A developed ecosystem is the primary catalyst for Apple’s growth
Apple Inc. (AAPL) remains the owner of one of the most popular brands in the world. However, the segment of services is gradually growing in importance. The combination of a strong brand of electronics and a variety of services is the main advantage of Apple.In the first quarter of the current fiscal year 2022, products under the Mac and iPhone brands brought in more than $60 billion out of $97.3 billion in total sales. At the same time, sales of the iPhone alone during this period amounted to more than $ 50 billion.
The growth driver is switching to mobile phones that support 5G wireless networks. Recall that Apple released 5G-compatible iPhones in the fall of 2020, which helped increase iPhone sales by 39% in the fiscal year 2021. Due to high inflation, sales may decrease slightly in the short term, but the long-term trend of switching to 5G will remain the driver of the company’s growth. Thus, consumer demand for 5G to increase from 8% in 2021 to about 25% by 2025.
Over the years, Apple has created many offers that generate regular revenue through subscriptions. Apple’s services segment includes digital payments, cloud storage, advertising products, and digital content, including subscriptions to music, movies, television, and video games. This division’s revenue increased from $46.3 billion in fiscal 2019 to $68.4 billion in fiscal 2021. The impetus for the sale of advertising was, among other things, a change in the privacy rules, when a user can prohibit third-party applications from targeting ads for themselves. As a result, many advertising providers have declined revenue from their iPhone apps. Meanwhile, Apple has benefited as advertisers have shifted budgets to its advertising products. Another growth factor is cloud storage subscriptions, where users can store digital content.
Thus, Apple has created a self-sufficient ecosystem, including modern equipment and popular services. As a result, a consumer buying the latest iPhone can take advantage of the convenience of the Apple cloud to automatically backup the contents of the phone or connect streaming movies to a TV connected to an Apple TV device. This interaction between products and services contributes to the company’s revenue growth by attracting new iPhone buyers.
