apple Card™, a co-branded credit card; Apple News+, a subscription news and magazine service; and Apple Pay, a cashless payment service.
  • Apple has a diversified business model broken down into products and services.
  • Even though iPhone sales still represented over 52% of the overall sales for 2022, the company also offers services and subscriptions, which are growing substantially.
  • The services business has a high marginality, even higher than the products business of Apple. This makes it interesting for Apple to keep pushing its growth in the coming years, considering this part comprises the advertising business. 

Apple’s quest for the next business platform

Apple is among the tech companies that can build incredible hardware while leveraging its software.

Apple is secretly working on its AR headset (we don’t know the specs), which might be launched next year.

Apple controls the pipeline of the mobile Internet. And the next ten-trillion dollars business platform will be AR.

Thus, for Apple to be the company that we know today, it needs to be on top of it in ten years. 

Related to Apple

Who Owns Apple

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  • Apple Business Model

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Apple Business Growth

Apple Distribution

Apple Value Proposition

apple-value-proposition

How Much Is Apple Worth?

how-much-is-apple-worth

Apple Cash On Hand

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Apple Employees

Apple Employees Number

Apple Revenue Per Employee

Apple Revenue Per Employee

Apple iPhone Sales

apple-iphone-sales

Apple Profits

Apple-profits

Revenue Per Employee

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Apple Mission Statement

apple-mission-statement-vision-statement

The Economics of The iPhone

Tim Cook’s Salary

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Tim Cook’s Net Worth

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  • Apple Distribution Strategy
  • The Apple-NeXT Deal
  • A Decade-Long Evolution Of Apple Sales By Products
  • Who Owns Apple?
  • Apple vs. Google Business Models

More Resources

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Apple iPhone

In 2007, apple launches the iPhone and combines an internet browser, a music player, and a mobile phone in one high-end, multitouch device without a keyboard. It ushers in the era of the smartphone.

In 2007, Apple founder Steve Jobs famously introduced the iPhone at the Macworld 2007 convention as a revolutionary device that “would change everything.” Its initial selling price was a hefty $499, but 270 thousand units sold its first weekend and 6 million units in its first year of production.

Apple’s iPhone ushered in the era of the smartphone, the world of mobile-first and constant connection, leading the way for mobile technology to dominate and reform day-to-day existence. Apple’s iPhone has consistently been more expensive than competing devices. However, Apple continually packs new features and technology into its iPhone in order to keep its products from seeming like a commodity.

Despite high prices, Apple maintains a high degree of control over production costs in its supply chain. This combination of controlled costs, high-end positioning, and continuous technology innovation have resulted in gross margins of 60 to 70% in the last 10 years.

Apple Business Model

1. Delight and surprise the high end of the market

Apple positions the iPhone at the high end of the spectrum, knowing that the price will put it out of reach for the majority of the market. The phone combines an aspiration feel with design, technology, and simplicity, and capitalizes on its love-mark brand.

2. Control costs

Apple does not manufacture the iPhone, but keeps its production costs low by controlling its supply chain. Due to the popularity of the device, Apple forces its suppliers to keep costs low as well as maintain privacy and secrecy over their devices.

3. Maximize margins and profits from high end market share

The iPhone’s profit margins have remained between 60 to 70% over the past 10 years. At its peak, Apple captured 94% of the smartphone industry’s profits, despite only accounting for 14.5% of sales.

4. Continuously reinvent and surprise the high end of the market

Since 2007, Apple has released 12 generations of iPhones. While Apple isn’t always the first to develop many of the iPhone’s technological innovations, it often delivers the best: multi-touch screen, dual cameras, Apple Pay, Siri, iMessage, FaceTime, facial recognition.

+ The App Store

The iPhone initially launched without the App Store, which was opened in 2008 with 500 applications. As of 2019, the store featured over 1.8 million apps. The available applications and number of developers provide Apple with an additional competitive advantage as described in the Resource Castle Platform.

Apple iPhone Fun Facts

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Understanding Apple's Business Model

Unlock the hidden strategies behind apple's business model and its unprecedented achievements..

In today's fast-paced and ever-evolving tech industry, one company has consistently stood out as a symbol of innovation and success:

Apple Inc. From its humble beginnings in a garage in California to becoming one of the world's most valuable companies, Apple's journey is nothing short of extraordinary.

To truly grasp the magnitude of Apple's success, we must delve into its business model, examining its history, product portfolio, revenue streams, and marketing strategy.

Unraveling Apple's Business Model: Key Insights

Before we can understand Apple's business model, we must first explore its fascinating history. Apple was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne in 1976. The trio turned a passion for technology into a business that would redefine the world of computing.

The Founding Years and Early Struggles

In its early years, Apple faced immense challenges. Despite releasing the Apple I and Apple II computers, the company struggled to find its footing in a market dominated by IBM and Microsoft. However, Apple's commitment to innovation and design would soon set it apart.

One of the defining moments for Apple during this time was the introduction of the Macintosh in 1984. With its revolutionary graphical user interface and mouse, the Macintosh became a symbol of Apple's dedication to user-friendly technology.

Despite initial skepticism, the Macintosh went on to become a cult favorite among creative professionals and laid the groundwork for Apple's future success.

Another significant development for Apple was the creation of the Apple Store in 2001. This retail concept allowed Apple to directly engage with customers and showcase its products in a unique and immersive environment.

The Apple Store quickly became a destination for tech enthusiasts and played a crucial role in building Apple's brand image.

The Steve Jobs Era

In 1997, Steve Jobs returned to Apple after a decade-long absence. His vision and relentless pursuit of perfection transformed the company into what it is today. Under Jobs' leadership, Apple launched iconic products like the iMac, iPod, iPhone, and iPad, forever changing the way we interact with technology.

The iMac, introduced in 1998, was a breakthrough in computer design. Its colorful, all-in-one design and emphasis on simplicity made it a hit with consumers and set the stage for Apple's future success. The iPod, released in 2001, revolutionized the way we listen to music, with its sleek design and the introduction of the iTunes Store.

Perhaps the most significant milestone of the Steve Jobs era was the launch of the iPhone in 2007. The iPhone not only redefined the smartphone industry but also paved the way for a mobile revolution.

With its intuitive touchscreen interface and access to the App Store, the iPhone became an indispensable tool for communication, entertainment, and productivity.

Entrepreneurship Lessons To Learn from Steve Jobs:

  • Innovation is Key: Embrace innovation as the foundation of your entrepreneurial journey, seeking to create groundbreaking solutions.
  • Customer-Centric Approach: Understand and prioritize your customers' needs to build a business that truly serves them.
  • Design Matters: Focus on aesthetics and user-friendly design to make your products or services stand out.
  • Keep It Simple: Embrace simplicity to enhance customer satisfaction and adoption rates.
  • Perseverance through Challenges: Learn from failures and stay resilient when facing obstacles.
  • Strong Branding and Marketing: Invest in branding and effective marketing strategies to build a loyal customer base.
  • Pay Attention to Detail: Meticulously attend to the finer aspects of your products and business for greater success.
  • Disrupt the Status Quo: Challenge norms and find disruptive solutions to address market gaps.
  • Build a Talented Team: Surround yourself with passionate and skilled individuals who share your vision.
  • Never Settle for Mediocrity: Pursue perfection and continuous improvement.
  • Adapt to Market Changes: Stay flexible and adapt your business strategy to changing market conditions.
  • Have a Long-Term Vision: Look beyond short-term gains and plan for sustainable growth.
  • Ruthless Prioritization: Focus on the most critical tasks and initiatives for your business's success.
  • Embrace Failure as Learning: View failures as opportunities to learn and grow.
  • Fuel Your Passion: Be genuinely passionate about your entrepreneurial journey and believe in your ideas.

Remember, while these lessons from Steve Jobs are valuable, every entrepreneur's path is unique. Adapt and apply these insights in a way that aligns with your business goals and values for the best results.

Post-Jobs Apple: The Tim Cook Leadership

Following Steve Jobs' passing in 2011, Tim Cook took the reins as CEO. Cook faced the daunting task of sustaining Apple's remarkable success and living up to its legacy. With Cook at the helm, Apple continued to innovate and expand its product portfolio, solidifying its position as a global tech giant.

Under Cook's leadership, Apple introduced new product categories such as the Apple Watch and AirPods, further diversifying its offerings. The Apple Watch, launched in 2015, brought wearable technology into the mainstream and became the best-selling smartwatch in the world.

The AirPods, released in 2016, revolutionized wireless audio with their seamless connectivity and innovative design.

Furthermore, Apple's commitment to sustainability and environmental responsibility has been a key focus under Tim Cook's leadership. The company has made significant strides in reducing its carbon footprint, transitioning to renewable energy sources, and implementing recycling programs for its products.

In conclusion, Apple's history is a testament to the power of innovation, design, and visionary leadership. From its humble beginnings to its status as a global tech giant, Apple continues to shape the world of technology with its groundbreaking products and unwavering commitment to excellence.

Apple's Product Portfolio

Central to Apple's business model is its diversified product portfolio that caters to different consumer needs. Let's take a closer look at some of Apple's most iconic products:

Macintosh: The Computer Revolution

The Macintosh computer revolutionized the industry with its user-friendly interface and sleek design. From creative professionals to students, Apple's Mac lineup continues to dominate the market.

The Macintosh, with its innovative graphical user interface, changed the way people interacted with computers. It offered a more intuitive and visually appealing experience compared to the command-line interfaces of other computers at the time.

This breakthrough in user interface design made the Macintosh a favorite among creative professionals, who appreciated its ability to handle graphic-intensive tasks with ease.

Over the years, Apple has consistently pushed the boundaries of technology with its Mac lineup. From the compact and powerful Mac Mini to the high-performance iMac Pro, Apple offers a range of options to suit the needs of different users.

Whether you're a professional video editor or a casual web surfer, there's a Macintosh computer that's perfect for you.

iPod and iTunes: Changing the Music Industry

The introduction of the iPod and iTunes marked a turning point in the music industry. Apple's seamless integration of hardware, software, and services created a music ecosystem that empowered consumers and disrupted traditional distribution models.

Before the iPod, listening to music on the go meant carrying around a bulky CD player or cassette Walkman. The iPod changed that by introducing a sleek and portable device that could store thousands of songs in your pocket.

With its iconic click wheel and easy-to-use interface, the iPod became a cultural phenomenon and a must-have gadget for music lovers.

But it wasn't just the hardware that made the iPod a game-changer. Apple's iTunes software revolutionized the way people bought and listened to music. With the iTunes Store, users could legally purchase individual songs or albums and instantly download them to their iPods.

This shift from physical media to digital downloads disrupted the traditional music industry, paving the way for the streaming services we know today.

iPhone: The Smartphone Revolution

The iPhone's launch in 2007 ushered in a new era of smartphones. Combining cutting-edge technology, elegant design, and a user-friendly interface, the iPhone cemented Apple's position as an industry leader.

With its multi-touch display, the iPhone introduced a whole new way of interacting with a mobile device. Users could now pinch, swipe, and tap their way through apps and webpages, making the smartphone experience more intuitive and immersive.

The iPhone's sleek design and premium build quality set it apart from its competitors, making it a status symbol and a coveted device.

But the iPhone was more than just a phone. It was a portable computer, a music player, and a camera all rolled into one. With the App Store, users gained access to a vast ecosystem of apps that transformed the iPhone into a versatile tool for work, entertainment, and communication.

From social media apps to productivity tools, there's an app for almost everything you can imagine.

iPad and Apple Watch: Expanding the Ecosystem

With the introduction of the iPad and later, the Apple Watch, Apple expanded its ecosystem beyond computers and smartphones. These devices empower users with seamless connectivity and convenient access to a wide range of services and apps.

The iPad, with its large touch screen and powerful hardware, bridged the gap between a smartphone and a laptop. It became the go-to device for content consumption, allowing users to browse the web, watch movies, read books, and play games with ease.

The Apple Pencil further enhanced the iPad's capabilities, turning it into a versatile tool for digital artists, students, and professionals.

Meanwhile, the Apple Watch brought the power of technology to your wrist. With its fitness tracking features, customizable watch faces, and seamless integration with your iPhone, the Apple Watch became a popular choice for fitness enthusiasts, tech-savvy individuals, and fashion-forward consumers.

It not only tells the time but also keeps you connected and motivated throughout the day.

As Apple continues to innovate and expand its product portfolio, it remains at the forefront of technology and design. From computers to wearables, Apple's products have become an integral part of our daily lives, empowering us to work, create, and connect in ways we never thought possible.

business model d'apple

Apple's Revenue Streams

Apple's diverse product portfolio is the backbone of its revenue streams. Let's explore the key sources of Apple's revenue:

Hardware Sales

Apple generates a substantial portion of its revenue from selling hardware, including Macs, iPhones, iPads, and wearables like the Apple Watch. Each product release creates a frenzy among consumers, propelling sales to new heights.

One of the most significant contributors to Apple's hardware sales is the iPhone. With each new iteration, Apple manages to captivate its loyal customer base and attract new users. The iPhone's sleek design, advanced features, and seamless integration with other Apple products make it a highly sought-after device.

Additionally, Apple's Mac lineup, including the MacBook Pro and iMac, appeals to professionals and creatives who rely on powerful computing capabilities. These devices are known for their exceptional performance, stunning displays, and user-friendly interfaces.

Apple's iPad, on the other hand, has become a popular choice for both personal and professional use. Its versatility, portability, and extensive app ecosystem make it an attractive option for tasks ranging from entertainment and gaming to productivity and creativity.

Wearables, such as the Apple Watch, have also become a significant revenue driver for Apple. With features like fitness tracking, heart rate monitoring, and seamless integration with other Apple devices, the Apple Watch has carved a niche for itself in the wearable technology market.

Software and Services

In addition to hardware, Apple's software and services play a significant role in its revenue generation. From the App Store and Apple Music to iCloud and AppleCare, these offerings provide both convenience and recurring income for the company.

The App Store, with its vast collection of apps, is a thriving marketplace for developers and a go-to destination for users seeking new and innovative software solutions. Apple takes a percentage of the revenue generated from app sales and in-app purchases, contributing to its overall revenue stream.

Apple Music, Apple's music streaming service, competes with other industry giants like Spotify. With its extensive music library, personalized playlists, and exclusive content, Apple Music has attracted a substantial user base, generating revenue through subscription fees.

iCloud, Apple's cloud storage and backup service, provides users with a seamless way to store and access their files across multiple devices. The convenience and peace of mind offered by iCloud subscriptions contribute to Apple's recurring revenue.

AppleCare, the company's support and repair service, offers extended warranty coverage and technical assistance for Apple products. Customers who opt for AppleCare contribute to Apple's revenue by paying for additional coverage and services.

Other Revenue Sources

Apple's revenue streams span beyond its core products. The company earns revenue from various sources, including licensing fees, Apple Pay transactions, and partnerships with third-party developers.

Through licensing agreements, Apple allows other companies to incorporate its technologies into their products, earning royalties in return. This revenue stream not only adds to Apple's bottom line but also helps establish its presence across a wide range of industries.

Apple Pay, Apple's mobile payment and digital wallet service, enables users to make secure transactions using their Apple devices. With a growing number of businesses accepting Apple Pay, the service generates revenue through transaction fees.

Partnerships with third-party developers also contribute to Apple's revenue. By collaborating with app developers, game studios, and content creators, Apple gains access to a diverse range of high-quality software and content for its devices, attracting more users and generating additional revenue.

Apple's Marketing and Branding Strategy

Apple's unparalleled success can be attributed not only to its exceptional products but also to its marketing and branding strategy. Let's examine some key elements of Apple's approach:

The Power of Simplicity

Apple's marketing revolves around simplicity. From sleek product design to minimalist advertisements, Apple captures the essence of its products with elegance and clarity. This focus on simplicity resonates with consumers and creates a sense of desirability.

Creating a Lifestyle Brand

Apple has successfully positioned itself as more than just a technology company; it's a lifestyle brand. By aligning its products with creativity, innovation, and individuality, Apple connects with its customers on a deep emotional level, fostering brand loyalty like no other.

Apple's Retail Strategy: The Apple Store Experience

One of Apple's most impactful branding strategies is its retail presence. The Apple Store experience is carefully curated to immerse customers in the Apple ecosystem and provide exceptional customer service. These stores have become iconic landmarks, attracting millions of visitors worldwide.

In conclusion, Apple's business model is a culmination of its rich history, diverse product portfolio, multi-faceted revenue streams, and strategic marketing approach. By consistently pushing the boundaries of technology and maintaining a strong brand identity, Apple continues to define the future of the industry. As the company evolves, one thing remains clear: understanding Apple's business model is essential to comprehending its remarkable success and its continued impact on our world.

Exploring More Business Models:

For those interested in understanding the business models of other industry giants, the following articles provide in-depth insights:

https://supliful.com/blog/how-does-herbalife-business-work

https://supliful.com/blog/what-is-a-business-model-canvas-of-amazon

https://supliful.com/blog/how-does-nike-business-model-look-like

These articles will give you a broader perspective on how different companies operate and succeed in their respective markets.

business model d'apple

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Apple: Business Model, SWOT Analysis, and Competitors 2023

Inside This Article

In this blog article, we will delve into Apple's business model, conduct a SWOT analysis, and explore its competitors in the year 2023. Apple, a renowned multinational technology company, has established a unique business model that focuses on innovation and premium products. By analyzing its strengths, weaknesses, opportunities, and threats, we can gain valuable insights into Apple's current and future position in the market. Additionally, we will examine the competitive landscape to understand the challenges Apple faces from its rivals. Join us as we explore Apple's strategies and its outlook for the coming years.

What You Will Learn:

  • Who owns Apple and the structure of the company's ownership.
  • The mission statement of Apple and its guiding principles.
  • How Apple generates revenue and the sources of its income.
  • An explanation of the Apple Business Model Canvas and how it applies to the company.
  • An overview of Apple's main competitors and the industry landscape.
  • A comprehensive SWOT analysis of Apple, examining its strengths, weaknesses, opportunities, and threats.

Who owns Apple?

Major shareholders.

Apple is one of the most valuable companies in the world, but who exactly owns it? Let's take a closer look at the major shareholders of Apple.

At the top of the list is typically institutional investors, such as mutual funds, pension funds, and other large investment firms. These institutions own a significant portion of Apple's shares. Some of the major institutional shareholders include The Vanguard Group, BlackRock, and State Street Corporation. These organizations manage funds on behalf of millions of investors, including individuals and retirement accounts.

Another notable group of shareholders is Apple's executive team, including the CEO, CFO, and other key executives. These individuals often receive stock options and grants as part of their compensation package. As a result, they have a vested interest in the company's success and hold a considerable number of shares.

Additionally, individual investors also own a portion of Apple's stock. These investors can range from small retail investors to high-net-worth individuals. While their ownership may not be as significant as institutional investors, they collectively contribute to the overall ownership structure of the company.

Founders and Inheritance

Apple was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne in 1976. However, Ronald Wayne sold his shares back to Jobs and Wozniak just a few weeks after the company was formed, making Jobs and Wozniak the primary founders and shareholders.

Over the years, Steve Jobs became the face of Apple and played a pivotal role in its success. However, he sold all of his shares in the company in 1985 after being ousted from Apple. Jobs returned to the company in 1997 and was instrumental in its turnaround, but he did not initially own any shares. As part of his return, he negotiated a deal to buy back a significant number of shares, which eventually made him the largest individual shareholder of Apple.

Following Steve Jobs' passing in 2011, his shares were transferred to the Steve Jobs Trust, managed by his widow, Laurene Powell Jobs, and other family members. The Trust remains a major shareholder in Apple, representing the late co-founder's vision and legacy.

While Apple is a public company with shares traded on the stock market, its ownership is widely distributed among institutional investors, executive team members, individual investors, and the Steve Jobs Trust. This diverse ownership structure reflects the broad interest and confidence in Apple's future, as well as the company's commitment to delivering value to its shareholders.

What is the mission statement of Apple?

The mission statement of apple: innovate and inspire.

Apple's mission statement is concise, yet powerful: "To bring the best user experience to its customers through innovative hardware, software, and services." This statement encapsulates the essence of Apple's purpose and the driving force behind its success.

Apple's commitment to innovation is evident in every product they release. From the iconic iPhone to the sleek MacBook and the intuitive Apple Watch, Apple consistently pushes the boundaries of technology. Their innovative approach not only sets them apart from competitors but also shapes the industry as a whole.

However, Apple's mission goes beyond mere technological advancements. They strive to inspire their customers by creating products that seamlessly integrate into their lives. Apple products are designed to be intuitive and user-friendly, providing an unparalleled user experience. This dedication to simplicity and usability is a testament to Apple's mission of delivering the best experience to its customers.

Apple's mission statement also emphasizes the importance of hardware, software, and services working together harmoniously. This holistic approach is evident in their ecosystem of devices, operating systems, and services, which seamlessly integrate and enhance each other. By creating this ecosystem, Apple aims to provide a cohesive and seamless experience for its customers, regardless of the device they are using.

Moreover, Apple's mission statement highlights their commitment to service excellence. Beyond offering innovative products, Apple understands the importance of customer support and satisfaction. Their extensive network of Apple Stores, online resources, and customer service channels ensures that customers receive the assistance they need promptly and efficiently.

In conclusion, Apple's mission statement reflects their dedication to innovation, user experience, integration, and exceptional service. It serves as a guiding principle for the company, driving their continuous pursuit of excellence and inspiring their customers worldwide.

How does Apple make money?

Sales of iphones.

One of the primary ways Apple makes money is through the sales of its flagship product, the iPhone. With each new release, Apple generates significant revenue from the sale of these smartphones. The company's ability to consistently innovate and deliver cutting-edge technology has created a loyal customer base that eagerly awaits new iPhone models. Apple's iPhones are known for their premium quality, sleek design, and advanced features, which allows the company to command a premium price and generate substantial profits from each device sold.

App Store and Services

Another major source of revenue for Apple is its App Store and various services. The App Store offers a vast selection of applications and games, both free and paid, which users can download onto their iPhones, iPads, and Macs. Apple takes a 30% cut from the sales of paid apps, in-app purchases, and subscriptions, thereby generating significant revenue. Additionally, Apple's services such as Apple Music, iCloud storage, Apple Pay, and Apple TV+ also contribute to the company's revenue stream.

Mac Computers and iPads

While iPhones may be the most popular product, Apple also earns a substantial amount of money from the sale of Mac computers and iPads. Macs are renowned for their performance, user-friendly interface, and seamless integration with other Apple devices, making them a preferred choice among professionals, creatives, and students. Similarly, iPads have become increasingly popular due to their versatility, powerful features, and compatibility with a wide range of apps. The sales of these devices contribute significantly to Apple's overall revenue.

Wearables, Home, and Accessories

Apple's wearables, home, and accessories segment is another lucrative revenue stream for the company. This category includes products such as the Apple Watch, AirPods, HomePod, and various accessories like cases, chargers, and cables. The Apple Watch, in particular, has gained immense popularity as a leading smartwatch in the market. The seamless integration with other Apple devices, health tracking capabilities, and a vast array of apps make it a sought-after accessory. The sales of these products contribute to Apple's overall profitability.

Other Products and Services

In addition to the main revenue sources mentioned above, Apple also generates income from other products and services. This includes sales of iPods, Apple TV, iTunes content, licensing fees from third-party manufacturers, and more. While these may not be as significant as the primary revenue streams, they collectively contribute to Apple's overall financial success.

In conclusion, Apple's ability to generate substantial revenue stems from its diversified product and services portfolio. The sales of iPhones, along with the App Store and services, remain the primary sources of income. Additionally, Mac computers, iPads, wearables, home, and accessories, as well as other products and services, all contribute to Apple's overall financial performance.

Apple Business Model Canvas Explained

What is a business model canvas.

A Business Model Canvas is a strategic management tool that allows businesses to visually describe, analyze, and design their business models. It provides a comprehensive framework to understand the key components of a business and how they interact with each other to create value for the company.

Key Components of the Apple Business Model Canvas

Customer Segments : Apple primarily targets premium customers who value quality, design, and innovation. They focus on different customer segments such as individual consumers, businesses, educational institutions, and creative professionals.

Value Proposition : Apple's value proposition centers around creating user-friendly, innovative, and aesthetically pleasing products. They emphasize the seamless integration of hardware, software, and services to deliver a unique user experience. The company positions itself as a premium brand that offers superior quality and design.

Channels : Apple utilizes a multi-channel approach to reach its customers. They have a strong retail presence with Apple Stores worldwide, online sales through their website, and partnerships with authorized resellers. Additionally, Apple leverages advertising campaigns, product launches, and word-of-mouth to promote its products.

Customer Relationships : Apple focuses on building long-term relationships with its customers. They achieve this through excellent customer service, providing regular software updates, and offering warranty and repair services. Apple also encourages customer engagement through its Apple Support Communities and feedback channels.

Revenue Streams : Apple generates revenue through various sources, including the sale of hardware products such as iPhones, iPads, Macs, and wearables like Apple Watch. They also earn revenue from digital services like the App Store, Apple Music, iCloud, and Apple Pay. Additionally, Apple generates income from licensing agreements and partnerships.

Key Activities : Apple's key activities revolve around product design, development, and manufacturing. They invest heavily in research and development to create innovative products and maintain a competitive edge. Apple also focuses on marketing, supply chain management, and retail operations to ensure efficient delivery of their products.

Key Resources : Apple's key resources include its intellectual property, patents, trademarks, and brand reputation. They have a strong supply chain network that ensures a steady flow of high-quality components. Apple's human capital, including skilled designers, engineers, and marketing professionals, also contributes to its success.

Key Partnerships : Apple collaborates with a range of partners to enhance its business model. They work closely with suppliers to ensure the availability of quality components. Additionally, Apple has partnerships with software developers, content providers, and other technology companies to expand the ecosystem of its products and services.

Cost Structure : Apple's cost structure is mainly driven by research and development, manufacturing, marketing, and distribution expenses. They incur significant costs in designing and developing new products, as well as maintaining a global supply chain. Apple also invests in marketing campaigns to create brand awareness and promote its products.

The Apple Business Model Canvas provides a comprehensive overview of how Apple creates, delivers, and captures value in the market. By analyzing each component, it becomes clear that Apple's success stems from its focus on innovation, design, and delivering a superior user experience. Understanding the intricacies of the Apple Business Model Canvas can provide valuable insights for entrepreneurs and businesses looking to learn from Apple's success.

Which companies are the competitors of Apple?

Samsung is one of the biggest competitors of Apple in the global smartphone market. Known for its flagship Galaxy series, Samsung offers a wide range of smartphones that compete directly with Apple's iPhone. With a loyal customer base and innovative features, Samsung has managed to capture a significant market share, posing a tough challenge to Apple.

Google, with its Android operating system, is another major competitor of Apple. Android is the dominant mobile operating system worldwide, powering a multitude of smartphones from various manufacturers. Google's Pixel smartphones, in particular, directly compete with Apple's iPhone, offering similar features and capabilities. Additionally, Google's ecosystem of apps and services provides a compelling alternative to Apple's offerings.

While primarily known for its software and operating systems, Microsoft has been making inroads into the hardware market, directly competing with Apple. Microsoft's Surface lineup of devices, including the Surface Pro and Surface Laptop, offers a unique blend of tablet and laptop functionality, challenging Apple's iPad and MacBook range. With its focus on productivity and versatility, Microsoft aims to attract consumers looking for an alternative to Apple's products.

As a Chinese telecommunications giant, Huawei has emerged as a strong competitor to Apple, particularly in the global smartphone market. Known for its high-quality cameras and cutting-edge technology, Huawei's flagship smartphones, such as the P and Mate series, directly compete with Apple's iPhone. Despite facing some challenges in recent times, Huawei continues to innovate and expand its market presence, posing a significant threat to Apple's dominance.

While not traditionally seen as a direct competitor in terms of smartphones, Amazon competes with Apple in various other areas. With its Kindle e-readers and Fire tablets, Amazon offers affordable alternatives to Apple's iPad and other tablet devices. Additionally, Amazon's smart speakers, such as the Echo series with Alexa voice assistant, compete with Apple's HomePod. As Amazon continues to expand its product portfolio, its competition with Apple is likely to increase in the future.

Apple faces tough competition from various companies in different sectors of the technology industry. Samsung, Google, Microsoft, Huawei, and Amazon are just some of the major competitors vying for market share and consumer attention. As the competition intensifies, Apple will need to continue innovating and delivering exceptional products and services to maintain its position as a leading player in the highly competitive tech market.

Apple SWOT Analysis

Strong brand image: Apple has a powerful brand reputation that is associated with quality, innovation, and premium pricing. This allows the company to command a loyal customer base and maintain a competitive advantage in the market.

Robust ecosystem: Apple has successfully built an integrated ecosystem of hardware, software, and services. This seamless integration across its product lines, such as the iPhone, iPad, Mac, and Apple Watch, creates a superior user experience and encourages customer loyalty.

Innovation and design excellence: Apple is renowned for its commitment to innovation and groundbreaking product designs. The company consistently introduces new features and technologies that set industry standards and drive customer excitement.

Strong financial performance: Apple's financial performance has been consistently strong, with high revenue growth and profitability. This allows the company to invest heavily in research and development, marketing, and acquisitions, further strengthening its competitive position.

High price points: Apple's products are typically priced at a premium compared to its competitors. This can limit its customer base, especially in price-sensitive markets. Additionally, the high price points may deter some potential customers from purchasing Apple products.

Dependency on a few key products: Apple's success heavily relies on a few key products, particularly the iPhone. This dependence exposes the company to risks such as changing consumer preferences, market saturation, and increased competition.

Limited customization options: Apple's products are known for their sleek design and user-friendly interface, but they offer limited customization options compared to some of its competitors. This may deter customers who prefer more flexibility and customization in their devices.

Opportunities

Growing demand for wearable technology: The market for wearable devices, such as smartwatches and fitness trackers, is rapidly expanding. Apple's Apple Watch has gained significant market share and presents an opportunity for the company to further capitalize on this growing trend.

Expansion into emerging markets: Apple has the opportunity to tap into untapped markets, particularly in emerging economies where smartphone penetration is still low. By offering more affordable product options tailored to these markets, Apple can increase its market share and revenue.

Services revenue growth: Apple's services segment, including Apple Music, iCloud, Apple Pay, and the App Store, has been experiencing strong growth. The company can continue to leverage its robust ecosystem to further expand its services and generate additional revenue streams.

Intense competition: Apple operates in highly competitive markets, facing strong competition from companies like Samsung, Google, and Huawei. These competitors continuously introduce new products and technologies, which can erode Apple's market share and profitability.

Dependence on third-party suppliers: Apple relies on a global network of suppliers for the components and manufacturing of its products. Any disruption in the supply chain, such as natural disasters or political instability, can impact Apple's ability to deliver its products to the market.

Regulatory challenges and legal disputes: Apple operates in multiple countries and is subject to various regulations and legal disputes. These include issues related to privacy, antitrust, intellectual property, and taxation. Adhering to different regulations and resolving legal disputes can be time-consuming and costly for the company.

Key Takeaways

  • Apple is owned by its shareholders, with the largest shareholders being institutional investors such as Vanguard Group and BlackRock.
  • The mission statement of Apple is to design innovative products that enhance the lives of individuals, while also focusing on environmental sustainability and ethical practices.
  • Apple primarily makes money through the sale of its hardware products, such as iPhones, iPads, and Macs, as well as through its services, such as the App Store, Apple Music, and iCloud subscriptions.
  • The Apple Business Model Canvas consists of key elements such as customer segments, value proposition, channels, customer relationships, revenue streams, key activities, key resources, key partnerships, and cost structure, all of which contribute to Apple's success.
  • Apple faces competition from companies such as Samsung, Google, Microsoft, and Amazon. While some competitors focus on hardware, others compete in the software and services space, challenging Apple's dominance in certain areas.
  • Apple's SWOT analysis highlights its strengths in brand loyalty, innovation, and strong financial performance, along with weaknesses such as high prices and dependence on a limited product range. It also considers opportunities in emerging markets and new product categories, as well as threats from intense competition and changing consumer preferences.

In conclusion, Apple is owned by its shareholders, who invest in the company and have ownership rights. The mission statement of Apple is to design innovative products that enrich people's lives. Apple makes money primarily through the sale of its hardware devices, such as iPhones, iPads, and Mac computers, as well as software and services like the App Store and Apple Music.

The Apple Business Model Canvas provides a comprehensive overview of the key aspects of Apple's business model. It highlights the company's key activities, resources, and partnerships, as well as its customer segments and revenue streams.

As for competitors, Apple faces strong competition from companies such as Samsung, Google, and Microsoft. These companies offer similar products and services, and constantly strive to innovate and attract customers in the highly competitive tech industry.

In conducting a SWOT analysis of Apple, we can identify the company's strengths, weaknesses, opportunities, and threats. Apple's strengths include its strong brand image, loyal customer base, and innovative product design. However, weaknesses such as high product prices and dependence on a limited number of suppliers can pose challenges. Opportunities exist in emerging markets, expansion of services, and further technological advancements. On the other hand, threats such as intense competition, changing consumer preferences, and legal and regulatory challenges need to be carefully managed.

Overall, Apple has established itself as a leading technology company with a strong focus on innovation and customer experience. By continuously adapting to market trends and leveraging its strengths, Apple is well-positioned to maintain its success and drive future growth in the dynamic tech industry.

What is a SWOT analysis for Apple?

  • Strong brand image and reputation globally.
  • High-quality and innovative products.
  • Strong financial position and high profitability.
  • Diversified product portfolio including iPhones, iPads, Macs, Apple Watch, etc.
  • Extensive and loyal customer base.
  • Robust supply chain and efficient distribution network.
  • Strong ecosystem of products and services including iTunes, App Store, iCloud, etc.
  • Effective marketing and advertising strategies.
  • Strong focus on research and development.
  • Strong leadership under the guidance of CEO Tim Cook.

Weaknesses:

  • High prices of products limiting market reach.
  • Dependence on a few key products for revenue generation.
  • Limited customization options for products.
  • Limited compatibility with non-Apple devices.
  • Reliance on third-party suppliers for critical components.
  • Limited presence in emerging markets.
  • Ongoing legal battles and patent disputes.
  • Limited focus on entry-level and mid-range market segments.

Opportunities:

  • Growing demand for wearable technology.
  • Expansion into emerging markets like India and China.
  • Increasing demand for services like Apple Music, Apple TV+, etc.
  • Growing trend of remote work and online learning.
  • Expansion of the Internet of Things (IoT) market.
  • Acquisitions and strategic partnerships to enhance product offerings.
  • Growing demand for electric vehicles and autonomous driving technology.
  • Intense competition from other technology giants like Samsung, Google, etc.
  • Rapid technological changes and short product life cycles.
  • Economic downturns and fluctuations in global markets.
  • Potential impact of trade wars and tariffs.
  • Increasing concerns over data privacy and security.
  • Counterfeit and imitation products affecting brand reputation.
  • Negative impact of COVID-19 pandemic on global economy and consumer spending.

What are Apple's strengths and weaknesses?

  • Strong brand image: Apple has a highly recognizable and respected brand worldwide.
  • Innovation: Apple is known for its cutting-edge technology and innovative products.
  • Design: Apple products are known for their sleek and aesthetic design.
  • Integration: Apple offers a seamless integration between hardware, software, and services.
  • Strong customer loyalty: Apple has a large and dedicated customer base that is loyal to the brand.
  • High prices: Apple products tend to be more expensive than competitors, limiting their accessibility to some customers.
  • Dependency on few product lines: Apple heavily relies on a limited number of products, with the iPhone being its most significant revenue driver.
  • Reliance on suppliers: Apple depends on a global network of suppliers, making it vulnerable to supply chain disruptions.
  • Limited customization: Apple's closed ecosystem limits customization options for users.
  • Competition: Apple faces intense competition from other technology companies, especially in the smartphone and computer markets.

What are the strengths of Apple's SWOT analysis?

Some of the strengths of Apple's SWOT analysis are:

Strong brand image: Apple has a highly recognizable and trusted brand globally, known for its innovative and premium products.

Product differentiation: Apple's products are known for their unique design, quality, and user experience, setting them apart from competitors in the market.

Strong ecosystem: Apple has built a robust ecosystem of hardware, software, and services that seamlessly work together, enhancing customer loyalty and creating a barrier for competitors.

Innovation and R&D capabilities: Apple has a strong focus on research and development, consistently delivering innovative products and features that drive customer demand.

Strong financial position: Apple is one of the most valuable companies in the world, with a strong financial position and substantial cash reserves, enabling it to invest in new technologies and acquisitions.

Retail presence: Apple's physical retail stores provide a unique experience for customers to interact with products and receive expert advice, contributing to its strong sales and customer satisfaction.

Global presence: Apple has a strong global presence, with a vast distribution network and the ability to reach customers worldwide, enabling it to tap into various markets and drive sales.

What are Apple SWOT analysis weaknesses?

Some of Apple's weaknesses identified in a SWOT analysis include:

Dependence on a limited range of products: Apple heavily relies on a few key product lines, such as iPhones, iPads, and Macs. This dependence leaves the company vulnerable to market fluctuations and changes in consumer preferences.

High price points: Apple products are often priced at a premium compared to their competitors. This pricing strategy can limit the company's market share, particularly in price-sensitive markets.

Overdependence on China for manufacturing: Apple relies heavily on Chinese manufacturers for the production of its products. This concentration of manufacturing in a single country exposes the company to risks such as supply chain disruptions, regulatory changes, and rising labor costs.

Limited customization and compatibility: Apple products are known for their closed ecosystem, which limits customization options for users. Additionally, Apple's software and hardware are designed to work best within their own ecosystem, making it less compatible with non-Apple devices and software.

Reliance on third-party suppliers: Apple sources key components from various suppliers, which can lead to potential supply chain issues, quality control problems, and intellectual property disputes.

Weak market presence in emerging economies: While Apple has a strong presence in developed markets, it faces challenges in gaining significant market share in emerging economies due to affordability issues and intense competition from local brands.

It is important to note that weaknesses are relative to a company's overall strengths and should be analyzed in conjunction with its opportunities and threats to provide a comprehensive SWOT analysis.

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How Apple Is Organized for Innovation

  • Joel M. Podolny
  • Morten T. Hansen

business model d'apple

When Steve Jobs returned to Apple, in 1997, it had a conventional structure for a company of its size and scope. It was divided into business units, each with its own P&L responsibilities. Believing that conventional management had stifled innovation, Jobs laid off the general managers of all the business units (in a single day), put the entire company under one P&L, and combined the disparate functional departments of the business units into one functional organization. Although such a structure is common for small entrepreneurial firms, Apple—remarkably—retains it today, even though the company is nearly 40 times as large in terms of revenue and far more complex than it was in 1997. In this article the authors discuss the innovation benefits and leadership challenges of Apple’s distinctive and ever-evolving organizational model in the belief that it may be useful for other companies competing in rapidly changing environments.

It’s about experts leading experts.

Idea in Brief

The challenge.

Major companies competing in many industries struggle to stay abreast of rapidly changing technologies.

One Major Cause

They are typically organized into business units, each with its own set of functions. Thus the key decision makers—the unit leaders—lack a deep understanding of all the domains that answer to them.

The Apple Model

The company is organized around functions, and expertise aligns with decision rights. Leaders are cross-functionally collaborative and deeply knowledgeable about details.

Apple is well-known for its innovations in hardware, software, and services. Thanks to them, it grew from some 8,000 employees and $7 billion in revenue in 1997, the year Steve Jobs returned, to 137,000 employees and $260 billion in revenue in 2019. Much less well-known are the organizational design and the associated leadership model that have played a crucial role in the company’s innovation success.

  • Joel M. Podolny is the dean and vice president of Apple University in Cupertino, California. The former dean of the Yale School of Management, Podolny was a professor at Harvard Business School and the Stanford Graduate School of Business.
  • MH Morten T. Hansen is a professor at the University of California, Berkeley, and a faculty member at Apple University, Apple. He is the author of Great at Work and Collaboration and coauthor of Great by Choice . He was named one of the top management thinkers in the world by the Thinkers50 in 2019. MortentHansen

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business model d'apple

Apple Business Model (2023) | How Does Apple Make Money

5 minutes read

How does the Apple business model canvas continue to find success in the market? One of the world’s most popular brands, Apple dominates the tech industry with its top-quality products and software. Users choose to upgrade their iOS-powered devices year after year thanks to the company’s effective marketing and production tactics. This article reviews the inner workings of the Apple business model.

Apple Business Model | How Does Apple Make Money

A Brief History of Apple

Apple founders Steve Jobs and Steve Wozniak officially launched the brand on April 1, 1976. The partnership of the two college dropouts brought forth sweeping ideas to motion. Working from Job’s garage, the pair aimed to create computers that didn’t take up much space in homes and offices. They introduced the hand-built Apple I computer as their first product, featuring only hardware modules.

Jobs and Wozniak later presented the Apple II in 1977, shifting to a fully assembled personal computer. It retailed for $1,298 during release and featured a redesigned TV interface that displayed simple text and graphics. It bested some of that year’s competition and became a bestseller in the tech industry. They opened the product to the public and amassed a whopping $118 million in 1980.

Wozniak left the company in 1983, followed by Jobs in 1985 after an attempted coup against then-president John Sculley. However, Steve Jobs bought back Apple in 1997 to save the brand’s dropping market shares. His revolutionary tactics improved the numbers, eventually paving the way for the first iPhone to be introduced in 2007.

The Apple business model canvas stayed unbeatable through it all, allowing the company to reach the trillion-dollar mark in 2018. iOS devices and software became a household name, doubling its market cap in 2020. Today, aspiring businesses can take pointers from the highly successful Apple business model.

Apple Business Model Canvas

Apple Inc. is a world-renowned technology company that delivers creative and aptly differentiated products for a global audience. The business model utilizes an effective framework, ensuring that the brand maintains its reputation as an industry leader.

This section presents the canvas for Apple’s business model created using the Boardmix productivity platform.

Apple Business Model Canvas

Value Proposition of Apple

The brand's value proposition lies heavily in design, branding, and innovation. Banking on creativity, the brand sets its products and services apart using aesthetics, advanced technology, and user experience. The build quality and sleek appearance of the iPhone, for example, makes the device recognizable in an instant. Additionally, the superior interface makes the gadget suitable for people of all ages.

In terms of the hardware to software to services ecosystem, Apple manages to provide seamless integration across all these aspects. As a result, the user can switch between devices without losing their work or progress. Adding to its strengths is the user-friendly operating system, iOS. It’s intuitive and easy to navigate, which helps customers manage their usage effectively.

Customer Segments of Apple

The diverse clientele of the brand is a testament to the effectiveness of the Apple business model canvas. Its customer segment primarily consists of product buyers and service subscribers who utilize Apple TV, iCloud, and other products. There are also product developers looking to monetize their creations using the platform.

Key Partners of Apple

At the core of Apple's business model lie crucial partnerships that uphold the brand's impeccable standards and product quality. Key collaborators encompass suppliers and manufacturers who meticulously provide and assemble components. Additionally, strategic alliances with content providers are integral to ensuring users access the exceptional service and quality they expect. These symbiotic relationships underpin Apple's commitment to delivering top-tier products and experiences to its global customer base.

Key Activities of Apple

Apple focuses on several key activities that boost business performance, including design, development, and manufacturing. The company invests significantly in research and development (R&D) to leverage new and up-and-coming technologies. The engineering and production teams collaborate to create seamless products that meet customer expectations and needs.

In addition, Apple strengthens its marketing efforts by implementing strong branding tactics. The market is always abuzz with the company’s latest products. With a global network of distributors, the brand is a household name in all parts of the world.

Customer Relationships of Apple

The brand sells billions of devices, making it a mass-market provider in the tech industry. Its customer relations teams cater to consumers through various avenues like social media and the official website. It also maintains a loyal customer base by offering services via the Apple Store and a robust reward system.

Key Resources of Apple

Apple’s supply chain enables a more streamlined production scaling, with different teams working seamlessly to create high-standard products. Besides its strong brand image, Apple also banks on its pool of engineering and design talents. Additionally, the company has a healthy portfolio of trademarks and patents that boost the value of the brand.

Channels of Apple

Apple's business model encompasses a diverse array of distribution channels to cater to its extensive customer base. Boasting over 500 retail stores worldwide, customers have the opportunity to experience and test devices firsthand before making their purchase decisions. This brick-and-mortar presence complements its robust online presence, ensuring accessibility and convenience for consumers.

The company also has an excellent e-commerce platform that enables customers to select pick-up or home delivery for their purchases. Lastly, the brand enlists authorized carriers and sellers to make Apple products widely available for different types of customers.

Cost Structure of Apple

It’s a known fact that the Apple business model canvas relies heavily on R&D. As such, it incurs a huge expense in this aspect, including marketing and advertising. However, despite this heavy investment, the company has a commendable supply chain management. Its efficiency, strong branding, and product pricing allow Apple to offset costs effectively.

As of 2022, the company has over 160,000 employees, which means salaries take a significant cut of the expenditures. The company also pays for platform maintenance and payment processing fees, ensuring ease and convenience for customers.

Revenue Streams of Apple

Apple Inc.'s primary revenue stream predominantly derives from product sales, notably the iconic iPhone, iPad, Apple Watch, Mac, and an array of innovative devices. In tandem with its hardware offerings, the brand provides an array of complementary services, encompassing Apple Music and the seamless convenience of Apple Pay.

Beyond these core channels, Apple enjoys supplementary income from royalties stemming from its rich reservoir of intellectual properties. Additionally, the sale of accessories and peripherals, including chargers and cables, contributes significantly to the company's diverse revenue portfolio. This multifaceted approach underscores Apple's robust financial ecosystem.

How Does Apple Make Money?

The Apple business model reveals the brand's dedication to designing and innovating products and services for a diverse clientele. The company understands customer expectations and needs and answers every demand effectively. In return, Apple loyalists continue to patronize their devices, accessories, and software year after year.

Apple's strong value proposition paired with a deep understanding of its customer segments helps the company generate a sizable revenue. On top of the price tag on products and services, the company makes money off device care like warranties. Customers are willing to add a few more dollars to acquire brand-recommended apps and third-party accessories.

With respect to gross margin, subscription services take the highest revenue across all channels. However, the most profitable source is understandably the product sales.

Key Takeaways

The Apple business model canvas is highly successful, and it can be attributed to the company’s emphasis on design, innovation, and optimized user experience. The company leads the market with its strong branding, backed by the guaranteed quality of products and services.

Apple has a streamlined supply chain and a network of stakeholders that provide expertise and resources. As a result, the brand continues to dominate the tech industry in different parts of the world. Since its inception, the brand managed to stay on top and generate significant revenue by selling top-notch products and services. Overall, Apple has a framework worth emulating.

You can get an in-depth view of the Apple business model canvas when you use the Boardmix platform. The productivity app provides outstanding insight regarding the tech powerhouse, which you can take inspiration from for your project. Get the Boardmix application and find the canvas template without hassle!

References:

https://worktheater.com/explaining-the-apple-business-model/

https://businessmodelanalyst.com/apple-business-model/#Apple%E2%80%99s_Customer_Relationships

https://blog.gitnux.com/companies/apple/

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Profitable Business Models > Business models of large companies

Apple Business Model Canvas: How it became the King of Innovation

  • by  Joanne Moyo
  • September 23, 2021

Unless you’ve been living under a rock, you probably know just how big Apple, Inc. is. Over the last few decades, Apple has become one of the most recognized brands in the world. It’s been dominating the technology industry, becoming one of the most valued companies in the world.

As of August 2021, Apple had a market cap of around $2.43 trillion. With a business model based on innovation and consumer-centric devices, Apple can retain a loyal customer base through user-friendly designs, easy data migration to new product lines, and integration between Apple devices. Every time Apple drops a new iPhone, the long winding queues are proof of how successful its business model is.

But how did the company manage to create such a fierce love for the brand?

Apple created an entire technological ecosystem, often referred to as the Apple Ecosystem Lock. The company’s insistence on integrating its products makes it easier for customers to keep using new Apple products. Thus, it is more challenging to switch to a competitor’s product.

In terms of hardware and high-end gadget sales, Apple created brand loyalty in the early 2000s by radically aiming to put a computer in every pocket. Unlike the then-dominant Microsoft, whose focus was on putting a computer on every person’s desk. This nonconformist business model is what propelled Apple to the top of the technological food chain.

However, every success story also has a couple of failures along the way. Over the last 40 years, Apple has faced disappointing product releases, continued leadership, and legal issues. Nevertheless, its profitable business model has ensured Apple’s success.

Let’s take a look at how this giant was born.

Apple's Business Model Canvas Evolution And History

1971-1989: The birth of Apple

1971: the beginning of personal computers.

In the 70s, computers were big and expensive machines, and the industry was dominated by IBM. Additionally, only a handful of enthusiasts knew how to manage and use these technologies aside from the big corporations.

The idea for microcomputers began to take root among computer enthusiasts in Silicon Valley. Several people were building personal computers using parts such as the first chips manufactured by Intel.

During this time, the founders of Apple, Steve Jobs, and Steve Wozniak, first met through a mutual friend, Bill Fernandez, in 1971. They began their first business partnership later that year when Wozniak, who had experience in electronics, started to build his original invention called the “blue boxes.”

These boxes made it possible for people to make free long-distance phone calls. Jobs convinced Wozniak to sell some two hundred blue boxes for $150 each, and they split the profits. Wozniak was also working on several other inventions, one of them being a video terminal that he could use to log on to minicomputers.

1975: The first commercial, personal computer

In 1975, the Altair 8800 became the first computer to achieve commercial success. It, however, required the user to assemble the different components, so it had no real appeal to the average person. It mostly captured the hearts of electronic hobbyists and computer geeks who would have the know-how. 

At the time, Wozniak could not afford to buy the microcomputer CPUs that were on the market. Instead, he decided to learn as much as he could, designing computers on paper. This paid off tremendously, and by 1975, Jobs and Wozniak had withdrawn from Reed College and UC Berkeley, respectively.

They started attending different meetings and conferences to gain more knowledge about the computer industry. One specific meeting they went to at the Homebrew Computer Club inspired Wozniak to build a microprocessor into his video terminal and have a complete computer.

1976: Apple Computer Inc. was born

In April, along with Ronald Wayne (who worked with Jobs at Atari), Jobs and Wozniak formed Apple Computer. Wayne designed the first company’s logo and prepared the first partnership agreement with a 10% stake. However, just twelve days later, he relinquished his stake to avoid any potential financial risk. 

Wozniak finished working on his hand-built personal computer kit that was named the Apple I.  It was a circuit board that lacked basic features like a keyboard, monitor, and case. Jobs had to sell his Volkswagen Type 2 minibus for a few hundred dollars. Wozniak sold his HP-65 programmable calculator for $500 to raise money to pay for the parts.

They used Job’s parent’s garage in Los Angeles, California, as their office and factory. The first public launch of the Apple I was at the Homebrew Computer Club. The computer received a warm reception convincing the pair to go commercial.

Wozniak offered the design to Hewlett-Packard (HP), where he worked at the time, but they turned him down. So he decided to sell the Apple I for a little more than the cost of the parts. All he wanted was to recover the money they had put into making the computer.

Partnership with Byte Shop

Jobs, on the other hand, had bigger plans. He approached a local computer store called The Byte Shop to sell them 50 units of the Apple I. It was a considerable risk for the shop for several reasons. First, there was not enough Apple I to fulfill the order, and Apple Computer Inc. didn’t have the money to produce them.

Atari, where Jobs worked, required cash for the components it sold him, and a bank he had approached for a loan had turned him down. While Job’s friend’s father had offered to loan him $5,000, it wasn’t going to be enough. 

Fortunately, Paul Terrell,  Byte Shop’s owner, decided to grant Apple the $500/unit purchase deal anyway. Jobs hoped that Wozniak could produce enough working computers to settle the bill from the proceeds (they were selling the Apple I for $666.66).

They roped in family and friends at a kitchen table to help solder parts they had bought from Cramer Electronics (a national electronic parts distributor). Once the computers had been tested, Jobs drove them over to Byte Shop. All in all, 200 Apple I units are sold.

1977-1978: Apple’s First Investor & the Apple II

On January 3, Apple Computer Inc. was incorporated. Wozniak designed the Apple II, an upgraded personal computer intended for mass-market production. Meanwhile, Jobs and Wozniak meet Mike Markkula, who invests $250,000 in the company.

Markkula was pivotal in securing credit and additional venture capital for Apple. He also recruits Michael Scott, who acted as Apple’s first CEO.

Wozniak and Jobs wanted to create a computer that would fit into the average person’s everyday life. Thus the Apple II was released in June of that year at a retail price of $1,298. The Apple II had a completely redesigned TV interface, with a simple text display and graphics.

Other competitors & Partnerships

However, it wasn’t the only personal computer of its kind on the market. Its rivals, the Commodore PET 2001 and the Tandy TRS-80 were launched at the same time. All three machines were designed to make personal computers as straightforward as possible.

Users didn’t need to have the computer skills required to start using one. However, the Apple II had something different; a color video connection and presentable packaging. The Apple II had no visible boards and wires. Additionally, Apple partnered with programmers Dan Bricklin and Bob Frankston, and the Apple II became the official carrier of the new VisiCalc spreadsheet program in 1978.

VisiCalc opened the way for Apple to enter the business market. Moreover, the fact that the Apple II was starting to have corporate clients attracted more software and hardware developers like Microsoft to the machine. In fact, Apple’s home user customer segment grew because of the Apple II’s compatibility with Microsoft Office’s basic program.

The value proposition of the Apple II was its flawless design and high performance. It’s no wonder that the product exploded in popularity. By the end of the year, Apple had made $750,000 in revenue.

1980: The Third Generation Computer & Going Public

After riding off the success of the Apple II for two years, Apple announced the arrival of the Apple III in May of 1980 during the National Computer Conference (NCC) in Anaheim, California.

Apple rented Disneyland for a day and commissioned bands to play in the Apple III’s honor. This third-generation PC was meant to solidify Apple’s hold in the business environment. Despite the success of the Apple II, IBM was still dominating the corporate computing market.

The Apple III was released in November at a retail price ranging from $4,340 to $7,800. While it was a relatively conservative design for computers of the era, it had some fantastic features that corporations enjoyed. For example, it had a typewriter-style upper and lower case keyboard and an 80 column display.

The following month in December, Apple went public. Selling 4.6 million shares at $22 per share.

Apple Business Model Canvas: The Early Days

At this point, Apple’s Business Model Canvas looked like this:

business model d'apple

1981-1990: Product Failures & Fierce Competition

1981-1982: competition from the ibm pc & failure of the apple iii.

By August, Apple was among the largest microcomputer companies in the industry. It was slowly overtaking giants like IBM and revenue in the first half of the year had already exceeded 1980’s $118 million.

In fact, the lack of production capacity was constraining growth. The pairing of the Apple II and VisiCalc ensured that businesses kept purchasing Apple’s PCs. When IBM discovered that all its corporate customers wanted VisiCalc, the computer giant quickly launched its own personal computer in August 1981.

However, Apple had many advantages over IBM PC. Firstly, Apple established a strong network of dealers in the US who provided them with parts for their hardware. Apple also had partnerships with hundreds of independent software developers and had an established international distribution network. Additionally, the Apple II had more than 250,000 customers.

The IBM PC had none of that. Fortunately for IBM, the failure of the Apple III would prove to be its saving grace. The Apple III had significant flaws and was prone to overheat, glitches, and minimal software. By 1982 Apple had to recall 14,000 Apple III computers, and Apple’s reputation for producing flawless computers tanked. It was a significant blow.

1983: The Apple Lisa

By 1983, Apple was losing ground to IBM. Revenue from the Apple II was dwindling, and Apple hadn’t released a successful product since 1977. Jobs had to act fast if Apple was to compete with the expanding personal computer market.

To gain a competitive advantage, Apple decided to move away from the text-based format that PCs were coming in. Jobs discovered a new technology by a company called Xerox that developed a demo PC with a graphic user interface and a mouse. He convinced Xerox to grant Apple’s Engineer access to the technology. In exchange, Xerox bought 100,000 Apple shares at a discounted price of $10 each.

The Apple Lisa was launched in January 1983. It was a high-end business machine that was targeted at business users. It retailed for $10,000, but unfortunately, it was a commercial failure. It had a lackluster software library and an unreliable floppy disk.

There were simply better and cheaper computers on the market, and the Apple Lisa failed to sell.

Problems with Apple Leadership Begins

Jobs had gotten so involved in the development of the Lisa that he had started bypassing the management structure of the company. This caused significant problems for him when the Apple Lisa failed to take off.

Michael Scott, the then CEO, and president and Mark Markkula created a new corporate structure that sidelined Jobs and stripped him of any responsibility for research and development within Apple. Looking for a new project, Jobs turned his sites to the Apple Macintosh, which had been in development for a couple of years.    

1984: The Iconic Macintosh

Apple needed another hit to guarantee its future and target the lower end of the market as the Lisa. The Apple III had failed to make waves in the high-end market. This hit came in the form of the Macintosh. It combined the low production cost of the Apple II with the Apple Lisa’s features.

Before the launch of the Macintosh, Apple decided to increase its marketing budget. All the previous launches had been somewhat reserved. This time they wanted to create a buzz because they believed that much in their product.

Apple put a call to its ad agency and tasked them with securing sixty seconds during the third quarter break of Super Bowl XVIII. The production budget of this new campaign stood somewhere between $350,000 and $900,000. The commercial featured a sportswoman in red shorts in a sea of pale men, all dressed in grey clothing sitting down on benches in front of a big screen.

The woman is holding a sledgehammer and is being chased by police-like figures as she runs towards the screen. The commercial ends with the woman throwing the hammer at the screen and a voice-over announcing:

On January 24th, Apple Computer will introduce Macintosh.

And you’ll see why 1984 won’t be like “1984”.

It was an indirect reference to how IBM was dominating the PC industry and how Apple was trying to break the monopoly. The “1984” phrase was taken from a novel by George Orwell where the earth is controlled by “Big Brother”.

The ad was a hit and the Mac went on sale in January 1984 at a retail price of $2,495. While it wasn’t cheap, it was good value for money, and sales skyrocketed.

The Mac fails to make significant traction.

Although the Macintosh was received well, it still needed a killer application, as VisiCalc had been on the Apple II.

The PageMaker was a desktop publishing computer program that helped users create ads, brochures, newsletters, and books was Mac’s golden ticket. It was backed up by the revolutionary Apple LaserWriter printer. It would establish the Mac as a contender in the low-end market. The LaserWriter was the first mass-market laser printer, even though it wasn’t the first laser printer.

Unfortunately, the Mac was three times more expensive than the average PC. Moreover, the new graphic user interface required much more effort for existing software developers to make new programs compatible with the Mac. This resulted in very limited programs and applications for the Mac.

Apple was also against IBM in the home customer segment. IBM had a stronghold in the corporate world. Many customers who used IBM computers at work simply decided to go with what they knew when they bought their first home computers.

The IBM PC came with a range of software and included the hugely popular VisiCalc spreadsheet program and the EasyWriter word processor.  Within a few months, sales began to dwindle as consumers were not interested in an expensive PC that was not compatible with anything. This led to conflict within Apple’s leadership.

1985: Jobs is forced out of Apple

Although Steve Jobs was Apple’s most public face and the company’s co-founder, he wasn’t its CEO. Apple’s leadership has changed hands a few times since 1976. In the mid-80s, John Sculley was hired by Apple to run the company.

At first, Sculley and Jobs got along; however, Jobs had the vision to create a computer for the mass market. He wanted a computer that would cost $1000 or less; unfortunately, production costs had doubled the price.

Jobs and the development team had pegged the Mac at $1,995. Still, Sculley, who needed to ensure profitability, insisted on hiking the price by an additional $500. This caused a lot of friction between the two men.

The tanking sales of the Mac increased the tension, and the board urged Sculley to reign in Jobs. They felt that he was taking unnecessary risks, putting the company at risk financially.  Again Jobs was stripped of his duties with the Macintosh team and given a ceremonial role as Chairman. Jobs was not happy about this demotion at all and decided to launch a coup.

Unfortunately, Sculley got wind of it, and Jobs was forced to resign. He took with him a few Apple employees and went on to start a company called Next.

1986-1997: The decline of Apple

1986-1992: an identity crisis.

The departure of Steve Jobs signaled the beginning of an immense identity crisis for Apple. Up until now, Jobs had driven the company’s direction towards one single goal; making low and high-end PCs at a consumer-friendly price.

Sculley and the board wanted to go in a different direction. They wanted Apple to be a premium computer company that sold cutting-edge products. Since Apple already appealed to creative business users, they figured that the most logical step was to target the high-end market. They settled for more powerful and thus more expensive Macs.

Apple raised the price of the Mac at a time when competing PCs from Microsoft and IBM were becoming cheaper. The strategy was to create demand by selling fewer units at a higher price, resulting in higher profits. Boy, were they wrong! Despite the unique user interface that created brand loyalty, Apple’s stock prices and market share continued to decline.

They introduced several products such as the Centris PC line, a low-end Quadra offering, and the ill-fated Performa PC line. These products were sold with many configurations and software bundles to avoid competing with consumer outlets such as Sears, Price Club, and Wal-Mart. They were the primary dealers for these models.

1993-1997: The Dark Years

In 1993 Michael Spindler replaced Sculley as CEO. Spindler completely restructured Apple, laying off 15% of the workforce and splitting up the product development team according to the market. He wanted to focus on building as many cheap products as possible.

Not only did this weaken the product development team, but it also caused a lot of confusion. The product line was so complicated that no one could identify which product was best for which market.

Apple experimented with several failed consumer targeted products that included digital cameras, portable CD audio players, speakers, video consoles, and TV appliances. Unfortunately, none of these products helped, the company continued to experience challenges. None of its products were seeing the success that the Apple II had enjoyed. There were simply better alternatives on the market.

1994: Microsoft: The New Giant in Town

At this time, Microsoft began making significant strides in the market. Its Windows software was proving to be highly reliable, and it came at an affordable price. Microsoft continued to gain market share.

To address Microsoft’s growing dominance, Apple joined forces with IBM and Motorola in the AIM alliance. The aim was to create a new computing platform that would use IBM and Motorola’s hardware and Apple’s software. The AIM alliance hoped that the new platform would replace the PC and thus counter Microsoft.

The same year, Apple launched the Power Macintosh, the first of Apple’s computers to use Motorola’s PowerPC processor. The following year Apple decided to license the Mac Operating System and Macintosh ROMs to 3rd party manufacturers to produce Macintosh “clones.” They wanted to achieve deeper market penetration and earn extra revenue for the company. However, this backfired as the clones were competing with Apple’s Macs and reduced Apple’s own sales.

1996-1997: Steve Jobs Saves the Day

In 1996, Spindler was replaced by Gill Amelio. Amelio implemented more layoffs and cost-cutting measures to try and keep the company afloat. It was clear that Apple was dying a slow and painful death. They just could not keep up with how quickly the tech industry was changing.

While Apple had experienced initial success with the Apple II, once competitors developed similar and more stable technologies, Apple could do little to stop the inevitable. It had lost the element of surprise.

Realizing this, Amelio tried to improve Mac OS, but nothing was working. In a last-ditch effort, he chose to approach Steve Job’s NeXT and its operating system. He also decided to bring Steve Jobs back to Apple as an advisor.

In July 1997, Gil Amelio was fired, and Jobs became the interim CEO. He began restructuring the company’s product line, creating a dream team to drive up innovation. They decided to launch just four computers, the iMac, Power Mac, iBook, and the PowerBook.

Furthermore, he partnered with Microsoft agreeing to release new versions of Microsoft Office for the Macintosh. In exchange, Microsoft made a $150 million investment in non-voting Apple stock.

In November, Apple introduced the Apple Online Store launching a new build-to-order manufacturing strategy. They closed off the year, having sold 80,000 units of their four products, creating a constant income stream for the cash-strapped company.

Apple Business Model Canvas: The Dark Days

business model d'apple

1998-Present: Return to Profitability

1998-2007: moving beyond the pc & key acquisitions.

In August 1998, Apple introduced a new all-in-one computer similar to the Macintosh 128K: the iMac. The iMac had modern technology and a unique design. Within 5 months, it had sold almost 800,000 units.

Apple made several vital acquisitions throughout this period:

  • In 1998, Apple bought Macromedia’s Final Cut software. This was a move into the digital video editing market.
  • In 2001 they bought Spruce Technologies, a DVD authoring company that had developed a software called DVDMaestro. This software was a direct competitor to Apple’s own newly released DVD Studio Pro 1.0. Apple wanted to incorporate the features of DVDMaestro into its new DVD Studio Pro 2.0 software.
  • In 2002, Apple purchased Nothing Real’s Shake app. It was a high-end video compositing software application that enabled Apple to integrate it into their computers for better video quality.

2001-2003: First Official Store, iPod, and iTunes

In 2001 after years of development, Apple released the Mac OS X aimed at the average consumer and the professionals. In May that same year, Apple opened the first official Apple Retail Stores in Virginia and California.

A few months later, in October, Apple announced the iPod portable digital audio player and started selling it on November 10. The iPod was a phenomenal success. In 2003, Apple’s iTunes Store was launched, offering online music downloads for $0.99 a song. Users could integrate iTunes and the iPod.

Soon Apple became the market leader in online music services.

2007-2011: The iPhone, App Store, iPad & iCloud

In June, Apple introduced what was to be their best-selling product yet, the iPhone. During the Macworld Expo, Jobs announced that Apple Computer Inc. would now be called Apple Inc. The reason was that the company was now focusing on mobile electronic devices and not just PCs.

This led to the development of the iPhone, iPod Touch, and the iPad. Apple became the first to achieve a mass-market adoption of the touch screen user interface with pre-programmed gestures. Additionally, Apple expanded its business model and introduced its App Store to purchase third-party software applications.

The iCloud was launched in 2011. The online storage and syncing service for music, photos, files, and software solidified Apple’s Ecosystem. Users of Apple products could seamlessly move from one device to another and still have access to their data. This signaled the beginning of the Apple we know today.

Unfortunately that same year, Steve Jobs passed away and with his passing Apple began to lose some of its competitive edge and innovation.     

Apple Business Model Canvas: The Profitable Days

business model d'apple

The Apple we see today is a far cry from the highly rebellious, non-conformists start-up it was under the guidance of Jobs. Jobs’ greatest skill was relentless internal competition. While Tim Cook (who now leads Apple) has focused on making the company profitable, it’s clear that he follows a more conservative approach.

The danger for Apple now is that 90% of its business is now centered on one product; the iPhone. Apple has fallen into the classic monopoly trap where because of its dominance they’ve stopped innovating and are now focusing instead on protecting their core business.

History is clear, monopoly is never a good place to get comfortable. Just look at Microsoft, it was late to the internet, late to the cloud, and late to portable music players, all because it was trying to protect its Windows software.

Time will tell whether Apple will survive a post-mobile phone era with this strategy.

  • https://finance.yahoo.com/quote/AAPL/
  • https://www.marketing91.com/business-model-of-apple/
  • https://www.bailiwickexpress.com/jsy/life/technology/apple-timeline-key-milestones-companys-40-year-history/
  • https://www.nydailynews.com/news/national/apple-turns-40-timeline-tech-giant-evolution-article-1.2581048
  • https://www.macworld.co.uk/feature/history-of-apple-steve-jobs-mac-3606104/
  • https://www.investopedia.com/articles/personal-finance/042815/story-behind-apples-success.asp
  • https://www.nytimes.com/2015/01/30/business/how-and-why-apple-overtook-microsoft.html
  • https://www.investopedia.com/articles/markets/111015/apple-vs-microsoft-vs-google-how-their-business-models-compare.asp
  • https://medium.com/age-of-awareness/what-made-apples-1984-advert-so-successful-dc5af1b073f3
  • Tags: apple , business model canvas , cloud services , ibm , itunes , microsoft , steve jobs , wal-mart

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Apple’s business model: How Apple makes money

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Founded in 1976 by Steve Jobs and Steve Wozniak, Apple is an American multinational technology company that designs, manufactures and markets smartphones, personal computers, tablets, wearables and accessories, and sells a variety of related services headquartered in Cupertino, California, United States.

Apple focuses mainly on the R&D and design of its hardware products, while the hardware is primarily manufactured by outsourcing partners that are located mainly in Asia, with some Mac computers manufactured in the U.S. and Ireland.

As of November 2022, Apple is the world’s largest company by market capitalization. It became the first publicly traded U.S. company to be  valued at over US$1 trillion  in August 2018, US$2 trillion in August 2020, and most recently US$3 trillion in January 2022.

By total revenue, Apple is the fifth largest company as of 2022. In FY2022, Apple generated US$394 billion in revenue despite the uncertain economic environment. As of 2022, Apple has over half of the smartphone market share in the U.S. and more than a quarter of the market share globally .

The Sankey chart below shows the company’s revenues and expenses for FY2022. It illustrates how net sales flow through to costs and, ultimately, net profit.

business model d'apple

Let’s have a look at Apple’s five key business segments:

The iPhone is Apple’s line of smartphones based on its iOS operating system. The current iPhone line includes iPhone 14 Pro, iPhone 14, iPhone 13, iPhone SE, iPhone 12, and iPhone 11. This is Apple’s marquee product and core revenue contributor as it represents 52% of the company’s top line in FY2022.

Apple released the new iPhone 14 and iPhone 14 Plus to the market in September 2022 which comes with a new dual-camera system with camera upgrades for sharper photos, industry-leading durability, and longer battery life. The iPhone segment grew 7.0% year-on-year and hit US$205.5 billion in net sales in FY2022.

The Mac is Apple’s line of personal computers based on its macOS operating system. The Mac line includes laptops MacBook Air and MacBook Pro, as well as desktops iMac, Mac mini, Mac Studio and Mac Pro. This segment achieved record sales in FY2022 and grew 14.2% year-on-year to US$40.2 billion.

Apple explained in its Q4 FY2022 conference call that the exceptional results were due to new product launch of the MacBook Air and MacBook Pro powered by the M2 chip, coupled with filling existing backlog demand as supply chains returned online.

The iPad is Apple’s line of multipurpose tablets based on its iPadOS operating system. The iPad line includes iPad Pro, iPad Air, iPad, and iPad mini. Apple envisioned the tablet as a bridge between the smartphone and laptop, with the capabilities to be both. This segment is Apple’s smallest revenue contributor.

iPad posted a weaker performance in FY2022 and saw net sales decline by 8.1% to US$29.3 billion. This was mainly due to a late launch in October for the iPad Pro this year which wasn’t fully captured in the results for FY2022 which ends in September.

Wearables, Home and Accessories

This segment includes the Apple Watch, AirPods, Beats headphones, Apple TV, and more. The segment grew 7.5% year-on-year in FY2022, driven by the launch of the new Apple Watch Ultra and Series 8, and AirPods Pro. The new AirPods Pro have advanced noise cancellation features cancelling up to twice as much noise over the previous model and better overall sound quality. Apple is also the global leader in wearables with a 30% market share worldwide .

Other than its hardware segments, Apple also provides services including AppleCare, cloud services, digital content, advertising, and payment services. This segment grew 14.2% to US$78.1 billion in FY2022.

AppleCare and cloud services. AppleCare is a fee-based insurance service which protects your Apple devices for repair and replacement. Cloud services is a subscription service which provides additional cloud storage and backups for users. Apple customers can easily sign up for AppleCare and iCloud directly through their device.

Digital content and advertising. The AppStore allows users to discover and download content including books, music, video, games, and podcasts. Apple charges 15-30% commission for every paid app purchase, in-app purchase, or in-app subscription. Apple also provides other subscription services like Apple Music, Apple Arcade, Apple Fitness+, Apple News+ and Apple TV+ which are sourced from content providers. In turn, these content providers collect fees or royalties from Apple. Apple also provides advertising services for app developers who wish to promote their apps through the AppStore.

Payment services comprises Apple Card and Apple Pay. At this point in time, Apple Card only available in the U.S., while Apple Pay is available in selected countries around the world. Apple Pay is built into Apple devices like a digital wallet which allows users to make payment without holding physical credit cards. Apple charges financial institutions 0.15% per Apple Pay transaction. Apple Card is a digital/physical card that Apple launched together with Goldman Sachs. Apple Card also helps to track your spending behaviour like categories, time, and location. Users also earn daily cash backs when they use their iPhone or Apple Watch to make payments via Apple Card.

The fifth perspective

Apple is primarily a hardware company that has tied its products together with a seamless user experience through its software. The iPhone remains Apple’s crown jewel, but its Wearables and Services are the company’s fastest-growing segments as customers increasingly adopt wearable technology and subscribe to Apple’s suite of digital services.

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The Business and Revenue Model of Apple Explained

Discover the intricate business and revenue model of tech giant Apple in this comprehensive article.

business model d'apple

Understanding Apple's Business Model

Apple's business model is built upon a set of core principles that have been instrumental in its success. One such principle is the relentless focus on product design and user experience. Apple's products are not just functional, they are also synonymous with sleek aesthetics and intuitive interfaces. This attention to detail creates a sense of desirability that sets them apart from the competition.

But it's not just about the looks. Another key principle is vertical integration , which allows Apple to have complete control over the entire product development process. From hardware to software and even retail, Apple maintains a tight grip on every aspect of its products. This level of control ensures a seamless and cohesive experience for consumers, as everything works together harmoniously.

Furthermore, Apple's emphasis on innovation and pushing the boundaries of technology has been pivotal in its success. The company constantly strives to be at the forefront of industry trends , always looking for ways to improve and surprise its customers. Whether it's through groundbreaking hardware advancements or revolutionary software updates, Apple never settles for mediocrity.

But what role does innovation play in Apple's success? Well, it's safe to say that it's a major driving force. Apple's commitment to innovation has allowed the company to introduce groundbreaking products that capture the imagination of consumers worldwide. Think about the iconic iPhone, which revolutionized the smartphone industry. Or the iPad, which created a whole new category of portable computing. And let's not forget the game-changing Apple Watch, which brought wearable technology into the mainstream.

But it's not just about the hardware. Apple's software ecosystem has also been a driving force behind its success. The seamless integration between Apple devices through services like iCloud and iTunes creates a sense of continuity for users. It's not just about owning one Apple product, it's about having a whole ecosystem that works together seamlessly. This level of integration makes it hard for users to switch to competitors , as they would lose the convenience and familiarity that Apple offers.

In conclusion, Apple's business model is built upon principles like product design, vertical integration, and innovation. These principles have allowed Apple to create a unique and desirable brand that consistently delivers groundbreaking products and a seamless user experience. It's no wonder that Apple has become one of the most valuable and influential companies in the world.

Dissecting Apple's Revenue Streams

When it comes to revenue, Apple is undoubtedly a powerhouse in the tech industry. The company's ability to generate substantial profits can be attributed to its diverse range of products and services. Let's take a closer look at the various revenue streams that contribute to Apple's success.

Revenue from iPhone Sales

Undeniably, the iPhone remains Apple's primary revenue driver. Year after year, millions of consumers eagerly await the latest iPhone release, leading to record-breaking sales and substantial profits. The allure of the iPhone, coupled with Apple's loyal customer base, continues to make it a cash cow for the company.

Furthermore, Apple's strategic pricing allows the company to maintain healthy profit margins while still offering premium products. The combination of high-quality hardware, cutting-edge software, and aspirational branding has made the iPhone a status symbol that consumers are willing to pay a premium for.

Apple's commitment to innovation and user experience has also played a significant role in driving iPhone sales. Each new iteration of the iPhone introduces groundbreaking features and improvements, enticing consumers to upgrade their devices and contribute to Apple's revenue stream.

Revenue from Services

In recent years, Apple has recognized the potential of its software and services as a significant revenue source. Through offerings like Apple Music, Apple Arcade, and Apple TV+, the company has created a subscription-based ecosystem that generates recurring revenue from millions of subscribers worldwide.

Additionally, the App Store has become a lucrative marketplace for developers, with Apple taking a percentage of every sale made on the platform. The vast selection of apps and the stringent review process enforced by Apple have given consumers confidence in the safety and quality of the offerings, driving app downloads and generating revenue for the company.

Apple's commitment to privacy and security has also contributed to the success of its services. With growing concerns about data breaches and privacy violations, consumers are willing to pay for services they can trust, further boosting Apple's revenue from its service offerings.

Revenue from Other Products

Although the iPhone and services dominate Apple's revenue streams, the company's portfolio of other products also contributes significantly to its bottom line. Products like the iPad, Mac, Apple Watch, and various accessories have garnered a substantial customer base and continue to generate revenue for Apple.

The diversification of its product lineup allows Apple to cater to different market segments and provides consumers with a range of options to choose from. This not only strengthens Apple's revenue streams but also increases brand loyalty as customers find more reasons to remain within the Apple ecosystem.

Furthermore, Apple's commitment to seamless integration between its devices has created a sense of synergy among its products. For example, the ability to sync an iPhone with an iPad or a Mac enhances the overall user experience, making it more appealing for consumers to invest in multiple Apple products.

In conclusion, Apple's revenue streams are a reflection of its ability to create innovative and desirable products, coupled with a strong focus on providing exceptional services. As the company continues to evolve and expand its offerings, it is poised to maintain its position as a leader in the tech industry and generate substantial revenue for years to come.

The Impact of Apple's Business Model on its Market Position

Apple's business model has undoubtedly played a crucial role in cementing its position as a market leader. The company's commitment to superior design, vertical integration, and relentless innovation has created a strong competitive advantage that is difficult to replicate.

Apple's dedication to superior design sets it apart from its competitors. The sleek and elegant aesthetics of Apple products have become synonymous with quality and luxury. This attention to detail not only enhances the user experience but also creates a strong brand image that resonates with consumers.

Vertical integration is another key aspect of Apple's business model. By controlling both hardware and software development, Apple is able to optimize the performance and compatibility of its products. This integration allows for seamless user experiences and ensures that Apple devices work harmoniously with their respective operating systems.

Relentless innovation is at the core of Apple's success. The company consistently pushes the boundaries of technology, introducing groundbreaking features and functionalities with each new product release. This commitment to innovation not only attracts tech enthusiasts but also keeps Apple ahead of its competitors in terms of product offerings.

Furthermore, the combination of hardware, software, and services has allowed Apple to build an ecosystem that fosters customer loyalty. Once customers become invested in the Apple ecosystem, they are more likely to remain loyal and continue purchasing Apple products, creating a recurring revenue stream for the company.

Apple's ecosystem offers a seamless integration between devices, allowing users to effortlessly transition from their iPhone to their MacBook or Apple Watch. This interconnectedness enhances the user experience and encourages customers to stay within the Apple ecosystem.

In addition to hardware and software, Apple's services also contribute to its competitive advantage. Services such as iCloud, Apple Music, and the App Store provide added value to Apple customers, further solidifying their loyalty to the brand.

Challenges and Criticisms of Apple's Business Model

While Apple's business model has been incredibly successful, it has not been without its fair share of challenges and criticisms. One common criticism is Apple's premium pricing strategy, which some argue limits its market share and makes the products inaccessible to a broader consumer base.

Apple's premium pricing strategy has been a double-edged sword. On one hand, it allows the company to maintain high profit margins and invest heavily in research and development. On the other hand, it can alienate price-sensitive consumers who may opt for more affordable alternatives.

Additionally, Apple's emphasis on secrecy and control has been a subject of scrutiny. The company's closed ecosystem, strict app review process, and limited customization options have drawn criticism from those who value openness and freedom of choice.

Some argue that Apple's closed ecosystem limits innovation and stifles competition. The strict control over app development and distribution has led to allegations of anti-competitive behavior, as developers are required to follow Apple's guidelines and pay a commission for each transaction made through the App Store.

Furthermore, the limited customization options on Apple devices have been a point of contention for some users. Unlike certain competitors that offer a wide range of customization options, Apple devices have a more standardized and uniform appearance, which may not appeal to those seeking individuality.

Despite these challenges and criticisms, Apple's business model has undeniably propelled the company to the forefront of the technology industry. Its commitment to design, vertical integration, and innovation, combined with a loyal customer base, continues to solidify Apple's market position.

The Future of Apple's Business and Revenue Model

Predicted changes in apple's revenue streams.

As technology continues to evolve, so too will Apple's business and revenue model. While the iPhone will likely remain a significant revenue driver, Apple is poised to expand its services offerings with new ventures such as Apple Fitness+ and Apple One, which bundle multiple services into a single subscription.

Apple Fitness+ is a prime example of Apple's dedication to the health and wellness sector. With a wide range of workout options led by professional trainers, this service aims to revolutionize the way people exercise. Users can choose from various workout types, including yoga, cycling, and strength training, all accessible from the comfort of their own homes. By incorporating personalized metrics and real-time feedback, Apple Fitness+ provides an immersive and engaging fitness experience.

Furthermore, Apple One offers customers a convenient way to access multiple Apple services, including Apple Music, Apple TV+, Apple Arcade, and iCloud storage, all in one subscription. This bundling strategy not only enhances the user experience but also encourages customers to explore and utilize different services within the Apple ecosystem.

The growing importance of wearables, such as the Apple Watch and AirPods, also presents an opportunity for Apple to diversify its revenue streams further. These accessories have gained immense popularity and are likely to become an integral part of Apple's future revenue generation.

The Apple Watch, with its advanced health monitoring capabilities, has revolutionized the way people track their fitness and well-being. From heart rate monitoring to ECG readings, this wearable device provides users with valuable insights into their overall health. Additionally, the Apple Watch's integration with other Apple products, such as the iPhone and Mac, creates a seamless ecosystem that enhances the user experience.

Similarly, AirPods have become a cultural phenomenon, offering users a wireless and convenient audio experience. With features like active noise cancellation and seamless device switching, AirPods have become an essential accessory for many Apple users. As Apple continues to innovate in this space, we can expect to see new iterations of AirPods that push the boundaries of audio technology.

Potential Shifts in Apple's Business Strategy

Looking ahead, Apple may explore new avenues for growth, such as augmented reality (AR) and autonomous vehicles. These emerging technologies align with Apple's focus on innovation and could potentially open up new revenue streams for the company.

Augmented reality has the potential to transform various industries, from gaming and entertainment to education and healthcare. Apple's ARKit, a development platform for augmented reality apps, has already laid the foundation for the company's foray into this space. With the integration of AR capabilities into devices like the iPhone and iPad, Apple aims to provide users with immersive and interactive experiences that blend the digital and physical worlds.

Autonomous vehicles represent another area of interest for Apple. While the company has not officially announced its plans in this field, there have been rumors and speculation about Apple's involvement in the development of self-driving cars. With its expertise in hardware and software integration, Apple could potentially disrupt the automotive industry by introducing innovative technologies and user-centric design.

Additionally, Apple's continued investment in research and development suggests a commitment to staying ahead of the curve and ensuring its business model remains adaptable to evolving market trends. This flexibility will be crucial in maintaining Apple's position as a leader in the tech industry.

In conclusion, Apple's business and revenue model is a testament to its unwavering commitment to superior design, seamless integration, and relentless innovation. The combination of these principles, coupled with its diverse product lineup and growing services ecosystem, has propelled Apple to the pinnacle of success. As the tech landscape continues to evolve, only time will tell what new innovations and revenue streams Apple will pursue to stay ahead of the curve.

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The Apple Business Model

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Apple vs. Microsoft Business Model: What's the Difference?

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Katrina Ávila Munichiello is an experienced editor, writer, fact-checker, and proofreader with more than fourteen years of experience working with print and online publications.

business model d'apple

Apple Business Model vs. Microsoft Business Model: An Overview

More than any other American companies, Apple, Inc. (NASDAQ: AAPL ) and Microsoft Corporation (NASDAQ: MSFT ) dominate the intersection of technology and consumer access. Even though they compete across a huge range of sub-industries, such as computing software, hardware, operating systems, mobile devices, advertising, applications, and web browsing, each firm takes a different approach from an organizational and philosophical perspective.

As of Jan. 2022, AAPL had a market cap of around $2.61 trillion. Microsoft briefly edged out Apple as the largest company in the world riding on the strength in the growth of its cloud computing business, but MSFT has now fallen to second at $2.17 trillion.

Key Takeaways

  • As of 2021, Apple and Microsoft are two of the biggest companies in the world, alternating the title of the world's most valuable company.
  • Both companies have boasted a market cap of over $2 trillion.
  • Apple's business model is based on innovation and consumer-centric devices. They are able to keep their base due to easy-to-use designs and data migration to new product lines.
  • Microsoft built its success on the licensing of software such as Windows and Office Suite. Their business model has shifted, and they are releasing their own devices to compete with Apple's.
  • Both companies are run differently with different end purposes. They are both extremely successful and have revolutionized their respective industries.

It is difficult to recall a modern American business so thoroughly dominated by the ideas and personality of one individual as Apple was under the tutelage of Steve Jobs . Jobs' remarkable innovations propelled Apple to unprecedented heights until his passing from cancer in 2011.

During Steve Jobs' second reign—he was fired in 1985, returning in 1997—Apple returned to relevancy and revolutionized multiple subindustries. In 2001, the company released the iPod, a pocket-sized device that could hold 1,000 songs, and it soon took over the Sony Walkman. A few years later, Apple completely redefined mobile phones when the iPhone was released in 2007.

Apple easily bests its competitors in terms of hardware sales and high-end gadgets. Thanks to the company's early 2000s reputation as a nonconformist response to Microsoft, millennials grew up using Macs in large numbers. This is buoyed by the company's brilliant insistence on integrating its products, making it easier to keep using new Apple products and thus more difficult to switch to a competitor's interface; this is sometimes referred to as the "Apple Ecosystem Lock."

The weakness in the Apple's business model lies in the historic success of the company's golden invention: the iPhone. Nearly half of all Apple revenue comes from iPhone sales, and no new, comparable innovation has taken off since its former CEO died and was replaced by Tim Cook. However, Cook has done a good job of preserving Jobs' legacy and has propelled Apple stock to all-time highs.

For years, Microsoft dominated the computer industry with its Windows software; Apple was an afterthought for more than a generation of operating products. Before Google Web browsing began to dominate the market, Microsoft gave away Internet Explorer for free, driving Netscape and other similar companies out of business.

The Microsoft revenue model historically relied on just a few key strengths. The first, and most important, is the licensing fees charged for use of the Windows operating system and the Microsoft Office suite. After a few years of increasing irrelevance in the race against Google and Apple, Microsoft unveiled a new vision in April 2014, instantly shifting focus to make Windows software more compatible with competitor products, such as the iPad. Microsoft also has a few successful products, highlighted by the Microsoft Surface and Surface Pro, that battle Apple devices such as the iPad.

Moving forward, however, Microsoft realized that paid software is a more difficult sell in an age of low-cost alternatives. Additionally, tablets and phones are replacing PCs. A newer Microsoft business model has been telegraphed by CEO Satya Nadella, one that emphasizes product integration, a "freemium" software package, and a concentration on its cloud computing business.

For example, Microsoft wants customers to be more engaged and fixated on its products.

Special Consideration: Google's Business Model

Unsurprisingly, the heart and soul of the Google revenue stream is its search engine and web advertisements. While Google is not the only company to give away free services and bundle them with other goods, few do it as well or as successfully.

Google services did not originally cost the user anything. Google would lure in users and collect their data, and then sell access to eager buyers across the planet. Every marketing firm in the world wants the kind of information and repeat usage Google enjoys. Moreover, the company keeps getting better and more sophisticated at targeting consumers and businesses, syncing preferences and playing economic matchmaker. In recent years, some fees have been added for storage and other services.

This no-fee model is not just profitable, it is very disruptive to Apple and especially to Microsoft. While Apple and Microsoft keep competing to find better and more innovative products to charge consumers, Google is all too happy to find a way to monetize activities for which users are eager to stop paying.

Google does not charge for Android in the U.S., which is one of the chief reasons manufacturers are so drawn to it. The Google Web apps, which bear a striking resemblance to Microsoft Office programs, are also free. Since Google began offering a free operating system and computer software, sales for Microsoft Windows and Office have slowed.

Yahoo! Finance. " Apple Inc. (AAPL) ."

Yahoo! Finance. " Microsoft Corporation (MSFT) ."

Apple, Inc. " Statement by Apple’s Board of Directors ."

The New York Times. " How the iPod Ran Circles Around the Walkman ."

Apple, Inc. " Apple Presents iPod ."

Apple, Inc. " Apple Reinvents the Phone with iPhone ."

Apple.Inc. " Apple Media Services Terms and Conditions: Third-Party Devices and Equipment ."

U.S. Securities and Exchange Commission. " Apple, Inc. Form 10-K, For the fiscal year ended September 26, 2020 ," Page 21.

U.S. Department of Justice. " Justice Department Files Antitrust Suit Against Microsoft for Unlawfully Monopolizing Computer Software Markets ."

Microsoft. " Microsoft Showcases Latest Updates to Windows, Opportunities for Developers ."

Microsoft. " Satya Nadella: Mobile First, Cloud First Press Briefing ."

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U.S. Securities and Exchange Commission. " Alphabet, Inc. Form 10-K, For the Fiscal Year Ended December 31, 2020 ," Pages 33-36.

The New York Times. " Google to Charge Phone Makers for Android Apps in Europe ."

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The Business Model of Apple – How Apple Inc. Makes Money!

June 9, 2023 | By Hitesh Bhasin | Filed Under: Business

Established in April 1976, Apple is one of the top-rated Multinational Technology Company popular as one of the top four big companies around the world. The business model of Apple is based on designing, developing, manufacturing and selling of computer software, consumer electronics, and online services.

Company is headquartered in Cupertino, California, and it is functional all around the world. In this post, we will be diving deep into the world of Apple and understand how it has become a trillion-dollar company. So, without any further ado, let us get started right away.

Table of Contents

Introduction to the Business Model of Apple

Introduction

Are you aware of the revenues that the Apple Company is gathering right now?

With operating income of US$70.898 billion and revenue of US$265.595 billion, Apple is for sure having a business model which is profit-oriented, global, powerful, and equally sustainable.

Hence, there is no doubt that companies from all over the world would want to have an idea about the business model of Apple so that they can have some sort of inspiration from it.

Here we are going to discuss the amazing business model that Apple has, which enables it to make billions and trillions of cash every single year. There was recently a $6 million cash flow free for the Apple Company, and that was in the weakest quarter that the company has.

There is no doubt that in the last year, the company has about 51 billion dollars of cash flow for sure. So, that is certainly more than the other companies that we see around. The business model of Apple predisposes the entire company for the cash generation via its different types of products

Apple sells three types of products , and they are-

Apple Hardware Products

Apple software products.

  • Apple Online Services

Let us have a look upon different products comprised of these three different types-

  • iPhone smartphone
  • iPad tablet computer
  • Mac personal computer
  • iPod portable media player
  • Apple Watch smartwatch
  • Apple TV digital media player
  • AirPods wireless earbuds
  • HomePod smart speaker
  • tvOS operating systems
  • iTunes media player
  • Safari web browser
  • Shazam acoustic fingerprint utility
  • iLife and iWork creativity and productivity suites
  • Professional applications like Final Cut Pro, Xcode, Logic Pro

The Mighty Business Model of Apple: Numbers Say it All

Busienss Model of Apple

We all know that the financial league of Apple is something that definitely cannot be matched in the best way for sure. The Trailing Twelve-month revenue of the company came out to be 224B dollars in total which were a lot higher than the combined total of Alphabet, Facebook , and Amazon .

When we talk about the revenue of the company, it can be said without a doubt that it is more and more daunting to see for sure. There is the income statement that is provided, which can ensure the pint that we are trying to make.

The operating income to Apple Company came out to be 608 Billion dollars in total which were about 50% higher than the entire outcome of Facebook, Alphabet, and Amazon.

Latest Numbers associated with Apple Business Model

  • Revenue          US$265.595 billion[1] (2018)
  • Operating income US$70.898 billion[1] (2018)
  • Net income              US$59.531 billion[1] (2018)
  • Total assets          US$365.725 billion (2018)
  • Total equity          US$107.147 billion (2018)

How Apple Makes Money?

Business model of Apple

Apple makes money via three key resources-

#1. Product Sales

Apple makes money by selling some of the top-notch products across the globe.

  • Apple Watch

#2. Subscription fees associated with iTunes Store, iCloud, Apple Music, etc.

When users subscribe for different apps and software, they pay a fee to the Apple that helps the company generate a good amount of money. When content owners and developers sell their digital content and applications via different Apple resources, they pay fees to the company.

  • Apple application software like iLife, iWork, etc
  • Apple Music
  • iTunes Store
  • Mac App Store
  • iBooks Store
  • Apple TV App Store

#3. Extended Warranty fees for its products

Apple also makes money when its users pay fees for extending the warranty for their respective products.

By using retail and online stores along with direct sales force, Apple sells its products and services in the major markets across the globe. Plus, Apple is also involved in selling a variety of third party products that are compatible with Apple, such as different apps and accessories.

Also, Apple offers indirect distribution channels such as third party Cellular Network Carriers, Value-Added Resellers, and Retailers.

Cash Flow in Apple

Cash Flow in Apple

When it comes to the operating of the cash flow, there is no doubt that Apple is trying to make a lot of money for sure. But then it also has the cash flow as well with the rates which are not seen in any other company which is present in Silicon Valley for sure.

Now you must be wondering what the cash flow is.

Well, the cash flow is just a measure which can be used to make sure that people can easily find out the right amount of cash that is easily generated in the best way and that too after taking into account all the capital expenditures that the company makes.

These expenditures are the ones that are often associated with businesses operating all over the world.

The $51B of the free cash of Apple Company is quite more than the other brands that we have on the internet these days such as Amazon, Facebook, and Alphabet as well.

What is even more surprising here is that Apple is currently bringing about 70% more cash flow for free than the giant Microsoft as well.

We all know how lucrative the business model of Microsoft is, and this is why we know that the Apple Business model is even better than Microsoft’s in some ways.

Profit Extraction in Apple Inc.

When some discussions happen about the financial position of the company, there is simply not a single speck of doubt that the most credit is given to the iPhone for that.

It is something that would be considered as responsible for all the good fortune that the company has.

However, the iPhone just accounts for about 60% of the revenue that is present in the Apple Company.

Cash Flow in Apple

So, we can say this without a doubt that some of the revenue is generated from some of the other products that Apple has. When it comes to the Apple products, there are smartphones, tablets, laptops, desktops, smartwatches, and so much more to look forward to.

Not just that, but there are some TV streaming boxes as well as some wireless headphones as well. There are some hardware manufactures that tend to make their money with the help of selling some of the tablets and the smartphones of the Apple Company.

Hence, there is no doubt that the businesses don’t really come close to the profitability that Apple has over the competitors in the best way. The best selling options for the manufacturers would have to be the Apple Macs.

Apart from that, Apple is known to be one of the companies that have some of the most profitable and amazing wearables for the customers too. This is not its people as there are some minor products from Apple, which have a pretty big sales perspective.

For example, we have the Apple TV for the users, which is also quite popular, and there is simply not a single speck of doubt about that fact.

So when you look at such products, then there is no doubt that you might think that Apple is one of the most profitable and amazing companies that there is for the people. How else can anyone explain so many profit leaders of the company, right?

Core Belief System of the Apple Business Model

Business Model of Apple

If you want to have a proper idea about the cash flow of the Apple Company, you need to make sure that you have to see the amazing business model of the Apple Company. There are three core beliefs that the Apple Company has, and we are going to talk about that in here.

#1. Placing Products Above Anything Else

When it comes to the Apple Company, we all know that there is pretty serious cash flow. So, there is no doubt that it starts with the R&D labs for sure.

The management that the company has is completely motivated with the coming up of amazing products and not to just make the profits for the company.

The executives present in the Apple Company won’t really miss a chance in order to focus on the point. However, there are quite a few people outside who might think that this is not the right solution for sure.

However, when it comes to the financial performance of the Apple Company, it certainly backs up all the quality statements that are being made by the company. So, we can say this that the claims which are made by the company will be true in the most certain way for sure.

Also, the company is pretty sure that they are able to provide their customers with everything that they want to have.

#2. Staying Focused Always to Optimize Global Presence of the Company

Business Model of Apple

The value of the Apple Company starts with the focus that they have.

They expand the network of the company by using company-owned retail stores across the world. So, there is no doubt about the fact that they have been pretty much focused on their goals for sure.

The money that the company is spending on Apple products is certainly one of the main reasons that it is so popular amongst the people. Company is also focused on building different platforms that can be used for the apps and content distribution on the Apple devices.

#3. Incorporating a Vertically Integrated Business Model for better User Experience

The business model of Apple incorporates a vertically integrated business model that helps the company in offering the best user experience to its users. Apple is involved in designing and manufacturing its own OS, application software, hardware, and services.

Hence, the company integrates all this, so users can get easy to use products in a seamless manner. All the innovations and technical breakthroughs get their processing via Apple only and not on any other partner.

Because of this vertically integrated model, Apple makes the top-notch products that are considered best in the industry, and hence, they are sold at the premium pricing .

Wrapping it up!

So, there is no doubt about the fact that the company has an invariable focus when it comes to the success of the company. There are some other traits such as deliberate management and focus on technology which makes it one of the best options for the people.

These are some of the ways in which Apple is able to make money for businesses. It is for sure, going to help a lot when it comes to inspiring other companies in designing their business models.

How have useful and profit-driven do you consider the business model of Apple? Share your views about Apple business model in the comments below.

Liked this post? Check out the complete series on Business Models

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About Hitesh Bhasin

Hitesh Bhasin is the CEO of Marketing91 and has over a decade of experience in the marketing field. He is an accomplished author of thousands of insightful articles, including in-depth analyses of brands and companies. Holding an MBA in Marketing, Hitesh manages several offline ventures, where he applies all the concepts of Marketing that he writes about.

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  • April 5, 2023

Explaining the Apple Business Model. How does Apple Make money?

Have you ever thought about how apple makes money in this article, we explain the depths of the apple business model to help you learn how the brand has built an massive business empire..

Apple Inc. is a multinational technology company based in Cupertino, California, that has revolutionized the world through its innovative and iconic products. Established in 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne, Apple has since grown into one of the world’s most valuable and influential companies. Apple designs, manufactures, and markets a wide range of consumer electronics, software, and online services, with its flagship products being the iPhone, iPad, Mac, Apple Watch, and Apple TV.

In this blog post, we will explore the business model of Apple using Alexander Osterwalder’s Business Model Canvas. The canvas is a strategic management tool that presents a company’s business model in a visual and comprehensive manner, breaking it down into nine key components: customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partnerships, and cost structure. By analyzing Apple’s business model through this lens, we will uncover the secrets behind its success and longevity in the competitive technology industry.

The Story of Apple

The story of Apple began in the 1970s when two young visionaries, Steve Jobs and Steve Wozniak, set out to change the world. Both had a passion for technology and a shared belief that personal computers could empower people to create, learn, and communicate in ways never before possible. They met in 1971 through a mutual friend and began working on various projects, including the infamous “blue box” that allowed users to make free long-distance phone calls.

The idea for Apple was born in 1976 when Wozniak designed the Apple I, a personal computer that was relatively affordable and easy to use. Jobs saw the potential in Wozniak’s invention and convinced him to start a company to sell the Apple I. They were joined by Ronald Wayne, who provided administrative support and helped draft the company’s first logo and legal documents. On April 1, 1976, Apple Computer, Inc. was officially founded.

The Apple I was initially sold as a kit that users had to assemble themselves. However, with the introduction of the Apple II in 1977, the company shifted its focus to producing fully assembled computers. The Apple II was a game-changer, featuring a color display, a user-friendly interface, and a sleek design. It quickly became a bestseller, establishing Apple as a major player in the burgeoning personal computer industry.

Over the years, Apple has faced numerous challenges, including competition from IBM and Microsoft, internal power struggles, and the temporary departure of Steve Jobs. However, the company has continuously reinvented itself and its products, driven by its founders’ unwavering commitment to innovation and design excellence. Today, Apple stands as a testament to the power of creativity, perseverance, and vision in business.

Now that we have a brief understanding of Apple’s history, let us delve into its business model using Alexander Osterwalder’s Business Model Canvas.

  • Customer Segments

Apple targets a broad range of customer segments, including individual consumers, businesses, educational institutions, and governments. The company’s products and services cater to various needs, from communication and entertainment to productivity and creativity. Some of the main customer segments include:

  • Tech-savvy individuals who value high-quality products and cutting-edge technology
  • Creative professionals, such as graphic designers, musicians, and filmmakers
  • Students and educators who use Apple devices for learning and teaching
  • Businesses of all sizes that rely on Apple products for their daily operations
  • Value Propositions

Apple’s value propositions revolve around design, innovation, and user experience. The company has consistently delivered products and services that are not only technologically advanced but also aesthetically pleasing and easy to use. Some of the key value propositions that differentiate Apple from its competitors include:

  • Superior design and build quality: Apple products are known for their sleek and minimalist design, as well as their durability and premium materials. This attention to detail has made Apple devices highly desirable and instantly recognizable.
  • Seamless integration and ecosystem: Apple’s ecosystem of hardware, software, and services is designed to work seamlessly together, providing a smooth and consistent user experience across all devices. This integration encourages customer loyalty and encourages users to purchase multiple Apple products.
  • Innovation and technological advancements: Apple has a track record of introducing groundbreaking technologies and features, such as the first graphical user interface on the Macintosh, the iPod’s click wheel, and the iPhone’s multi-touch display. This commitment to innovation has kept Apple at the forefront of the industry.
  • User-friendly software and interfaces: Apple’s operating systems, macOS and iOS, are renowned for their intuitive and user-friendly design, making it easy for users of all skill levels to navigate and use their devices effectively.
  • Brand prestige and status: Apple has cultivated a strong and loyal brand following, with many customers seeing ownership of an Apple product as a status symbol. The company’s focus on design, innovation, and marketing has contributed to this perception.

Apple uses a combination of direct and indirect channels to distribute its products and services to customers. These channels include:

  • Retail stores: Apple operates over 500 retail stores in more than 25 countries, providing customers with a unique shopping experience where they can test and purchase Apple products and receive expert assistance from knowledgeable staff.
  • Online store: Apple’s e-commerce platform allows customers to purchase products and services directly from the company’s website, with the option for home delivery or in-store pickup.
  • Authorized resellers and carriers: Apple partners with a network of authorized resellers and carriers to sell its products in various countries, ensuring broad availability and distribution.
  • App Store and iTunes Store: Apple’s digital marketplaces allow customers to download and purchase apps, music, movies, TV shows, and other digital content directly onto their devices.
  • Customer Relationships

Apple has built strong customer relationships through its emphasis on customer service, support, and user experience. Some of the ways the company fosters these relationships include:

  • Retail store experience: Apple Stores are designed to be welcoming and interactive spaces, where customers can try out products, attend workshops and events, and receive personalized assistance from the company’s highly trained staff.
  • Genius Bar: The Genius Bar is a dedicated support center located within Apple Stores, where customers can receive technical support and repair services for their devices.
  • AppleCare: Apple offers extended warranty and support plans for its products, providing customers with peace of mind and additional protection for their devices.
  • Online resources: Apple’s website features extensive resources, such as user guides, tutorials, and forums, to help customers get the most out of their devices and troubleshoot any issues.
  • Revenue Streams

Apple generates revenue from several sources, including:

  • Product sales: The company’s primary revenue stream comes from the sale of its hardware products, such as iPhones, iPads, Macs, Apple Watches, and Apple TVs.
  • Services: Apple’s growing services segment includes revenue from the App Store, iTunes Store, Apple Music, Apple Pay, and iCloud.
  • Accessories and peripherals: Apple also sells various accessories and peripherals for its devices, such as cases, cables, and adapters.
  • Licensing and royalties: Apple earns royalties from licensing its technology and intellectual property to third parties.
  • Key Resources

Some of Apple’s key resources include:

  • Intellectual property: Apple’s extensive portfolio of patents, trademarks, and copyrights protect its innovations and give the company a competitive advantage.
  • Supply chain and manufacturing: Apple’s sophisticated supply chain and relationships with manufacturers enable the company to source components, assemble products, and scale production efficiently.
  • Design and engineering talent: Apple’s success relies heavily on its ability to innovate and create compelling products. The company employs a talented team of designers, engineers, and researchers who drive product development and technological advancements.
  • Brand equity and reputation: Apple’s strong brand image, customer loyalty, and reputation for quality and innovation are key resources that contribute to its success in the marketplace.
  • Key Activities

Apple’s key activities revolve around designing, developing, and manufacturing its products, as well as marketing and distributing them to customers. These activities include:

  • Research and development: Apple invests heavily in R&D to explore new technologies, develop innovative features, and improve existing products.
  • Product design and engineering: The company’s design and engineering teams work closely together to create user-friendly and aesthetically pleasing products that meet customer needs.
  • Manufacturing and assembly: Apple partners with manufacturers to produce and assemble its products at scale, ensuring high-quality standards and efficient production.
  • Marketing and advertising: Apple’s marketing efforts are focused on creating brand awareness, generating product interest, and driving sales. The company uses a mix of traditional and digital media, as well as high-profile product launches and events, to promote its products.
  • Distribution and logistics: Apple manages a complex distribution and logistics network to deliver its products to customers globally through various channels, such as retail stores, online platforms, and authorized resellers.
  • Key Partnerships

Apple has formed several key partnerships to support its business operations and enhance its product offerings. Some of these partnerships include:

  • Manufacturing partners: Apple relies on a network of manufacturing partners, such as Foxconn and Pegatron, to produce and assemble its products. These partnerships enable Apple to scale production and maintain quality standards while focusing on its core competencies.
  • Component suppliers: The company works with a variety of component suppliers, such as Samsung, LG, and Intel, to source the necessary parts for its devices. These partnerships help Apple secure access to cutting-edge technology and maintain a competitive edge.
  • Content providers and developers: Apple collaborates with content providers, such as music labels, movie studios, and app developers, to offer a wide range of digital content and services through its platforms, like the App Store and iTunes Store.
  • Authorized resellers and carriers: Apple partners with authorized resellers and carriers to distribute its products in different markets, expanding its global reach and customer base.
  • Cost Structure

Apple’s cost structure is composed of various elements, including:

  • Research and development: As a technology-driven company, Apple invests heavily in R&D to stay ahead of the competition and drive product innovation.
  • Manufacturing and production: The company incurs costs related to manufacturing and assembling its products, such as labor, materials, and equipment.
  • Marketing and advertising: Apple spends a significant amount on marketing and advertising to promote its products and maintain its brand image.
  • Distribution and logistics: The company’s global distribution network and logistics operations generate costs related to transportation, warehousing, and inventory management.
  • Employee salaries and benefits: Apple’s talented workforce is a significant expense, with the company offering competitive salaries and benefits to attract and retain top talent.

Apple’s business model, as analyzed through Alexander Osterwalder’s Business Model Canvas, reveals the company’s unwavering commitment to innovation, design, and customer experience. By understanding its target customer segments, delivering compelling value propositions, leveraging strategic partnerships, and managing its key resources and activities, Apple has managed to maintain its position as a leading technology company.

The company’s ongoing success is a testament to the vision and perseverance of its founders, as well as the dedication and talent of its employees. By continuously evolving and adapting to changing market conditions and customer needs, Apple has managed to stay ahead of its competitors and create a loyal customer base that spans across the globe.

As a result, Apple serves as an excellent example for entrepreneurs and business leaders seeking to build a successful and sustainable business in today’s fast-paced and competitive landscape. By focusing on delivering exceptional value to customers, fostering strong relationships, and constantly pushing the boundaries of innovation and design, companies can learn from Apple’s example and create their own unique and successful business models.

In summary, Apple’s business model, as analyzed through the Business Model Canvas, can be broken down into nine key components:

  • Customer Segments: A broad range of consumers, businesses, and institutions
  • Value Propositions: Superior design, seamless integration, innovation, user-friendly software, and brand prestige
  • Channels: Retail stores, online store, authorized resellers, carriers, App Store, and iTunes Store
  • Customer Relationships: Retail store experience, Genius Bar, AppleCare, and online resources
  • Revenue Streams: Product sales, services, accessories, and licensing and royalties
  • Key Resources: Intellectual property, supply chain and manufacturing, design and engineering talent, and brand equity
  • Key Activities: Research and development, product design, manufacturing, marketing, and distribution
  • Key Partnerships: Manufacturing partners, component suppliers, content providers, and authorized resellers
  • Cost Structure: R&D, manufacturing and production, marketing and advertising, distribution and logistics, and employee salaries and benefits

By understanding and applying the lessons from Apple’s business model, entrepreneurs and business leaders can develop a clear roadmap for success and build companies that are not only profitable but also make a meaningful impact on the world.

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I HELP BOLD LEADERS TRANSFORM THEIR BUSINESSES AND THE INDUSTRIES THEY COMPETE IN

September 13, 2018 By Denis Oakley

What is the Apple Business Model Canvas?

What is Apple’s business model? In this video, I describe how Apple makes money by working through all 9 components of Apple’s business model canvas.

Apple Business Model Canvas

Apple creates consumer electronic products that have amazing design and usability and bundles them with software products to lock consumers in. Because they are so attractive they deliver great status and productivity to users leading to a premium price.

Customer Segments in the Apple Business Model

Apple’s business model targets mass-market consumers. That is hundreds of millions of consumers. They may be middle class and fairly affluent. It may be marketed as a premium product but it is a mass-market electronic good.

There are smaller customer segments that it focuses on for non-handheld products. Designers and entrepreneurs both use and love Mac products but in 2019 this is a relatively small proportion of Apple’s revenue.

In the tables below Apple’s customer segments are broken down across a number of different measures, geographic, demographic, behavioural and psychographic

Apple’s Customer Segmentation – Geographic

Apple’s customer segmentation – demographic, apple’s customer segmentation – behavioural, apple’s customer segmentation – psychographic, value proposition.

Apple's Value Proposition

The Apple Value Proposition revolves around three core concepts.

Think Different

  • Tech That Works

Your Privacy is Safe with Us

“Think different” sets Apple apart. In the years since the original advert, shown below, it has developed into a philosophy that spawned the design style

The value proposition is that Apple is for the people who Think Differently , who see the world differently, who change it. Creatives, Entrepreneurs and Hipsters.

Their Apple devices are a way of letting them make their statement about who they are and what they are doing. The design, which many people say is important, is an outward and visible sign of the value proposition. Not the value proposition itself

Tech that Works

Living in a Microsoft environment before I got my first iPhone I remember how difficult it was to get things to work. It took me a day once to install a printer for an insurance company. I spent hours trying to get music onto my Creative music player. Technology promised lots of gains, but you had to put the hours in to get the technology to work to get those gains.

What Apple brought, brings, to the table, is technology that is seamless and integrated. Play around with Google for a while and you quickly discover that their products aren’t really integrated. Google Plus is dead but I still had to go somewhere that looked a lot like Google Plus to change my YouTube channel name today. Microsoft Windows has a UI that is half sleek and modern , and then suddenly jumps you back 20 years due to legacy coding issues.

The Apple business model is in large part the experience of using Apple products. Google’s is to consume advertising – which is why the experience isn’t nearly so good.

This is a major differentiation between it and it’s Android competitors. Apple controls the software, the hardware and the content. This means that it is able to finely tune the experience that users have.

In contrast, Samsung and other users of Android OS have to face the fact that they control the hardware, have some control over the version of Android that they use and have little control over the apps on the Play Store. This results in a far less joined up, or easy, experience for users.

Because Apple is the only company able to offer this it is major support for the premium that it is able to charge.

Apple sells Software and Hardware. It doesn’t sell advertising or make a market in data. It also builds all of its products into a single consistent eco-system or walled garden.

Once you are in you are safe. You stay safe. Apple doesn’t take your data. Apple makes sure that no one else takes your data unless you explicitly give them permission to do so.

This creates a core value proposition that separates them from Google. Google’s whole business model is based on taking your data and selling it to other people.

We can break these down into a number of smaller value propositions which Apple delivers to customers through its hardware and software products

Sense of Achievement

For many, there is a sense of achievement in getting an Apple Phone. When billions have a $50 smartphone being able to afford a phone that can cost over $1,000 is important. This is especially so for those who started off with an Android phone and were able to, through hard work or endeavour, to be able to achieve one. It’s a visible mark of success and is treated as such.

Self Expression

The self-expression component of Apple’s value proposition is an identification of the user with Apple’s brand values. Having an Apple product makes you hip, cool, an entrepreneur, creative, individual, someone who thinks different, successful. Any of the or all of these may apply to particular individuals. Invariably, individuals use Apple products to show to the world that these are important truths about them

Speed of Service

Speed of service is an important value proposition for Apple’s customers. This is not really about how fast your new Apple phone is delivered. It’s about how fast you can set it up and start using it. It’s about how quickly you can learn to use it. It’s about how smoothly the product has an impact on what is important in your life and how it makes you more efficient and effective.

“I waste less time trying to do stuff now that I have an Apple”

Muda (Hugo Tschirky 2017)

The efficiency component is deeply related to Apple’s speed of service value proposition. It’s not about the tech. Apple is notoriously behind many other hardware manufacturers in its tech.

It’s about how the tech interacts with your life. Is there friction between the tech and you? If there is then the technology is not really delivering the value that the hardware claims. This is a big part of ‘design’. It’s about ergonomics and usability. It’s stripping waste, or muda , out of every customer interaction. Those milliseconds and seconds stack up to a far more efficient customer experience

Advanced Features & Capabilities

This is all the cool tech stuff. Retina displays. Multiple Cameras. Fingerprint sensors. They are important but other manufacturers have them – and often better

So despite Apple entering the smartphone and tablet categories first, it is happier to be a fast second. The value proposition is a hygiene factor. Not a critical success factor.

Finally recreation. People play lots of games on Apple devices. They watch lots of videos. But the consumers who buy them are predominantly wealth successful business people.

Image result for flappy bird"

Recreation on Apple devices is a much lower importance value proposition for many of them. For example, I have Netflix on my iPhone, no games and almost every app contributes to me doing my job better.

Recreation is a part, but not a key part of Apple's value proposition

Apple Products

Apple has four groups of products

Operating Systems

Accessories.

  • iPhone smartphone
  • iPad tablet computer
  • Mac personal computer
  • iPod portable media player
  • Apple Music
  • Airpods – wireless headphones
  • Apple Watch – Smartwatch
  • AppleTV – digital Media player
  • HomePod – smart speaker

Image result for apple revenue by product 2019"

Distribution Channels

Apple uses a number of powerful promotional channels in the Apple business model, several of which have now been copied so much that they no longer differentiate Apple. These include the packaging of Apple products and the genius bar layout of apple stores.

These include:

  • Apple Stores
  • Apple’s websites
  • Third Party Stores
  • Telecom Companies

Apple Stores make a statement in a way that their competitors do not

Image result for apple stores"

Apple also controls the distribution of its products through its own website

Third-party stores have their brand and image tightly controlled so that they support the Apple brand.

Image result for machines malaysia"

Finally, Apple phones and tablets are sold through telecoms companies – bundled with the SIM and data required to make the most out of the device.

What is the Apple Business Model Canvas?

Marketing Channels

Apple generates an immense amount of PR and this is supported by strong brand awareness campaigns ‘shot with iPhone’ is a classic and long-running campaign.

Advertising as part of Apple's Business Model

Just as importantly – more so even – is the word of mouth. Because of the importance of self-expression and achievement in Apple’s value proposition users need and want to talk about their ownership of an Apple product.

If no one knows that they own an Apple device then they don’t get as much benefit from it. So they talk and often evangelise.

Image result for apple fanboy"

The final component of Apple’s word of mouth is the importance of groups.

“People like us do things like this” Seth Godin – Marketing Guru

Creatives, entrepreneurs, hipsters and business people have all adopted Apple products as part of their definition of group membership.

You can’t really be a ‘proper’ designer unless you use an Apple product. This isn’t true, but to members of a group, and especially to aspiring members of a group it can seem so.

Customer Relationships

With over 1.6 billion devices sold Apple is a mass-market consumer company by any definition.

Apple has a number of channels where they manage customer relationships

Image result for apple genius bar"

Telephone Customer Support

Image result for apple customer support"

Chat and Online Customer Support

Image result for apple chat support"

These are all great and are typically much better than competitors. Staff are onshore, rather than offshore, and as can be seen often match the demographics of target customers. Compare this to a lowest cost outsourced customer service department at Verizon.

However what makes the biggest difference in Apple’s customer relationships are:

  • Evangelists

The evangelists have been mentioned in the section on Marketing Channels. They provide a similar service in the customer relationships – advocating for Apple, as unpaid salespeople. They will often also provide a front line level of support for other users.

Design is critical. Because Apple is a product-led company – they focus on building great products and expect success and scale to be based on the product – a great deal of the need for customer support is designed out.

In many ways, customer support, an important part of customer relationships in the business model canvas, is a failure of product design. Consumers contact support when something goes wrong. If you can design out failures…. then you need far less customer support.

Revenue in Apple’s Business Model

Apple’s business model is hugely cash generative. It makes more profits and has a stronger cash flow than Amazon, Google and Facebook combined.

Apple’s $60B of TTM operating income was nearly 50% more than the combined operating income of Alphabet ($24B), Facebook ($15), and Amazon ($3B). Above Avalon

What is the Apple Business Model Canvas?

So what does Apple sell? How does Apple monetise its business model?

  • Apple Watch
  • iTunes Store,
  • Garage Band

Almost all of those are large enough to be a large company in their own right.

Key Resources in the Apple Business Model

The most important key resources in the Apple Business model are:

  • Product First Design Philosophy

Supply Chain

  • Walled Garden

Apple’s Product First Design Philosophy

If you look at Apple’s products you will find that they are often not better, on a technical sense

If you look at Apple’s products you will find that they are often not better, on a technical sense than its competitors. They are also priced similarly to the competitors’ premium products.

Apple, despite this, manages to extract far more profit from its products and services than its competitors.

This is a key feature of the Apple business model. When you charge the same price for a similar service and make a lot more money from it something must be going on under the hood.

The difference is Apple’s Product First Design philosophy.

This starts from the premise that they are going to make the best possible product for their market segment. Unlike competitors, they don’t initially think about scale and volume.

The focus is on how to make a product that will delight and inspire its users.

Those are the design constraints. Most other companies use budget and manufacturability as design constraints.

For them, a functional product is good enough. Customers understand that it is a functional product and treat it as one. In contrast, Apple’s focus is on creating a product that excels.

This is captured in their core values

  • We believe that we’re on the face of the Earth to make great products.
  • We believe in the simple, not the complex.
  • We believe that we need to own and control the primary technologies behind the products we make.
  • We participate only in markets where we can make a significant contribution.
  • We believe in saying no to thousands of projects so that we can really focus on the few that are truly important and meaningful to us.
  • We believe in deep collaboration and cross-pollination of our groups, which allow us to innovate in a way that others cannot.
  • We don’t settle for anything less than excellence in every group in the company, and we have the self-honesty to admit when we’re wrong and the courage to change.

 The result of this is that Apple’s business model creates products that work well. I mean well on a very deep level. They are hard to design, easy to manufacture and easy to use.

There is a significant amount of risk in doing this. If their idea of a product is wrong, if it doesn’t gel with the times, then they could lose a lot of money.

It’s a philosophy of perfection and, after their market entries, means that they will rarely be at the forefront of technology.

Design perfection means that they take longer to bring products to market. If they didn’t then they would lose the ease of use and many of the subtle components of the value proposition that makes the Apple business model so successful.

This key resource is composed of hugely talented people and a number of research and development labs working to bring products and services to fruition.

The second key resource that Apple has is its supply chain. In some ways, this is a misnomer as Apple, as part of the design of its business model, has positioned itself as a designer of products

Image result for designed in cupertino"

It has decided to buy the manufacturing of its products as a key resource delivered by key partners (ie Foxconn) rather than make them itself.

Foxconn is a key partner in the Apple Business Model

In contrast, many computer hardware manufacturers are, well, computer hardware manufacturers.

They have to spend a great deal of cash building and running factories, and then even more time focusing on the management of their supply chain to make sure that it works efficiently.

Imagine we have a management team that has a limited amount of time and attention.

It can decide to spend some of its time on manufacturing and some on design. That’s what most companies do. They produce good products as a result.

What Apple does in its business model is to focus ‘all’ its time on design. It then gets Foxconn to spend ‘all’ its time on manufacturing and supply chain.

As a result, it gets far better outcomes in both design and manufacturing than other computer hardware manufacturers do.

This also nicely ties in with the design focus of Apple’s business model.

Much of the visible design is focused on the consumer experience. A great deal of the invisible design is focused on the manufacturability of the product.

Because Apple gives another party critical control over a key part of its business model there is a huge risk of things going wrong.

The manufacturing design, done in Cupertino, work hard to design out as many faults as possible in the product. They are easier to manufacture as a result, and this, in turn, reduces the number of issues of product failure and reduces the need for customer support.

The Walled Garden

The final resource that the Apple Business Model has is the walled garden. This could also be called the Apple Ecosystem

Image result for apple ecosystem"

Everything works smoothly together.

This delivers a key part of Apple’s value proposition. It’s easy, unlike Windows or Android

If we look back into history Microsoft Windows created a platform that worked with any piece of hardware and allowed almost any software to run on it.

The operating system was the middleware that allowed everything to happen. The problem was that hardware designers and software developers cared only about their own products and didn’t often follow standards.

That meant that Windows was often a frustrating product to use as software and devices didn’t work, couldn’t be installed easily or crashed with the famous blue screen of death

Apple's business model works better than Microsoft's blue screen of death

Apple in an attempt to differentiate itself from Microsoft kept tight control of the ecosystem – perhaps because early users were creatives and not good at IT (Slanderous assertion I know) – and ensured it was user-friendly in a way that Microsoft did not.

This was rolled over into the Apple Store when the first iPods and iPhones were released. It then became an increasing part of the Apple experience. Everything played nicely together.

That then provided additional benefits.

Because Apple made its money from hardware sales it has no need to mine customer data and sell it to other people.

Apple can give users privacy. It also provides them with safety and security from many of the threats on the internet.

Finally, the more Apple products you use the greater the synergy you have. With each product, you add you get fewer irritations and hitches in your electronic life.

Key Activities in the Apple Business Model

Apple has two key activities in its business model. The first is the design. The second is branding.

We’ve spoken a great deal about design already, so I won’t go into too much detail there.

Why did I talk about branding being a key activity rather than marketing?

Apple is fundamentally about associating their products and services with emotional feelings in its users.

Apple wants its users to feel successful. Apple wants them to feel that they have achieved. It wants them to feel different. It wants them to be special

This is not something that can be done with traditional feature-based product marketing.

Branding thus connects people who want to be a ‘Mac’ and creates the need to buy the product in them.

It is all about who they can be and the lifestyle that they will become part of if only they buy into the Apple lifestyle.

Branding also works well because Apple controls a big chunk of its direct distribution channels – the Apple Stores.

Key Partnerships in Apple’s Business Model

There are two groups of key partners in the Apple business model.

These are the:

  • Contract manufacturers
  • Telecoms companies

Telecoms Companies in the Apple Business Model

Whilst Apple does have 500 shops worldwide this is a small number compared to the shops of other mobile phone companies, telecoms companies and resellers.

Expanding this network to enable everyone who wants to buy a phone would be cost prohibitive.

Apple’s key sales channel is selling phones through telecoms companies. They bundle the Apple iPhone with a subscription and let consumers pay for the phone over a couple of years. They provide the consumer financing that lets many people afford an expensive phone.

Apple outsource sales to the phone companies and uses their distribution networks and million of direct customers to achieve scale far faster than it could through its own store and website distribution service.

Contract Manufactures

Apple made the decision to buy manufacturing services rather than making its own. It derisked this by focusing on its design and quality control. As a result it freed up a huge amount of cash on its balance sheet.

It thought, correctly, that by using a manufacturer that it had a deep long term relationship with that it could get lower prices, a lower cost per unit, than if it ran factories itself.

Costs in the Apple Business Model

Apple employs some of the most expensive designers in the world in one of the most expensive locations in the world.

Equally, it spends a great deal on branding and on sourcing high-quality components.

Does it make sense then to say that Apple is a cost-driven company?

I think it does.

The expensive designers mean that Apple’s products hit the value proposition sweet spot demanded by their customers. As a result, Apple makes more $ per designer’s time than competitors.

The expensive branding means that it has to spend far less on tactical marketing and sales.

The expensive components deliver a superior user experience that generates intense loyalty and significantly reduces the retention cost and churn of apple users.

As a result, this focus on spending a lot on very valuable activities means that the actual cost of making Apple products is remarkably low and this is the fundamental reason for Apple’s incredible profitability.

Cost is a strategic goal, not a tactical one in the Apple business model

That’s the secret of Apple’s business model!

Apple Business Model Canvas

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  • Value Proposition Design Questionaire
  • Should a Brand be Desirable?

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business model d'apple

Marketline

Apple Inc. – World’s most valuable company has perfected the Luxury Tech Business Model

  • Published: October 2020
  • Report Code: MLCS0001-017

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In April 2020, Apple became the first company in the world to reach a $2tn market cap. Apple’s ‘luxury tech’ business model has been as important to its success as its innovation with groundbreaking products like the iPhone and iPad, and has competitors playing catch-up with their own premium devices that put factors like style, user experience and exclusivity on a par with technical performance. As the technical prowess of Apple’s products becomes increasingly less important than the power of its brand, with competitors offering the same technology at lower cost, the future of the model is uncertain. However, Apple is sure to continue relying on its service ecosystem – the key to its marketing strategy – for future profitability.

Key Highlights

– Whilst Apple remains out in front, the kinds of technological innovation which the company got ahead of over the last decade are likely to place less emphasis on devices and more on services in the future. Apple is in a uniquely strong position to lead the emerging IoT theme thanks to its closed ecosystem of products. However, the very utility of closed ecosystems to consumers will make its competitors more determined than ever to copy the luxury tech business model.

– See how the model might need to change in future

Reasons to buy

Table of contents, list of figures.

Figure 4: Apple’s privacy-focused marketing campaign

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Why apple's business model is so successful.

business model d'apple

Apple business model canvas

business model d'apple

Apple’s Company Overview

Apple is an American multinational technology company headquartered in Cupertino, California, that designs, develops, and sells consumer electronics, computer software, and online services. Its hardware products include the iPhone smartphone, the iPad tablet computer, the Mac personal computer, the iPod portable media player, the Apple Watch smartwatch, and the Apple TV digital media player. Apple's consumer software includes the macOS and iOS operating systems, the iTunes media player, the Safari web browser, and the iLife and iWork creativity and productivity suites. Its online services include the iTunes Store, the iOS App Store and Mac App Store, Apple Music, and iCloud. Apple was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne in April 1976 to develop and sell personal computers. It was incorporated as Apple Computer, Inc. in January 1977, and was renamed as Apple Inc. in January 2007 to reflect its shifted focus toward consumer electronics.

Country: California

Foundations date: 1976

Type: Public

Sector: Technology

Categories: Electronics

Apple’s Customer Needs

Social impact:

Life changing: provides hope, self-actualization, affiliation/belonging

Emotional: rewards me, design/aesthetics, badge value, fun/entertainment, attractiveness, provide access

Functional: saves time, simplifies, organizes, integrates, connects, reduces effort, avoids hassles, reduces cost, quality, variety

Apple’s Related Competitors

Apple’s business operations.

Advertising:

This approach generated money by sending promotional marketing messages from other businesses to customers. When you establish a for-profit company, one of the most critical aspects of your strategy is determining how to generate income. Many companies sell either products or services or a mix of the two. However, advertisers are frequently the source of the majority of all of the revenue for online businesses and media organizations. This is referred to as an ad-based income model.

The aikido business model is often characterized as using a competitor's strength to get an edge over them. This is accomplished through finding weaknesses in a competitor's strategic position. In addition, it adds to marketing sustainability by exposing rivals' flaws, finding internal and external areas for development, and attracting consumers via specific product offers that deviate from the norm.

Benchmarking services:

Benchmarking is a technique for evaluating performance and gaining insights via data analytics. It may be used to conduct internal research on your firm or compare it to other businesses to enhance business processes and performance indicators following best practices. Typically, three dimensions are measured: quality, time, and cost. In this manner, they may ascertain the targets' performance and, more significantly, the business processes that contribute to these companies' success. The digital transformation era has spawned a slew of data analysis-focused software businesses.

Best in class services:

When a firm brings a product to market, it must first create a compelling product and then field a workforce capable of manufacturing it at a competitive price. Neither task is simple to perform effectively; much managerial effort and scholarly study have been dedicated to these issues. Nevertheless, providing a service involves another aspect: managing clients, who are consumers of the service and may also contribute to its creation.

Blue ocean strategy:

The blue ocean approach is predicated on the premise that market limits and industry structure are not predetermined and may be reconfigured via the actions and attitudes of industry participants. This is referred to as the reconstructionist perspective by the writers. Assuming that structure and market boundaries exist solely in managers' thoughts, practitioners who subscribe to this perspective avoid being constrained by actual market structures. To them, more demand exists, primarily untapped. The core of the issue is determining how to produce it.

Multiple products or services have been bundled together to enhance the value. Bundling is a marketing technique in which goods or services are bundled to be sold as a single entity. Bundling enables the purchasing of several goods and services from a single vendor. While the goods and services are often linked, they may also consist of different items that appeal to a particular market segment.

Codifying a distinctive service capability:

Since their inception, information technology systems have aided in automating corporate operations, increasing productivity, and maximizing efficiency. Now, businesses can take their perfected processes, standardize them, and sell them to other parties. In today's corporate environment, innovation is critical for survival.

Consumerization of work:

Consumerization of IT (consumerization) is a term that refers to the process by which Information Technology (IT) begins in the consumer market and then spreads to business and government organizations, primarily as a result of employees utilizing popular consumer market technologies and methods at home and afterward bringing them in the workplace.

Corporate innovation:

Innovation is the outcome of collaborative creativity in turning an idea into a feasible concept, accompanied by a collaborative effort to bring that concept to life as a product, service, or process improvement. The digital era has created an environment conducive to business model innovation since technology has transformed how businesses operate and provide services to consumers.

A credit arrangement is when a consumer purchases items on credit (without paying cash) and spends the provider later. Typically, trade credit is extended for a certain number of days after the products are delivered. These credits may be deducted from one's tax liability.

Cross-subsidiary:

When products and goods and products and services are integrated, they form a subsidiary side and a money side, maximizing the overall revenue impact. A subsidiary is a firm owned entirely or in part by another business, referred to as the parent company or holding company. A parent company with subsidiaries is a kind of conglomerate, a corporation that consists of several distinct companies; sometimes, the national or worldwide dispersion of the offices necessitates the establishment of subsidiaries.

Culture is brand:

It requires workers to live brand values to solve issues, make internal choices, and provide a branded consumer. Developing a distinctive and enduring cultural brand is the advertising industry's holy grail. Utilizing the hazy combination of time, attitude, and emotion to identify and replicate an ideology is near to marketing magic.

Curated retail:

Curated retail guarantees focused shopping and product relevance; it presents a consumer with the most appropriate options based on past purchases, interactions, and established preferences. It may be provided via human guidance, algorithmic recommendations, or a combination of the two.

Customer loyalty:

Customer loyalty is a very successful business strategy. It entails giving consumers value that extends beyond the product or service itself. It is often provided through incentive-based programs such as member discounts, coupons, birthday discounts, and points. Today, most businesses have some kind of incentive-based programs, such as American Airlines, which rewards customers with points for each trip they take with them.

Channel aggregation:

Consolidating numerous distribution routes into one to achieve greater economic efficiency. A business model for internet commerce in which a company (that does not manufacture or warehouse any item) gathers (aggregates) information about products and services from many competing sources and displays it on its website. The firm's strength is in its power to create an 'environment' that attracts users to its website and develop a system that facilitates pricing and specification matching.

Decomposition:

Simplifying many product kinds inside a product group or set of goods. A technique for doing business analysis in which a complex business process is dissected to reveal its constituent parts. Functional decomposition is a technique that may be used to contribute to an understanding and management of large and complicated processes and assist in issue solving. Additionally, functional decomposition is utilized in computer engineering to aid in the creation of software.

Demarketing:

Excluding current clients that are unprofitable or who do not adhere to company principles. Efforts directed towards reducing (not eliminating) demand for a product that (1) a company cannot provide in sufficient quantities or (2) a firm does not want to sell in a particular area due to prohibitively expensive distribution or marketing expenses. Increased pricing, less promotion, and product redesign are all common demarketing tactics.

Digital transformation:

Digitalization is the systematic and accelerated transformation of company operations, processes, skills, and models to fully exploit the changes and possibilities brought about by digital technology and its effect on society. Digital transformation is a journey with many interconnected intermediate objectives, with the ultimate aim of continuous enhancement of processes, divisions, and the business ecosystem in a hyperconnected age. Therefore, establishing the appropriate bridges for the trip is critical to success.

Digitization:

This pattern is based on the capacity to convert current goods or services into digital versions, which have several benefits over intangible products, including increased accessibility and speed of distribution. In an ideal world, the digitalization of a product or service would occur without compromising the consumer value proposition. In other words, efficiency and multiplication achieved via digitalization do not detract from the consumer's perceived value. Being digitally sustainable encompasses all aspects of sustaining the institutional framework for developing and maintaining digital objects and resources and ensuring their long-term survival.

Direct selling:

Direct selling refers to a situation in which a company's goods are immediately accessible from the manufacturer or service provider rather than via intermediate channels. The business avoids the retail margin and any extra expenses connected with the intermediaries in this manner. These savings may be passed on to the client, establishing a consistent sales experience. Furthermore, such intimate touch may help to strengthen client connections. Finally, direct selling benefits consumers by providing convenience and service, such as personal demonstrations and explanations of goods, home delivery, and substantial satisfaction guarantees.

Disruptive banking:

The banking industry's disruptors are changing the norms that have been in place for decades. These new regulations, however, will only be effective until the next round of disruption occurs. Banks and credit unions must thus be nimble and responsive. We need audacious tactics. 'Disruptive Innovation' is a term that refers to the process whereby a product or service establishes a foothold at the bottom of a market and then persistently climbs up the value chain, ultimately replacing existing rivals.

Disruptive trends:

A disruptive technology supplants an existing technology and fundamentally alters an industry or a game-changing innovation that establishes an altogether new industry. Disruptive innovation is defined as an invention that shows a new market and value network and ultimately disrupts an established market and value network, replacing incumbent market-leading companies, products, and alliances.

Easy and low cost money transfer and payment:

This business model makes cheaper and more accessible for users to transfer money and make and collect payments. Sending or receiving money for either payment of salaries, settlement of business transactions, payment of school fees, or for family support is common both for businesses and individuals. It requires efficient, reliable and affordable money transfer services whereby money can be deposited in one location and withdrawn in another in both urban and rural areas.

Electronic commerce, or e-commerce (alternatively spelled eCommerce), is a business model, or a subset of a larger business model, that allows a company or person to do business via an electronic network, usually the internet. As a result, customers gain from increased accessibility and convenience, while the business benefits from integrating sales and distribution with other internal operations. Electronic commerce is prevalent throughout all four main market segments: business to business, business to consumer, consumer to consumer, and consumer to business. Ecommerce may be used to sell almost any goods or service, from books and music to financial services and airline tickets.

A business ecosystem is a collection of related entities ? suppliers, distributors, customers, rivals, and government agencies ? collaborating and providing a particular product or service. The concept is that each entity in the ecosystem influences and is impacted by the others, resulting in an ever-changing connection. Therefore, each entity must be adaptive and flexible to live, much like a biological ecosystem. These connections are often backed by a shared technical platform and are based on the flow of information, resources, and artifacts in the software ecosystem.

Enterprise unbundled:

Unbundling is a business practice that recognizes that a company may have three primary focuses: client connections, product innovation, and infrastructure. Moreover, three of these elements may coexist in big businesses, creating a complex model that needs significant resources to operate effectively. Thus, unbundling is a crucial idea for any enterprise's future success. Additionally referred to as deconstruction or disaggregation, this benign word refers to a dominating force that propels digital change into the heart of whole sectors.

Experience:

Disrupts by offering a better understanding that customers are willing to pay for. Experience companies that have progressed may begin charging for the value of the transformation that an experience provides. An experienced company charges for the feelings consumers get as a result of their interaction with it.

Experience selling:

An experience in the sales model describes how a typical user perceives or comprehends a system's operation. A product or service's value is enhanced when an extra customer experience is included. Visual representations of experience models are abstract diagrams or metaphors derived from recognizable objects, actions, or systems. User interfaces use a range of experience models to help users rapidly comprehend what is occurring in the design, where they are, and what they may do next. For example, a software experience model may depict the connection between two applications and the relationship between an application and different navigation methods and other system or software components.

Fast fashion:

Fast fashion is a phrase fashion retailers use to describe how designs travel rapidly from the catwalk to catch current fashion trends. The emphasis is on optimizing specific supply chain components to enable these trends to be developed and produced quickly and affordably, allowing the mainstream customer to purchase current apparel designs at a reduced price.

Finance get makeover:

Expand your company, acquire money, overcome obstacles, implement your plans, and achieve more success. Financial modeling is how a business creates a financial representation of part or all of the firm's or security's economic characteristics. Typically, the model is defined by its ability to conduct computations and offer suggestions based on the results.

This model is used to describe a pricing system that charges a single flat price for service regardless of its actual use or duration. A company may establish a responsible position in a market if customers get excellent pricing before performing the service. The consumer benefits from a straightforward cost structure, while the business benefits from a predictable income stream.

From push to pull:

In business, a push-pull system refers to the flow of a product or information between two parties. Customers pull the products or information they need on markets, while offerers or suppliers push them toward them. In logistics and supply chains, stages often operate in both push and pull modes. For example, push production is forecasted demand, while pull production is actual or consumer demand. The push-pull border or decoupling point is the contact between these phases. Wal-Mart is a case of a company that employs a push vs. a pull approach.

In-crowd customers:

Providing services to the in-crowd Consumers in mature markets need travel, leisure, and lifestyle businesses to customize their interactions with these customers significantly. For travel, leisure, and lifestyle businesses, their most valuable asset is their brand. The brand functions as a social network navigator as well as a separator between the in-crowd and the crowd. Potential brand ambassadors are the most influential members of a social network. In addition, brand ambassadors collaborate in the selective marketing of high-status goods and services.

Ingredient branding:

Ingredient branding is a kind of marketing in which a component or ingredient of a product or service is elevated to prominence and given its own identity. It is the process of developing a brand for an element or component of a product in order to communicate the ingredient's superior quality or performance. For example, everybody is aware of the now-famous Intel Inside and its subsequent success.

Layer player:

Companies that add value across many markets and sectors are referred to be layer players. Occasionally, specialist companies achieve dominance in a specific niche market. The effectiveness of their operations, along with their economies of size and footprint, establish the business as a market leader.

A formal agreement in which the owner of the copyright, know-how, patent, service mark, trademark, or other intellectual property grants a licensee the right to use, manufacture, and sell copies of the original. These agreements often restrict the licensee's scope or area of operation, define whether the license is exclusive or non-exclusive, and stipulate whether the licensee will pay royalties or another kind of compensation in return. While licensing agreements are often used to commercialize the technology, franchisees also utilize them to encourage the sale of products and services.

The lock-in strategy?in which a business locks in consumers by imposing a high barrier to transferring to a competitor?has acquired new traction with New Economy firms during the last decade.

The long tail is a strategy that allows businesses to realize significant profit out of selling low volumes of hard-to-find items to many customers instead of only selling large volumes of a reduced number of popular items. The term was coined in 2004 by Chris Anderson, who argued that products in low demand or with low sales volume can collectively make up market share that rivals or exceeds the relatively few current bestsellers and blockbusters but only if the store or distribution channel is large enough.

Make and distribute:

In this arrangement, the producer creates the product and distributes it to distributors, who oversee the goods' ongoing management in the market.

Make more of It:

The business invests time and money in developing in-house expertise and development that may be used both internally and outside to sell goods or services to clients or third parties. AWS was created to meet Amazon's cloud computing requirements. They quickly discovered that they could offer their services to end-users. At the moment, AWS accounts for about 11% of Amazon's overall income.

Mobile first behavior:

It is intended to mean that as a company thinks about its website or its other digital means of communications, it should be thinking critically about the mobile experience and how customers and employees will interact with it from their many devices. The term is “mobile first,” and it is intended to mean that as a company thinks about its website or its other digital means of communications, it should be thinking critically about the mobile experience and how customers and employees will interact with it from their many devices.

Niche retail:

A marketing strategy for a product or service includes characteristics that appeal to a particular minority market segment. A typical niche product will be distinguishable from other goods and manufactured and sold for specialized purposes within its associated niche market. Niche retail has focused on direct-to-consumer and direct-to-business internet sales channels. The slogan for niche retail is Everything except the brand.

Orchestrator:

Orchestrators are businesses that outsource a substantial portion of their operations and processes to third-party service providers or third-party vendors. The fundamental objective of this business strategy is to concentrate internal resources on core and essential functions while contracting out the remainder of the work to other businesses, thus reducing costs.

Product innovation:

Product innovation is the process of developing and introducing a new or better version of an existing product or service. This is a broader definition of innovation than the generally recognized definition, which includes creating new goods that are considered innovative in this context. For example, Apple launched a succession of successful new products and services in 2001?the iPod, the iTunes online music service, and the iPhone?which catapulted the firm to the top of its industry.

Regular replacement:

It includes items that must be replaced on a regular basis; the user cannot reuse them. Consumables are products utilized by people and companies and must be returned regularly due to wear and tear or depletion. Additionally, they may be described as components of a final product consumed or irreversibly changed throughout the production process, including semiconductor wafers and basic chemicals.

Resellers are businesses or individuals (merchants) that acquire products or services to resell them instead of consuming or utilizing them. This is often done for financial gain (but could be resold at a loss). Resellers are well-known for doing business on the internet through websites. One instance is the telecommunications sector, in which corporations purchase surplus transmission capacity or take the call from other providers and resell it to regional carriers.

Revenue sharing:

Revenue sharing occurs in various forms, but each iteration includes the sharing of operational gains or losses amongst connected financial players. Occasionally, revenue sharing is utilized as an incentive program ? for example, a small company owner may pay partners or colleagues a percentage-based commission for recommending new clients. Occasionally, revenue sharing is utilized to share the earnings generated by a corporate partnership.

Skunkworks project:

A skunkworks project is one that is created by a small, loosely organized group of individuals who study and develop a project with the primary goal of radical innovation. The terminology arose during World War II with Lockheed's Skunk Works project. However, since its inception with Skunk Works, the phrase has been used to refer to comparable high-priority research and development initiatives at other big companies that include a small team operating outside of their regular working environment and free of managerial restrictions. Typically, the phrase alludes to semi-secretive technological initiatives, such as Google X Lab.

Solution provider:

A solution provider consolidates all goods and services in a particular domain into a single point of contact. As a result, the client is supplied with a unique know-how to improve efficiency and performance. As a Solution Provider, a business may avoid revenue loss by broadening the scope of the service it offers, which adds value to the product. Additionally, close client interaction enables a better understanding of the customer's habits and requirements, enhancing goods and services.

Subscription:

Subscription business models are built on the concept of providing a product or service in exchange for recurring subscription income on a monthly or annual basis. As a result, they place a higher premium on client retention than on customer acquisition. Subscription business models, in essence, concentrate on revenue generation in such a manner that a single client makes repeated payments for extended access to a product or service. Cable television, internet providers, software suppliers, websites (e.g., blogs), business solutions providers, and financial services companies utilize this approach, as do conventional newspapers, periodicals, and academic publications.

Take the wheel:

Historically, the fundamental principles for generating and extracting economic value were rigorous. Businesses attempted to implement the same business concepts more effectively than their rivals. New sources of sustained competitive advantage are often only accessible via business model reinvention driven by disruptive innovation rather than incremental change or continuous improvement.

Technology trends:

New technologies that are now being created or produced in the next five to ten years will significantly change the economic and social landscape. These include but are not limited to information technology, wireless data transmission, human-machine connection, on-demand printing, biotechnology, and sophisticated robotics.

Tradeable currency:

This pattern involves the creation of a digital asset and the establishment of a payment mechanism. Through this, the user earns points that may be used for other services.

Trash to cash:

Trash to cash may be an extremely profitable business strategy. It entails collecting old goods and repurposing them or reselling them to other areas of the globe. It may be very lucrative for two reasons. The first reason is that most of these goods can be obtained for little or no money, dramatically boosting the profit margin. Furthermore, companies pay to have their garbage collected, which may be a lucrative revenue stream. It may be a double whammy for a business that is compensated to remove debris.

Ultimate luxury:

This business approach is based on product distinctiveness and a high level of quality, emphasizing individuals with significant buying power. The expenditures required to create distinction are covered by the comparatively high prices charged, which often allow for very high profits.

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Choosing a business model

The App Store empowers you to scale your app distribution worldwide using a variety of business models. The right business model for your app balances your goals with your target market’s expectations. Choosing your business model before developing your app can inform your app design decisions for a cohesive user experience.

With free models, users don’t pay to download or use your app. Removing the barrier of price increases the likelihood that users in your target market will download and try your app, which can help increase awareness and expand your user base. If you’re looking to grow your brand or attract a large user base, consider offering your app for free.

Free without monetization. Your app doesn’t offer in-app purchases or the ability to buy physical goods or services within the app, and doesn’t display advertisements. You don’t earn any revenue from your app.

Free with physical goods and services. Users can purchase physical goods and services — such as clothing or food — within your app or order rides from transportation services. You earn revenue from these sales.

Free with display advertising. Display advertisements are part of the app experience and you earn revenue when presenting them. Make sure that all display advertisements in your app are appropriate and relevant to your target market, as low-quality, obtrusive, or inappropriate advertising reduces engagement and retention.

Your app and any third-party SDKs you use to help target display advertising or measure advertising efficacy need to follow the Data Use and Sharing and the Advertising sections of the App Store Review Guidelines.

Reader. Users purchase or subscribe to content — such as magazines, newspapers, books, audio, music, or video — outside of your app and enjoy access to that content within your app. You generate revenue outside of the app. For more information, see the “Reader” Apps section of the App Store Review Guidelines.

With freemium models, users pay nothing to download your app and are offered optional in-app purchases for premium features, additional content, subscriptions, or digital goods. Freemium apps are accessible to all users, regardless of whether or not they choose to spend, and offer the option to pay to enhance or customize the experience. You earn revenue from the sales of in-app purchases within your app. Successful freemium apps operate as services that are continually updated to attract and retain users. You can offer multiple types of in-app purchases, including subscriptions.

In-app purchase types

Consumable. Users can purchase different types of consumables, such as lives or gems in a game, to further their progress through an app. Consumable in-app purchases are depleted as they’re used, and can be purchased again.

Non-consumable. Users can purchase non-consumable, premium features within an app. Non-consumables are purchased once and do not expire, such as additional filters in a photo app. Apple can host content associated with your non-consumable in-app purchases.

Auto-renewable subscriptions. Users can purchase access to services or periodically updated content, such as monthly access to cloud storage or a weekly subscription to a magazine. Users are charged on a recurring basis until they decide to cancel. Learn more about subscriptions.

Non-renewing subscriptions. Users can purchase access to services or content for a limited duration, such as a season pass to streaming content. This type of subscription does not renew automatically, so users need to renew each time.

If you wish, you can allow users to access content or services across multiple Apple devices, as well as other platforms. If you offer any multiplatform functionality, be sure any purchasable items or services outside of the app are also available as in-app purchases within your app. For more information, see the Multiplatform Services section of the App Store Review Guidelines.

Learn about different freemium experiences

In the paid model, users pay once to download your app and use all of its functionality. There are no additional charges or in-app purchases. You earn revenue from the sales of your app. This model resonates with users who prefer to pay once to get the full experience. Because the cost to download might make users consider the app’s value more carefully, successful paid apps are often positioned as premium experiences through outstanding design, functionality, and marketing.

In this combination of the paid and freemium models, users pay to download your app and have the option to buy additional features, content, or services through in-app purchases if they want to engage more deeply. It offers the possibility of lowering the app’s download price while using in-app purchases for ongoing monetization. Successful paymium apps offer premium design, functionality, and content, as well as advanced features intended to complement the experience.

As with paid apps, the cost to download might make users consider the app’s value more carefully. Set expectations about what users get when they pay up front and what they’ll get if they purchase optional enhancements. Keep in mind that creating in-app purchases for features that are required to use the app can cause a negative experience and may affect your sales and retention.

App Store Small Business Program

The App Store Small Business Program is designed to accelerate innovation and help propel your small business forward with the next generation of groundbreaking apps on the App Store. It features a reduced commission rate of 15% on paid apps and in-app purchases, so you can invest more resources into your business to continue building quality apps that customers love.

Learn about the program

Apple eyes business as a prime market for the Apple Vision Pro

Despite ar's lack of sustained success in the enterprise.

business model d'apple

For years, we’ve been hearing about virtual and augmented reality use cases in business around manufacturing, field service and product design, but for the most part, the notion has failed to take hold in a big way. The question now is whether the Apple Vision Pro (AVP), released last week with much ballyhoo, will move the needle at all when it comes to shifting these kinds of devices into the enterprise mainstream.

While most people use terms like “augmented reality,” “virtual reality” or even “metaverse” (thanks, Meta), Apple prefers to define the genre in its own terms, referring to the Apple Vision Pro as spatial computing or mixed reality. In its typical fashion, Apple is trying to define a new category. Whatever you call it, the company certainly sees the AVP as a business device alongside its more obvious consumer use cases around gaming, media consumption and good old-fashioned web surfing. Certainly it has the potential to transform the online shopping experience.

On Apple’s quarterly earnings call with analysts earlier this month, CEO Tim Cook emphasized that he was seeing lots of interest in the enterprise. “Leading organizations across many industries such as Walmart, Nike, Vanguard, Stryker, Bloomberg and SAP have started leveraging and investing in Apple Vision Pro as their new platform to bring innovative spatial computing experiences to their customers and employees,” Cook said. Notice that reference to spatial computing.

Cook cited ideas for business like everyday productivity, collaborative product design and immersive training. The ability to have a so-called infinite desktop is key to the productivity piece: Users can open multiple programs and move them around a huge palette that gives new meaning to extra screen real estate. Whether these devices are good for content creation, however, remains an open question.

With 600 apps announced last week, and more expected over time, the Apple Vision Pro lets people access the same apps that they are used to using on macOS and iOS, but tuned to the visual experience of the device. To select an app, users simply gaze at the icon in a similar interface as Apple’s other apps, like Safari, Photos, Messages and Mail. As the gaze focuses on the icon, it lights up and users pinch a finger and thumb together to select it.

business model d'apple

The Apple Vision Pro sports a familiar-looking interface. Image Credits: Apple

One of the big differences between this and earlier devices is that even though it goes over your eyes, you can see through it. Apple deliberately designed it that way, letting the user see the world, and other people see the user’s eyes, so there wasn’t as much separation between the two. The company believes that will alter the experience and perhaps generate new use cases.

Steve Sinclair, who is part of worldwide product marketing for Apple Vision Pro, says the company sees the device as an opportunity to explore new ways of interacting with software. “As our first spatial computer, it’s really given us a platform to build upon to create new spatial experiences,” he told TechCrunch. “We really believe that being able to bring information into your space while allowing you to stay connected to people around you is really important. And that has applications obviously from a consumer perspective but also from a business perspective.”

IDC analyst Ramon Llamas surveyed over 400 U.S.-based IT decision-makers last year at the Apple Worldwide Developer Conference and found there were several potential use cases, bearing in mind that this survey was conducted before people actually laid their hands on one. “I think we’re still trying to figure out use cases, especially when it has to do with B2B usage,” Llamas told TechCrunch. “About 56% use it for training, about 44% for customer facing retail experiences, and 43%-44% for collaboration.” Note that none of these use cases involves content creation.

Ray Wang, founder and principal analyst at Constellation Research, who has tried the device and is mostly positive about the experience, sees similar use cases. “We expect field service, training and customer experience to be the top use cases,” Wang said.

Apple Vision Pro review: The infinite desktop

Earlier this week, Apple announced it was bringing the AVP under the Apple device management umbrella, making it a lot more palatable for IT as a business device that can be managed in the same fashion as any Apple device.

But is that enough for companies to commit to a product that starts at $3,500? Jon Turow, a partner at Madrona Ventures, says this pricing approach follows a typical pattern of how Apple tends to introduce new hardware, including the iPhone, iPad, Watch or any new device. Over time, the company adds functionality and refines the approach, and the price usually tends to come down, and newer versions at different price points have also become the norm.

“Some people are going to be willing to pay for this. Apple has the Apple Watch Ultra and [there is a market for that]. They’re trying to find that northernmost price point, and then they will probably come in with another option below it,” Turow said.

In his survey of IT pros, IDC’s Llamas found that Turow could actually be right: 65% of those surveyed were interested in the device as described at WWD with around half saying they would definitely buy it. The other half expressed curiosity about it.

“When you have enterprise users coming back and saying that they want to get their hands on it, I think that speaks to Apple’s abilities to court the enterprise user with this device,” Llamas told TechCrunch.

It also has clear benefits over other devices. Wang called it the best eye tracking he’s seen. “Think of macOS and iOS merging and this is what you get,” he said.

But there are obvious things that will need to be addressed. For example, the AVP is tethered to a battery, which is definitely awkward and a big weakness, in Wang’s view, but something he expects Apple will fix in future versions. “It feels much lighter when the battery is not attached, but that’s a temporary thing. I’m sure the power will get better over time,” he said.

There’s also the ability for people to build their own apps. As a developer ecosystem begins to emerge, we will start to see apps created from scratch, some for consumers and some for businesses, that have been specifically designed for this paradigm.

Apple has clearly advanced the technology, whatever you want to call it, and created a pleasurable user experience, bringing the outside world in to the extent you want it. But so far, no AR device has attracted companies to buy them at scale. For now, Apple’s entry is cool to experiment with, but it’s not clear whether people want to wear a device on their face for hours at a time, no matter how good the interface design may be.

These VCs think the Vision Pro has a shot in the enterprise

What is Apple’s generative AI strategy?

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Apple was not mentioned much in the highlights of the 2023 generative AI race. However, it has been doing some impressive work in the field, minus the publicity that other tech companies have engaged in. 

In the past few months alone, Apple researchers have released papers, models and programming libraries that can have important implications for on-device generative AI. A closer look at these releases might give a hint at where Apple is headed and where it will fit in the growing market for generative AI.

On-device inference

Apple is not a hyper-scaler and can’t build a business model based on selling access to large language models (LLMs) running in the cloud. But it has the strongest vertical integration in the tech industry with full control over its entire stack, from the operating system to the development tools and down to the processors running in every Apple device.

This places Apple in a unique position to optimize generative models for on-device inference. The company has been making great progress in the field, according to some of the research papers it has released in recent months.

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In January, Apple released a paper titled “ LLM in a flash ,” which describes a technique for running LLMs on memory-constrained devices such as smartphones and laptops. The technique loads a part of the model in DRAM and keeps the rest in flash memory. It dynamically swaps model weights between flash memory and DRAM in a way that reduces memory consumption considerably while minimizing inference latency, especially when run on Apple silicon.

Before “LLM in a flash,” Apple had released other papers that showed how the architecture of LLMs could be tweaked to reduce “inference computation up to three times… with minimal performance trade-offs.”

On-device inference optimization techniques can become increasingly important as more developers explore building apps with small LLMs that can fit on consumer devices. Experiments show that a few hundredths of a second can have a considerable effect on the user experience. And Apple is making sure that its devices can provide the best balance between speed and quality.

Open-source models

Apple has also released several open-source generative models in the past few months. Ferret , silently released in October, is a multi-modal LLM that comes in two sizes: 7 billion and 13 billion parameters. 

The model is built on top of Vicuna, an open-source LLM, and LLaVA, a vision-language model (VLM). While multi-modal models usually analyze an input image in its entirety, Ferret has a special mechanism that enables it to generate its responses based on a specific area of the image. Ferret is especially good at handling small objects and details within images. It can potentially become the basis of a model that enables users to interact with objects they view through their iPhone camera or Vision Pro devices.

More recently, Apple released MLLM-Guided Image Editing ( MGIE ), a model that can modify images based on natural language commands. The capabilities of MGIE range from image-wide modifications such as changing the brightness and contrast, to edits on specific regions, such as “make the sky more blue,” or work on specific objects in the image. These features can be a good addition to the next generation of iOS devices.

Apple is not renowned for embracing the open-source culture. The license for Ferret states that it can only be used for research purposes. However, the release of the models can help create traction for Apple’s future releases and prepare the developer community to build applications for Apple’s products. Once a model is released to the public, developers usually find ways to use it in ways that its creators had not thought of and provide important guidance on how to improve it or integrate it into existing products.

Software development tools

In December, Apple released MLX , a library for working with machine learning models. MLX uses the familiar interfaces of Python libraries such as NumPy and PyTorch, which makes it easy to use for machine learning developers. 

However, MLX has been optimized for Apple processors like M2 and M3. MLX uses the concept of “shared memory,” where machine learning (ML) models can be split between different types of memory as opposed to running either on CPU or GPU memory. It also uses other techniques to make models more memory efficient without incurring a speed penalty. This is in line with the research Apple has been doing to run large models on memory-constrained devices.

Apple has created the library in a way that makes it easy for developers to port code from other popular libraries and optimize them for Apple devices. MLX has also been released under the MIT license, which means it can be used for commercial purposes

All signs indicate that Apple is creating the grounds for a platform shift that will enable it to become a major player in on-device generative AI. Apple has strong research and engineering teams that can work together to optimize models for Apple’s processors and create the next generation of chips that are better suited for Apple’s models and developer tools.

So, while Apple might not have a direct competitor to GPT-4 or its successor, it has everything it needs to power the next LLM that is running on your phone or watch.

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Defining the Pro in Apple Vision Pro: Who is Apple's target professional?

Mike Wuerthele's Avatar

Apple Vision Pro for business: hardhat optional

business model d'apple

We're past the point where we need to lay out the specs of the Apple Vision Pro in this review. It's clearly an attractive product, as VR headsets masquerading as AR headsets go, and it has packed a lot of technology into the device.

It's a great movie-watching device, there are burgeoning gaming options on it, even outside of the App Store . The (very few) interactive content showcases that there have been are presented well and put together excellently.

If you must know about the technology, Wes Hilliard has put together an excellent review for the consumer or prosumer looking at the headset and why they should buy it. Go read that first for a primer , if you need to.

Apple Vision Pro facing left sitting on Apple's carrying case for it, with a black background.

What's been talked about less is businesses, the feds, and trade workers' resistance to and successes from it.

Fortunately, I know a lot of people in those fields. Many of them are the same people who have helped us review the highest-end Mac hardware.

Apple Vision Pro in the workplace

Apple dropped Apple Vision Pro on the world at WWDC 2023, saying it was coming in early 2023. Despite the prevailing wisdom that Apple would ship about six of them in the last week of June to meet this deadline, the company crushed that deadline with an early February shipment.

But in between, Apple didn't say much at all. To anybody. The company shipped developer's kits to some and held sessions for others. For Apple's own inscrutable reason, it didn't do a lot more.

There wasn't much outreach to enterprise, where there had been before with other product launches. The federal government employees we spoke to who historically have had a good back-and-forth with Apple said they actively reached out but were silent.

And then January 2024 came.

Suddenly, there were executive interviews here and there, talking about how excited they were to get the headset in the hands of businesses and so forth. As we've been told, this was met with some incredulity behind closed doors, given the lack of detail that they were provided between the debut and shipment announcement.

We're sure that Microsoft got everything they needed, and we're equally certain that had Google given a single damn about the product, Apple would have bent over backward to help them too.

So, expectations outside Cupertino in enterprise and so forth were low from the start. That may be good, but there is an undercurrent of bitterness in some of the people we spoke to who are responsible for implementation and assessment.

Hands around Apple Vision Pro on a table with a reflective white surface

The folks that are excited about Apple Vision Pro see a future where operating procedures for maintenance or a task can be provided to a worker in real time. Alternatively, installation instructions and contextual information are possible, as are contextual safety exhortations to a user or audio instructions sent from a supervisor, limited to a single worker's ears.

Apple Vision Pro could also provide a company's workers in the field actual and relevant information to a custom installation in real-time, like a service history, instead of knowledge passed down verbally and perhaps not remembered well.

All of this is possible with Apple Vision Pro. The practicality of doing this today is another matter entirely.

Apple Vision Pro pricing for enterprise is the first speed bump

The Apple Vision Pro is expensive. It's loaded with sensors, optical glass, lenses, emitters, and, most expensively, screens.

At the same time, this isn't an Xbox . It's not a loss leader to get people to buy into software. There's a profit being made on it, but it's just not clear how much.

There haven't been any serious bill of materials breakdowns yet, but they're inevitable. And, besides making guesses on what things cost from a material standpoint, they never cover the cost of research, labor, and more, so they're never the final word.

The deals Apple makes through its enterprise sales channels are its own business, and squeezing data out of folks about them is hard. Apple advertises some educational pricing like on Mac mini and iPad , but don't be fooled — when the sale volumes get ridiculous, and the add-on services like AppleCare are added on, Apple is not shy about steeply cutting the price of most of its hardware (compare prices on Apple hardware in our Price Guide ).

Meta does this, too. They have their own enterprise sales team for Oculus hardware sales and evangelism departments to try to spread the good word of head-mounted surveillance capitalism.

For now, though, Apple isn't offering much of a discount on Apple Vision Pro headsets, regardless of volume. We've been told about enterprise sales packages with hardware discounts that don't even cover the cost of AppleCare — which is a typical discount — and more or less required for enterprise deals.

Right now, this is a bit of an obstacle for enterprise purchasers, and it's unclear if this will change any time soon.

Shared device profiles need to exist

It's practical for smaller teams to buy a handful of devices with a one-to-one ratio of devices to users. Getting into the hundreds of employees — or thousands — gets less practical from a financial standpoint very quickly.

Apple does allow some of its devices to have shared user profiles . There's obviously the Mac. You can do it on iPad too, with educational or enterprise mobile device management solutions, on basically any iPad made in the last seven years.

This doesn't exist yet for Apple Vision Pro. I'm not certain that it will, given the way that the light seal and fabric parts of the Apple Vision Pro work today.

A bottom view of the Apple Vision Pro shows the hand tracking sensors and the bottom of the displays

For a "fleet" of devices, in this case, you'd also have to have some kind of cleanliness solution for the fabric parts, which doesn't exist yet. More cleanable materials are less porous by nature, which negatively affects long-duration wearability comfort.

We expect a solution here in the longer term as Apple figures out how to make glasses that do the same thing in a form factor that does not resemble ski goggles. But, it's a problem for adoption now, just the same.

These devices cost $3500 each. Some kind of shared device system needs to exist, we've been told by literally every representative of enterprise, government, or trade work we spoke to.

The tethered battery isn't a big deal

At a glance, the external battery seems like it's not a great idea. But, in my actual home use, it hasn't been a hamper at all.

And, everybody that we've spoken to for the purposes of this review held the same opinion about the battery that I have.

Hands holding the Apple Vision Pro silver power bank, with a camera lens in the background

Some reviewers are getting an extra half-hour from that battery versus what Apple claims it will deliver. I haven't seen that personally or in the business use cases I've had the privilege to witness. And, the evolutions in question are not that long, clocking in at about an hour.

I'd prefer a brief period of a minute or two where the attached battery can be swapped without dropping power to the headset, but it isn't a deal-breaker.

Obviously, opinions may vary — but in this aspect of use, the external battery doesn't seem to matter. Beyond USB-C, we expect third-party options for that battery pretty soon.

Apple Vision Pro at the desk

It's not all about industry, construction, or defense. We've also spoken to some businesses more on the white collar side of the fence.

None were that impressed by what it brings, with most of them commenting that it doesn't do anything better versus what they're doing now, and how they're doing it.

Mac monitor mirroring performs well in my own testing. A single large canvas seems interesting, but that's the crux — a single canvas.

Multiple displays are proven productivity enhancers in the office. Even an external display connected to a single laptop helps a great deal. The Apple Vision Pro adds weight and an extra component to the existing office setups, in an imperfect single-screen mirroring environment.

And, all the aspects about the lack of ability to share Apple Vision Pro that we spoke about earlier apply to the office as well. Office computer users aren't known for having beefy computers, so adding a $3500 headset to a $600 computer and monitor setup, or a $1100 iMac makes very little sense in this environment.

The hardware just doesn't even answer a question that hasn't been asked. It's just something on top of what already exists, adding an additional complexity layer.

And then, there's the travel mode.

Right now, travel mode works poorly on the plane and not at all on the train

Common to enterprise, white collar, and federal service is travel. Apple Vision Pro, as it stands with visionOS 1.0.3, needs a travel mode that works better.

It's acceptable on the plane — as long as you don't look outside, ever. Whatever the reason, the system breaks down, and your windows slide away, locked in space.

This is contrary to how this is supposed to work, and we think this will get fixed. The short-term solution is to not look outside.

A train or a car is a much more challenging environment for travel mode. The windows are larger, and it is almost guaranteed the Apple Vision Pro sensors will see movement through those windows, and react accordingly.

Close-up of a hand holding Apple Vision Pro, with an emphasis on a hand location detecting camera

With all this said, and strangely related, Apple Vision Pro seems very reliant on visual sensing of hand location. If you put the device in travel mode, it relies on the optical sensors less and more on infrared.

So, pro tip: turn travel mode on if you use the Apple Vision Pro in bed or a dark room. Gesture use and hand tracking is much better if you do.

Comfort and safety in the workplace

There's been an adage in the industry forever that safety may be job one, but comfort is most important. It's self-defeating, but we've seen folks not wear eye or hearing protection because it just wasn't comfortable enough or somehow got in the way of the job.

Most got lucky. Obviously, some did not, and not wearing safety gear is typically only a lesson you need to learn once.

Apple Vision Pro and similar headsets aren't safety devices in any way, so that's one strike. And they're not very comfortable outside the office either, which is strike two.

"You get sweaty working already, and all-round eye protection has a sweat all its own," one technology executive at a large commercial construction company told me.

It's not just in construction that environmental concerns are being thought about, as it pertains to Apple Vision Pro.

"Apple Vision Pro is sweaty in an office chair, let alone when it's 90 near the main engines, with 70 percent humidity and you're contorting around pipes in an engine room," a civilian employee in the Department of Defense also told me.

Close-up of Apple Vision Pro vents with 'Designed by Apple in California Assembled in China' text

In a laboratory that requires eye protection from chemical exposure, the Apple Vision Pro isn't a great choice either. That fan that helps with user comfort and electronics heat will draw fumes and particulates right across the user's eyes.

In an evaluation performed by some tradespeople with the product, the Apple Vision Pro is not fully covered by a standard hard hat brim. It doesn't protrude much, but there is about a quarter-inch overhang of mostly glass.

And, the hard hat brim periodically presses the Digital Crown, which I've experienced first-hand with my relatively ancient Navy-issued hard hat from the '90s and a modern one, which isn't much different. This is confusing and jarring if you've got the Apple Vision Pro on, and don't immediately grasp what's happening.

Person with a yellow hard hat and Apple Vision Pro against a residential street backdrop

And, given the inherent nature of the pass-through video, it's nearly impossible to do anything precise with it. The pass-through cameras are excellent compared to the competition, but depth while wearing it is not mapped one-to-one versus with it off and is distorted some when you're not perfectly centered.

And, it's not a full field of view. We've measured it out to be about 100 degrees, and perhaps as many as 105. Apple is tight-lipped on this for some reason, and we aren't sure why.

In short, while wearing Apple Vision Pro, it's easy to miss a door knob, swing a hammer and miss a nail, and the like.

Don't drive any kind of industrial equipment or other vehicle while wearing Apple Vision Pro. Beyond it being very illegal, it's bad enough that you'll probably get hurt or damage property doing it, but you'll also take innocents down with you at the same time.

Glasshole phenomenon isn't really relevant for businesses

More than a decade ago, Google tried the Google Glass. Folks started wearing them in public, and they were, at best, derided and, at worst, assaulted.

This time around, there's less of that so far. Even so, this doesn't matter a great deal to business and trades. If you need it for work, it doesn't matter so much how dumb or slick it may look while you're using it.

So, you might feel like you look dumb working with it on, but that isn't really being considered by your co-workers who are in the same boat. Your customers may think differently about that, but that's not particularly relevant.

Those snickering customers may eventually realize that the Apple Vision Pro is the face-mounted equivalent of technical manuals at some point. The TikTok-using public generating those mostly faked Apple Vision Pro in public clips paired with ten years of ubiquitous smartphone use since the Google Glass launch are breaking down some of the stigmas associated with headset use in the wild.

visionOS will be good for multi-user simulations — eventually

What it is potentially good for is simulations. The same folks that provide the Apple Vision Pro to me over the summer of 2023 are evaluating it for their training efforts.

The simulation that they showed me six months ago has evolved, and is now a bit better with all the trainees sharing a virtual system in an open space — a "set" to borrow a phrase from the training documentation and Hollywood.

Occlusion by the model works very well now, in good lighting, where it didn't before. Response time by the shared system reacting to what any given student or instructor is doing is excellent.

The virtual nature of the "set" still doesn't preclude a trainee from walking through the mechanics of the system, where they (obviously) couldn't in the real world.

An alternative is a dummy physical system built with virtual operation in mind. An early prototype we saw had an ersatz system built with actual mechanical components, manually operated valves, and gauges — but no fluid, lubrication, or electricity flowing through the system beyond the bare minimum of what's needed for the simulation.

The Apple Vision Pro hardware just isn't that good at dealing with a hybrid system right now, though. In short, you can't set trainees loose in a warehouse with a built conveyor belt, for instance, and have them operate it without issues — and it's not clear when this will change.

"The software is good, the cameras are better than we've used to try this kind of thing with other headsets," we were told by an official associated with the testing and training. "It's still not quite there, and somebody could get hurt cracking their hands on a valve hand wheel, or punching a panel accidentally, or something like that."

What they do like is the hand-tracking. So far, it's the best they've seen, and is precise enough now to do what they want in a well-lit space.

While I observed the simulation in virtual space, the operator's hands were always in range of the sensors, and the responsiveness of the system was excellent. The pass-through transmission to an iPad feature was also smooth, and facilitated user training and direction very well.

Hands are floating above an immersive view of snow and the outline of a game controller can be seen, but the controller isn't visible

And in the simulation, there are two sources of audio — the simulation room as a whole, and the Spatial Audio in the headset. General plant noise is piped into the room, with crisis noises like public announcements, fire noises, or rushing gases or water sounds added to that feed.

Close-up of a hand holding Apple Vision Pro, with a close up of the speaker element

More specific Spatial Audio as it pertains to specific and local operations are sent to a trainee's headset. And, communication is made directly with the student to the headset as well, so as to not interrupt the entire training environment.

All told, the experience as presented to me all three times I've been privileged to witness it was very slick. It's rough around the edges versus actual environment operation and the technical seams in the simulator are apparent.

It's better than what they used before Apple Vision Pro, though. It's also not what was promised to them in WWDC briefings and use time.

What it is, is a bid for the future of training in this particular industrial environment, and it's getting closer.

The Steve Jobs and Apple Vision Pro connection

We've heard it a lot — " Steve Jobs would never" as it pertains to Apple Vision Pro. For the most part, arguments that invoke what Jobs would or would not have done, are logically fallacious, with the sayer trying to prove with an irrelevant Jobs story, whatever they want proven.

Jobs did talk headsets, to Walt Mossberg. And, he wasn't down on the entire concept — just negative on the technology almost 19 years ago.

It is a giant mistake to use Jobs' words as some kind of eternal paradigm for technology, forever. The guy died over 12 years ago, and his opinions were formed and expressed given the technology of the day informed by about four years of Apple's roadmap at the time.

Most importantly, technology marches on, and so do the mindsets of the creators and public.

For example, Jobs famously didn't like tablets, until he did. He burned clean suits in advertising mocking Intel, until its technology was needed in the Mac just a few years after that ad campaign ran.

Jobs didn't say that Apple would never, ever make a headset, and Tim Cook has been positive on the technology as a whole since 2016. All Jobs said, 19 years ago, was that the available technology wasn't there yet.

This statement by Jobs was made just two years before Apple filed for a patent that looked very much like the Apple Vision Pro on the outside. He knew then that Apple had it on the roadmap in the distant future.

There were digital music players before the iPod, and Apple didn't make one until they thought the technology was there. The same goes for iPhone , iPad, Apple Watch .

And now, the same applies to Apple Vision Pro. Apple thinks the technology is here — or close enough to get started the way that they want to do it.

Early days for Apple Vision Pro

There is always the argument to make that the first version of an Apple product should be avoided by most until there's refinement. The Apple Vision Pro is no exception.

The big business and government members we spoke to think it won't take just one iteration to hit that sweet spot, and wide market acceptance. Facebook/Meta hasn't been able to convince them to buy mass quantities of their headsets , and while there is a certain Apple cachet now, they aren't being convinced to buy this time around either.

The path ahead for Apple Vision Pro isn't completely obscured, but it is foggy. The first product out of the gate being "Pro" suggests that a non-pro version is coming at some point, and it's clear that Apple eventually wants something less bulky that can be more ubiquitous.

Sure, folks are wearing Apple Vision Pro while going about their day right now, but other than a few notable exceptions, they're performative and being done for the social media cred.

I've said it before, and the folks in business that we've spoken to agree with me — the Apple Vision Pro as it stands in early 2024 is a developer kit that it spread far and wide and is about the most Apple product possible. Its ultimate adoption percentage will be very low, for several years to come, and even perhaps past that.

Apple Vision Pro is a glimpse at the future, but not practical for today

Overall, the concept and, well, long-term vision for Apple Vision Pro appear sound. The hardware is well-executed.

It's just a homeless product beyond media consumption right now, and probably will be for several more years.

The devout want it now , which is fine. It's good for Apple, and presumably good for the enthusiastic early adopter crowd.

What those adopters get is a marginal improvement over the shared experience that is a large television at home for an equivalent cost. On top of that, they get a good and private viewing experience on the go when travel mode works well — which I'm confident it will do in time.

However, it's not a viable product for most businesses today. Enterprise doesn't want it right now because nothing they do is made better by it. There's some interest by the feds, but the form factor is still limiting.

The nature of optics slightly distorts the pass-through video, so, beyond the hard hat protrusion we discussed, it's maybe the hardest sell to trade workers.

So, for now, it's best for low-impact training, in a shared environment, but still not fabulous. The tools to develop that kind of thing for Apple Vision Pro aren't quite up to the promises that Apple made at WWDC 2023.

Maybe they will be for visionOS 2.0, but realistically, probably visionOS 4.0 or later. Today, right now, there's nothing it makes better for business, government, defense, or trade work.

After I appeared on the AppleInsider Podcast discussing this, critics of my opinion pointed to the iPhone, iPad, and Apple Watch as products that were similarly homeless at launch. However, all of those products were well-defined and had use cases and positive public mindshare as a product class when they shipped.

There were mobile phones in easily pocketable forms for a decade before iPhone. There were tablet-form computers for nearly a decade before iPad, and smart watches existed for a few years before Apple Watch.

And, in every case, there were positive examples in popular media of all three decades before.

Apple Vision Pro isn't doomed, and it isn't the downfall of Apple. Anybody trying to tell you that Steve Jobs would have crapped on it don't have any idea what the man would have liked or not, and completely missed that he set the table for the possibility almost two decades ago.

Yes, it is a new product that isn't well-defined. That's okay, though, because, like I've said before, Apple has the cash to wait it out, and they'll do that like they did the "hobby" Apple TV hardware.

Today, businesses and the federal government see utility in literally every other product lines Apple sells. They've seen this utility in the first year of an Apple product since around 2009 when they discovered that Apple wasn't doomed.

This year, this product, is different.

How long the Apple devout will need to keep that flag off the ground before the pole grabs enough traction in the VR sand to stay up on its own is another matter, though.

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Artificial Intelligence

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  • The top GenAI performers have the biggest lead across five main capabilities: a clear link to business performance, modern technology infrastructure, strong data capabilities, leadership support, and a grounding in responsible AI.
  • Companies at the earliest stage of adoption should start with a few priority projects, leverage outside partners and turnkey systems, and tailor their technology governance to keep early GenAI projects on track.
  • Those with GenAI pilots underway should reprioritize the project portfolio based on potential value, assess core technology and data requirements in the context of GenAI, and upskill their people to thrive with the technology.

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Generative AI

/ slideshow, what genai’s top performers do differently.

By  Amanda Luther ,  Romain de Laubier ,  Nicolas de Bellefonds ,  Tauseef Charanya ,  Suraj Shah ,  Kevin Ifiora , and  Patrick Forth

Key Takeaways

Roughly a year after its launch, generative AI (GenAI) is already helping some companies create value in startling new ways. GenAI is different from earlier tech advances—more accessible to frontline employees, with a wider range of applications. A select tier of companies is capitalizing on these differences and leading the way in scaling the technology across their entire organization. As a result, they are not just experimenting with GenAI but using it to unlock efficiency gains, improve the customer experience, and boost revenue. For an organization with $20 billion in revenue, we estimate that GenAI can lead to gains of $500 million to $1 billion in profit, with nearly a third of those gains coming in the first 18 months.

Yet most companies—roughly 90% in our analysis—are further behind in their use of GenAI. These organizations often don’t know how to get started, they don’t know which applications are most impactful for their sector, and they don’t know the specific steps to take to catch up. To that end, we recently surveyed more than 150 senior executives globally across 10 sectors to understand where organizations are succeeding with GenAI. We supplemented that with in-depth interviews and our experience with nearly 200 GenAI client projects across industries and geographies.

This comprehensive research enabled us to develop a set of prescriptive, data-driven steps for how lagging companies can accelerate their adoption of GenAI and start scaling projects across the enterprise. These are the early lessons from the leaders in GenAI—and a playbook for others to take action on immediately.

Segmenting the Landscape of GenAI Adoption

Our analysis shows that companies can be grouped into three categories, based on their level of GenAI adoption so far. (See Exhibit 1.)

business model d'apple

The top 10% of companies are scaling at least one GenAI application across the enterprise. These companies are currently winning in their use of GenAI by moving out of the pilot stage and beginning to capture real value from the technology. Moreover, they’re on the path to reimagine entire functions—or the overall enterprise—through GenAI. Overall, this group is also far more likely to have a solid foundation in predictive AI, which focuses on analytical tasks. Yet they are not satisfied with their current status. As a group, they are four times more likely than the other companies to have increased their investment in digital and AI due to the emergence of GenAI.

Although some of these organizations are digital natives like Amazon and Google, a full two-thirds are incumbent companies in industries like energy, insurance, and biopharma. For example, a US energy company launched a GenAI-driven conversational platform to assist frontline technicians, increasing productivity by 7%. A biopharma company is reimagining its R&D function with GenAI and reducing drug discovery timelines by 25%.

Roughly 50% of companies are in the pilot stage. Companies in this group have begun their GenAI journey and are developing a few focused pilots to test the technology’s value. Most of these companies have had some success with earlier digital and AI initiatives; however, they are not yet scaling them across the organization.

About 40% of companies have taken no action. The third group of companies have yet to take significant action on GenAI. The majority are still grappling with earlier digital and AI initiatives and lack many of the foundational capabilities to succeed, such as modern tech infrastructure or reliable, accessible data. Leaders in these companies may not have a robust understanding of GenAI and thus don’t see the need to take more ambitious steps to implement it.

Why GenAI Is Already Reshaping Businesses

Technology has been advancing for decades, and many companies have worked to digitize their processes and functions. Yet GenAI is different. In our research, roughly two-thirds (65%) of senior executives say it has the greatest disruptive potential of any technology over the next five years. And one-third have already increased investments, despite the tight cost environment. Why are executives so bullish on GenAI?

  • It has a faster time to value compared with other software. Based on the three broad value plays— deploy, reshape, and reinvent —leading organizations can rapidly put GenAI solutions in place and start realizing benefits in as little as three months, especially by leveraging plug-and-play applications. In basic tasks, employee productivity can increase by 10% to 20%.
  • More ambitious applications can generate correspondingly larger benefits. Using GenAI to reshape functions or invent new business models can take longer—one to three years—but trigger a much bigger impact. For example, a consumer goods company is building a GenAI-powered conversational assistant to provide customers with personalized diagnostics, trend discovery, product recommendations, and virtual try-on services.
  • The most valuable GenAI applications are already apparent. More than 50% of executives point to marketing and sales, customer operations, R&D, and IT/software engineering as the biggest value pools for GenAI. At the same time, the technology offers many sector-specific applications as well. The slideshow below shows the most impactful GenAI applications across several industries.

business model d'apple

  • The initial GenAI applications that companies deploy are usually geared toward increasing productivity or improving customer service, but GenAI also creates new revenue streams. Of a typical GenAI portfolio, about 60% of initiatives reduce costs and 40% increase revenue (including through applications that boost engagement and increase customer satisfaction). This also increases the strategic nature of GenAI: opening up a lead on competitors offers opportunities for sustainable advantages in cost, customer service, and value propositions.

The Key Capabilities Companies Need to Scale GenAI

Our analysis points to five specific capabilities that separate the top 10% of companies from the rest. These are the areas where leaders show the strongest performance and have the biggest gap over the competition. (See Exhibit 2.)

business model d'apple

A clear link to business performance.

More than 70% of scaling companies explicitly tailor their GenAI projects to create value. That can be both financial value (increased revenue and reduced costs) or non-financial value (such as an enhanced customer experience). Scaling companies are over 20% more likely to perceive GenAI’s potential to drive top-line growth versus cost savings potential only. In contrast, fewer than one-quarter of bottom performers link GenAI projects to value. Further, scaling companies tend to focus on a small number of targeted applications that can create significant value when scaled, rather than a more fragmented, scattershot approach. These often combine the foundational capabilities of predictive AI, which is strong in traditional left-brain activities like analysis, with GenAI’s strengths in right-brain activities like content creation. (See Exhibit 3.) 

business model d'apple

Modern technology infrastructure.

Leading companies are three times more likely to have a modern, modular IT infrastructure. This enables companies to develop new, GenAI-powered services on top of foundational AI models and to seamlessly work with outside developers. Compared to lagging companies, these top performers are also 1.5 times more likely to focus on building the GenAI stack internally over the coming three years, underscoring their desire to make the technology a core capability for the organization.

Strong data capabilities.

Top performers are twice as likely to have data pipelines and data management practices in place, helping them to source and store high-quality data (even from unstructured data sources). This is a critical element of GenAI, given that models are only as strong as the data on which they’re trained. As the head of data and analytics at a global media company said, “If training data is biased or lacks the diversity of our global audience, the outputs from GenAI tools will replicate those issues, which would impact our ability to serve our markets around the world.”

Critically, tech infrastructure and data capabilities are not formal, ironclad prerequisites to create value from GenAI. These attributes help, but some organizations find success even with less mature skills in these areas— though it may take them longer as they need to address the specific infrastructure and data capabilities in parallel.

Leadership support.

As with any change initiative, support from leadership is crucial. Scaling companies are three times more likely than no-action companies to have leaders who prioritize innovation and actively support GenAI across the company. These leaders usually have a deep understanding of the technology’s potential impact on their industry, and they are publicly committed to ensuring that the organization harnesses it in ways that generate value. As the head of data and analytics at a global media company said, “Visible support and commitment from our leadership team has been crucial, as it provided the freedom to experiment and deal with failures along the way.”

Guidelines and processes for responsible AI.

GenAI is a new and rapidly evolving technology, with implementation risks for organizations that do not understand it. But there are well-known ways to mitigate the risks, such as putting “humans in the loop,” using only factual data, and—critically—implementing responsible AI . Our research shows that leading companies are far more likely to have developed guardrails, guidelines, and policies to ensure that they follow the principles of responsible AI . In the findings, the share of scaling companies that are cautious about the potential misuse of GenAI and taking proactive measures to address these risks is 20 percentage points higher than the share of companies taking no action in this area.

As the head of data and analytics at a global media company said, “Sometimes we deal with highly sensitive personal identifiable information or content that is pre-release, so policies have to be very clear on what people can and cannot do with GenAI.”

Priorities for Lagging Companies to Close the Gap

It is imperative for companies that have been slow to embrace GenAI to take decisive action and ramp up their aspirations for the technology. Our research points to specific recommendations for both groups.

Priorities for “No Action” Companies

The 40% of companies that have yet to take action with GenAI should focus on leadership support, identify a small number of priority applications, work with outside partners, and tailor their approach to governance.

Turn leaders into informed advocates. More than half of the companies yet to take action on GenAI cite a lack of sufficient knowledge among leaders as a key barrier. Accordingly, leaders should educate themselves about the potential value from GenAI and push the organization to embrace the technology. As the GenAI product lead at a scaling company said, “Changing people’s working habits is tough. We use a top-down approach to drive adoption by setting targets for usage and measuring progress.”

Start with a small number of priority applications. Companies do not need to start from scratch—the highest value applications by sector are already well-known. Organizations can choose several that are most applicable to their needs and apply a minimum-viable-product approach to developing them. An agile team can determine the data required, the means to access that data, and the people needed to develop, implement, and run the solution—all within months. “Once we defined a set of projects that were technically feasible, we assessed them against each other in terms of their value and impact on the business,” said the head of technology strategy and transformation at a global financial services company. “And we used that assessment to make the hard choices needed to prioritize.”

Leverage outside partners early on. Over 40% of no-action companies cite the absence of modern tech infrastructure as a key barrier. But revamping IT infrastructure takes time. Instead of waiting, companies can work with outside partners and rely on turnkey GenAI platforms, enabling them to get solutions into place quickly. As the head of data and analytics at a scaling global media company said, “You don’t need advanced tech infrastructure to carry out a pilot. We have an ecosystem of partners that we’ve screened carefully, and we work with them to quickly run pilots.”

Tailor governance to the needs of GenAI projects. At many organizations, the governance for major technology projects is weak, and without sufficient attention, initial GenAI pilots can quickly go off-track. Rather than trying to solve this, companies should create bespoke governance specifically for GenAI projects. Some companies are creating GenAI centers of excellence to spur rapid action and lead to greater impact—with appropriate governance built in. The right approach should enable fast decisions and interventions to maintain progress, while ensuring that the necessary functions (including risk and compliance, procurement, IT, and business owners) are involved as required. Over time, as companies gain momentum with GenAI, they can continue to refine their governance model to address a broader set of applications.

Priorities for “Piloting” Companies

Compared to “no action” companies, the 50% of companies in the pilot stage reprioritize their portfolio of projects already underway, re-evaluate tech infrastructure and data requirements, and adjust their people strategy.

Reprioritize applications. As awareness of GenAI grows, companies at this stage are often inundated with requests to deploy GenAI solutions across the organization, leading to fragmented, isolated efforts. To improve, companies need to assess their portfolio of projects and reprioritize them based on potential value. “It’s easy for people to fall in love with an initiative and not pay attention to the actual value being delivered,” said the digital and innovation lead at an energy company. “We were ruthless in looking at business cases to determine which initiatives to scale. If a pilot fell short, we deprioritized it or killed it outright.”

Re-evaluate technology and data requirements. Modernizing technology and data infrastructure is a long and challenging quest. But companies can be smarter about the process based on the lessons from early pilots. After several initiatives are done, it’s essential to re-evaluate the core technology and data aspects needed to support broader adoption of GenAI. For example, about 50% of piloting companies say that siloed data represents a key barrier at this stage. This process can ensure that GenAI requirements dovetail with the broader technology needs of the organization, and it helps leaders make decisions about which capabilities to build internally versus which to outsource to partners. 

For example, a multinational financial services company considered cloud solutions for some GenAI applications but ultimately brought that capability in-house. “The significant costs associated with GenAI factored into our decision,” said the head of technology strategy and transformation. “We use our on-premise processors to train GenAI models so we don’t feel the pinch of training costs on the cloud.”

Improve the people strategy to accelerate adoption. As GenAI gets embedded and data becomes democratized across the organization, companies need to adjust their people strategy to ensure that workers have the skills they need to thrive with the technology. Yet piloting companies are 20% less likely than scalers to have upskilled their workforce on GenAI. And executives believe that 44% of their workforce will need to be reskilled in the next three years due to the impact of GenAI on their current roles. In some cases, the right approach is to work with employees in developing new tools, which can generate buy-in and support.

As the digital and innovation head at a European oil and gas company told us, “We needed to appropriately engage employees at the front line in helping to develop one of our GenAI tools, because they could strongly resist adoption if they misunderstand the purpose of the technology and assume it would replace them.”

GenAI is becoming an integral part of business ecosystems and is already a strong source of value and competitive advantage. But only 10% companies have mastered how to scale GenAI to create value. GenAI is still a new, evolving technology, but each new release offers more value to corporations. The GenAI leaders have forged a path to early success. The risk for their competitors is to be left behind as the best players increase their advantage further by shortening their times to at-scale deployment and focusing more on reshaping and invention. The time is now for other companies to put these learnings into practice and begin reaping the benefits of this transformative new technology .

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AAPL Company

Artificial intelligence, apple bought 30+ ai startups last year, more than any other tech giant – statista.

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A new report says that Apple bought “up to” 32 AI startups in 2023, more artificial intelligence acquisitions than any other tech giant.

Apple is also said to have bought companies at an earlier stage in their development …

The paywalled Statista report is summarised by Stocklytics .

Apple’s pursuit of AI innovation has been evident in recent years. The tech giant has made a series of strategic acquisitions, including staff hires from AI startups to bolster its AI capabilities across various product lines […] Apple purchased up to 32 AI startups by 2023, the highest number among tech giants. In the overall AI startup acquisition, Google trails Apple with 21, Meta with 18, and Microsoft lags with 17.

It goes on to say that, compared to other tech companies, Apple tends to recognize the value of startups at an earlier point than its rivals.

One notable aspect of Apple’s acquisition spree is its emphasis on acquiring early-stage startups, indicating a proactive strategy to identify and invest in emerging AI trends and technologies before they reach mainstream adoption.

The source data is an estimate, as Apple often makes quiet acquisitions without any announcement. CEO Tim Cook said back in 2021 that the company bought a startup every 3-4 weeks on average , and by the following year he said it was every 2-3 weeks.

The Cupertino company says that it usually buys companies for their technology and their people, but almost never comments on its reasons for any particular purchase, instead issuing a boilerplate response to media enquiries:

Apple buys smaller technology companies from time to time, and we generally do not discuss our purpose or plans.

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The True Price of Apple’s $3,500 Vision Pro Is Closer to $4,600

The new headset teaches a valuable lesson about the cost of tech products: The upsells and add-ons will get you.

In an illustration, gold coins spout from and form a pile around a pair of goggles.

By Brian X. Chen

Brian X. Chen is The Times’s lead consumer technology writer and the author of Tech Fix , a column about the social implications of the tech we use.

When Apple unveiled the Vision Pro virtual reality goggles last year at a technology conference, many in the audience gasped at the price: $3,500. That’s more than quadruple the cost of a new iPhone and 14 times the cost of a competing headset from Meta.

The headset, which Apple has marketed as a computer, movie player and gaming machine, will arrive in stores on Friday. Ahead of its release, the discussion has focused on its price: Many have wondered why people would pay so much to do what they could already do with their computers, TVs and game consoles.

Yet the true cost of owning the Vision Pro is probably even higher. Try $4,600. That’s because the price shoots up with the add-ons and accessories that many people would want to buy, including:

Apple’s $200 carrying case to protect the Vision Pro on the go.

A pair of earphones, such as Apple’s $180 AirPods, to listen to music privately.

A spare $200 battery pack to get more use from the headset (because with only two hours of battery life, the headset won’t last long enough to play a feature-length movie).

$100 prescription lens inserts for those who use glasses.

A spare $200 cushion to make the goggles fit another member of the family.

An additional $200 for the larger data storage option (512 gigabytes instead of the 256 gigs on the base model) to hold more videos and apps on the device.

And those are just the extras that many consider must-haves. Other options, including Apple’s $500 extended warranty coverage, a $70 video game controller and a very uncool $50 battery holder to clip onto your pants, could drive the price well above $5,000 — before tax.

While I have your attention with these breathtaking numbers, we can all learn a valuable lesson from the Vision Pro about “phantom costs,” the add-ons that significantly inflate the amount we spend. For electronics, including smartphones, computers and virtual reality headsets, they can include cases and charging gadgets.

A clear grasp of the true cost of tech ownership is crucial for any consumers trying to stay in control of their budget, said Ramit Sethi, a personal finance adviser. He said he had learned about phantom costs when he bought a Honda Accord about 20 years ago. He initially thought he was spending $350 a month on the car, to pay off his loan. The true cost ended up $1,000 a month after he added up maintenance, insurance, gas, parking and tolls.

“Companies count on you not being able to run the math,” said Mr. Sethi, who hosts a podcast on money psychology . “The bigger the purchase, the more money you invisibly spend.”

These lessons apply to any tech products we regularly use, not just Apple hardware. Let’s run through the phantom costs of a Windows computer and a Samsung phone.

Windows Computer

Microsoft sells its Surface Laptop 5 at a starting retail price of $1,000. But after some extras are added in the Microsoft store, it’s more realistically a $1,950 laptop — nearly double the sticker price.

The extras include:

$500 for more memory.

A pair of earphones, such as Microsoft’s $250 headphones.

$200 for the Microsoft dock that charges the laptop and connects it to an external display.

Here, the biggest phantom cost is memory, which is important for helping the computer smoothly run multiple apps at the same time. Typically, computer makers sell their base models with a modest amount of memory that isn’t likely to be enough to keep the computer running fast for many years, so it’s wise to buy the model with extra memory.

The $1,000 base model of the Surface Laptop 5 comes with only eight gigabytes of memory, but most people are likely to need double that to smoothly run the latest Windows operating system and new apps and games. The model that includes 16 gigabytes costs an extra $500.

Samsung Phone

Samsung’s new high-end smartphone, the Galaxy S24 Ultra , has a starting price of $1,300. But it’s more realistically a $1,540 phone.

In the last five years, many smartphone makers, including Apple, Google and Samsung, stopped shipping phones with basic accessories like earphones and charging bricks, a shift that increased their profit margins. And in an echo of the way computer makers upsell memory, the base model of a smartphone typically includes a modest amount of data storage that isn’t likely to be enough to hold your photos, videos and apps for the long haul.

First, a quick aside on storage. An average photo takes up five megabytes, according to Samsung. So shooting 3,000 photos would take up roughly 15 gigabytes. Popular mobile games like Fortnite and Final Fantasy VII: Ever Crisis gobble up dozens of gigabytes. On Netflix, each hour of video downloaded for offline viewing takes up about a gigabyte. Long story short, data storage can run out fast, so why get 256 gigabytes when you could spend about $100 more for double that?

Unless you already own accessories to work with your new phone, you’ll have to tack on these extras:

$30 for the Samsung charging brick.

$40 for a Samsung protective case.

$50 for the Samsung wireless earbuds.

An extra $120 to get 512 gigabytes to hold more photos and apps. (As of this writing, this data upgrade is free for a limited-time promotion.)

That’s not including the cost of using the phone with a modest wireless phone plan for, say, $70 a month. With wireless service included, the cost of owning this Samsung phone over three years is about $112.77 a month, or $4,060 total.

Bottom Line

The point is not to shame people about buying tech, but to raise awareness of what we’re actually spending on new gadgets, which is a lot more than we think, Mr. Sethi said. That’s why the best practice for most people buying tech products is to hold on to them for as long as they can. This way they maximize the value they get not just from the devices but from the many extras they bought for them along the way.

For comparison purposes, the examples above showed the costs of extras like headphones and cases if you bought them directly from the device makers. A simple method to save money would be to shop around for cheaper third-party alternatives, but the purchases would still nonetheless be phantom costs that drove up the overall price of your tech.

This all brings us to the biggest phantom cost of regularly buying products like new phones and Apple’s Vision Pro: the price you pay for being an early adopter.

“The more you buy a new phone, the more the people around you expect you to have the newest thing, and the more you create an identity that you always have the newest thing,” Mr. Sethi said. “That’s the biggest phantom cost of all.”

Brian X. Chen is the lead consumer technology writer for The Times. He reviews products and writes Tech Fix , a column about the social implications of the tech we use. More about Brian X. Chen

Tech Fix: Solving Your Tech Problems

Brian x. chen, our lead consumer technology writer, looks at the societal implications of the tech we use..

Apple’s Vision Pro: The new headset  teaches a valuable lesson about the cost of tech products: The upsells and add-ons will get you .  

Cut Down Your Screen Time:  Worried about smartphone addiction? Here’s how to cut down on your screen time , and here’s how to quit your smartphone entirely .

A New Age of Surveillance:  Meta’s $300 smart glasses can inconspicuously take photos and record videos. They also offer a glimpse into a future with less privacy and more distraction .

Green and Blue Bubbles: Apple announced that it would improve the technology used to send texts between iPhone and Android users. But the bubble culture war is far from over .

Google’s Pixel 8:  The smartphone lets you use A.I. to add or remove elements from your images. It’s not clear we really need this .

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  1. Apple Business Model

    Apple Business Model Business Model Canvas Examples Apple Business Model Posted on April 7, 2023 by Daniel Pereira Apple Business Model focuses primarily on selling its products and offering services through subscriptions.

  2. Apple Business Model Analysis

    Business, Business Models / By Gennaro Cuofano / June 5, 2023 Apple has a business model that is divided into products and services.

  3. Apple Business Model

    1. Delight and surprise the high end of the market Apple positions the iPhone at the high end of the spectrum, knowing that the price will put it out of reach for the majority of the market. The phone combines an aspiration feel with design, technology, and simplicity, and capitalizes on its love-mark brand. 2. Control costs

  4. Apple's Business Model: Innovation and Beyond

    Understanding Apple's Business Model Unlock the hidden strategies behind Apple's business model and its unprecedented achievements. In today's fast-paced and ever-evolving tech industry, one company has consistently stood out as a symbol of innovation and success: Apple Inc.

  5. Apple: Business Model, SWOT Analysis, and Competitors 2023

    Apple Business Model Canvas Explained What is a Business Model Canvas? Key Components of the Apple Business Model Canvas Conclusion Which companies are the competitors of Apple? Samsung Google Microsoft Huawei Amazon Conclusion Apple SWOT Analysis Strengths Weaknesses Opportunities Threats Key Takeaways Conclusion FAQs

  6. How Apple Is Organized for Innovation

    Joel M. Podolny and Morten T. Hansen From the Magazine (November-December 2020) Mikael Jansson/Trunk Archive Summary. When Steve Jobs returned to Apple, in 1997, it had a conventional structure...

  7. Apple Business Model

    The Apple business model canvas stayed unbeatable through it all, allowing the company to reach the trillion-dollar mark in 2018. iOS devices and software became a household name, doubling its market cap in 2020. Today, aspiring businesses can take pointers from the highly successful Apple business model. Apple Business Model Canvas

  8. Apple Business Model Canvas: How it became the King of Innovation

    With a business model based on innovation and consumer-centric devices, Apple can retain a loyal customer base through user-friendly designs, easy data migration to new product lines, and integration between Apple devices. Every time Apple drops a new iPhone, the long winding queues are proof of how successful its business model is.

  9. Apple's business model: How Apple makes money

    Mac. The Mac is Apple's line of personal computers based on its macOS operating system. The Mac line includes laptops MacBook Air and MacBook Pro, as well as desktops iMac, Mac mini, Mac Studio and Mac Pro. This segment achieved record sales in FY2022 and grew 14.2% year-on-year to US$40.2 billion.

  10. Apple Business Model: Is The $1Tn Giant Being Disrupted?

    The <b>Apple business model ...

  11. The Business and Revenue Model of Apple Explained

    December 5, 2023 The Business and Revenue Model of Apple Explained Discover the intricate business and revenue model of tech giant Apple in this comprehensive article. by Roald Larsen In today's digital age, few brands have achieved the level of success and global recognition that Apple has.

  12. Quick Analysis of Apple's Business Model & Strategy

    Rolling up this quick analysis of Apple, Inc., the company utilizes 5 business models: Manufacturer, Wholesaler, Manufacturer-Direct, Traditional Retail, and Non-Traditional Retail (Freemium ...

  13. Apple's Strategy Bends the World

    The billions of people who use Facebook are affected by Apple's strategy to squeeze more cash from apps. Companies have also said that they felt forced to charge people money in their iPhone ...

  14. Apple Business Model vs. Microsoft Business Model

    Apple's business model is based on innovation and consumer-centric devices. They are able to keep their base due to easy-to-use designs and data migration to new product lines. Microsoft...

  15. The Business Model of Apple

    The business model of Apple is based on designing, developing, manufacturing and selling of computer software, consumer electronics, and online services. Company is headquartered in Cupertino, California, and it is functional all around the world.

  16. Comprehensive Business Model of Apple

    About Apple . On April 1, 1976, in Cupertino, California, Apple Inc., a trillion-dollar firm, began its adventure. It was established as a computer company by Steve Jobs, Ronald Wayne, and Steve Wozniak. However, it presently has 1,5 billion active users worldwide. The iPhones and iPads constitute 80 per cent of active smartphones.

  17. Explaining the Apple Business Model. How does Apple Make money?

    April 5, 2023 Explaining the Apple Business Model. How does Apple Make money? Have you ever thought about how Apple makes money? In this article, we explain the depths of the Apple Business Model to help you learn how the brand has built an massive business empire.

  18. What is the Apple Business Model Canvas?

    Watch on What is Apple's business model? In this video, I describe how Apple makes money by working through all 9 components of Apple's business model canvas. Apple Business Model Canvas Apple creates consumer electronic products that have amazing design and usability and bundles them with software products to lock consumers in.

  19. Apple Inc.

    In April 2020, Apple became the first company in the world to reach a $2tn market cap. Apple's 'luxury tech' business model has been as important to its success as its innovation with groundbreaking products like the iPhone and iPad, and has competitors playing catch-up with their own premium devices that put factors like style, user experience and exclusivity on a par with technical ...

  20. Apple's Key To Success Goes Beyond Products And Services And ...

    In August 2018, the iPhone maker became the first company to cross $1 trillion. It hit the $2 trillion mark on August 20, 2020. Apple became a $3 trillion company briefly on January 3, 2022, and ...

  21. What is Apple's business model?

    Vizologi is a platform powered by artificial intelligence that searches, analyzes and visualizes the world's collective business model intelligence to help answer strategic questions, it combines the simplicity of business model canvas with the innovation power of mash-up method. See how Vizologi works View all features

  22. Business Models and Monetization

    Choosing a business model The App Store empowers you to scale your app distribution worldwide using a variety of business models. The right business model for your app balances your goals with your target market's expectations.

  23. Apple eyes business as a prime market for the Apple Vision Pro

    IDC analyst Ramon Llamas surveyed over 400 U.S.-based IT decision-makers last year at the Apple Worldwide Developer Conference and found there were several potential use cases, bearing in mind ...

  24. What is Apple's generative AI strategy?

    On-device inference. Apple is not a hyper-scaler and can't build a business model based on selling access to large language models (LLMs) running in the cloud.

  25. Apple Business Model Canvas

    170+ Business Model Canvas Examples. 1 review. $ 79 $ 39. 170+ Business Mode Canvas Examples (Amazon, Netflix, Tesla, Amazon...) PDF File Format. Instant Download.

  26. Apple Vision Pro in business: Who is Apple's target professional

    The Apple Vision Pro is an excellent media consumption tool. Still, in our experience and after talking to enterprise, the US federal government, and tradespeople, it's not close to where it needs ...

  27. What GenAI's Top Performers Do Differently

    GenAI is becoming an integral part of business ecosystems and is already a strong source of value and competitive advantage. ... We work in a uniquely collaborative model across the firm and throughout all levels of the client organization, fueled by the goal of helping our clients thrive and enabling them to make the world a better place ...

  28. Apple bought 30+ AI startups last year, more than other tech giants

    Apple purchased up to 32 AI startups by 2023, the highest number among tech giants. In the overall AI startup acquisition, Google trails Apple with 21, Meta with 18, and Microsoft lags with 17.

  29. The True Price of Apple's $3,500 Vision Pro Is Closer to $4,600

    The model that includes 16 gigabytes costs an extra $500. Samsung Phone Samsung's new high-end smartphone, the Galaxy S24 Ultra , has a starting price of $1,300.