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Apple Product Teardown

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Apple has led the hardware market for years. Their product design and proprietary ecosystem has secured them margins seen only luxury markets with the reach of a consumer product brand. We’ve collected facts and figures to help you understand how they’ve gained this power over the consumer.

Key Metrics:

Market Cap: $862.48B
PE Ratio: 17.52
EPS: 9.70
FY’ 17 Net Sales: $229.234B
YOY Growth: 6%
iPhone Net Sales: $141.319B
YOY Growth: 3%
iPad Net Sales: $19.222B
YOY Growth: -7%
Mac Net Sales: $25.850B
YOY Growth: 13%
Services: $29.980B
YOY Growth: 23%
Other Products: $12.863B
YOY Growth: 16%

Retrieved March 27, 2018 from Yahoo Finance and Apple 10-K.

Leadership:

  • Tim Cook, CEO
  • Katherine Adams, Senior Vice President and General Counsel
  • Angela Ahrendts, Senior Vice President, Retail
  • Eddy Cue, Senior Vice President, Internet Software and Services
  • Craig Federighi, Senior Vice President, Software Engineering
  • Jonathan Ive, Chief Design Officer
  • Luca Maestri, Senior Vice President and Chief Financial Officer
  • Dan Riccio, Senior Vice President, Hardware Engineering
  • Philip W. Schiller, Senior Vice President, Worldwide Marketing
  • Johny Srouji, Senior Vice President, Hardware Technologies
  • Jeff Williams, Chief Operating Officer

Essential Reading to Understand Apple:

Articles:

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Timeline of Apple Products vs Valuation

Customer Revenue Growth

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Valuation

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Data Collection and User Permissions

Section Pulled from Apple Privacy Policy:

  • When you create an Apple ID, apply for commercial credit, purchase a product, download a software update, register for a class at an Apple Retail Store, Contact West or participate in an online survey, we may collect a variety of information, including your name, mailing address, phone number, email address, contact preferences, and credit card information.
  • When you share your content with family and friends using Apple products, send gift certificates and products, or invite others to participate in Apple services or forums, Apple may collect the information you provide about those people such as name, mailing address, email address, and phone number. Apple will use such information to fulfill your requests, provide the relevant product or service, or for anti-fraud purposes.
  • In certain jurisdictions, we may ask for a government issued ID in limited circumstances including when setting up a wireless account and activating your device, for the purpose of extending commercial credit, managing reservations, or as required by law.
  • We may collect information such as occupation, language, zip code, area code, unique device identifier, referrer URL, location, and the time zone where an Apple product is used so that we can better understand customer behavior and improve our products, services, and advertising.
  • We may collect information regarding customer activities on our website, iCloud services, our iTunes Store, App Store, Mac App Store, App Store for Apple TV and iBooks Stores and from our other products and services.
  • We may collect and store details of how you use our services, including search queries.
  • With your explicit consent, we may collect data about how you use your device and applications in order to help app developers improve their apps.
  • If you do not wish to receive ads targeted to your interests from Apple’s advertising platform, you can choose to enable Limit Ad Tracking, which will opt your Apple ID out of receiving such ads regardless of what device you are using.
  • As is true of most internet services, we gather some information automatically and store it in log files. This information includes Internet Protocol (IP) addresses, browser type and language, Internet service provider (ISP), referring and exit websites and applications, operating system, date/time stamp, and clickstream data.
  • For example, when you purchase and activate your iPhone, you authorize Apple and your carrier to exchange the information you provide during the activation process to carry out service
  • Children under the age of 13, or equivalent minimum age in the relevant jurisdiction, are not permitted to create their own Apple IDs, unless their parent provided verifiable consent or as part of the child account creation process in Family Sharing or they have obtained a Managed Apple ID account (where available) through their school
  • To provide location-based services on Apple products, Apple and our partners and licensees may collect, use, and share precise location data, including the real-time geographic location of your Apple computer or device. Where available, location-based services may use GPS, Bluetooth, and your IP Address, along with crowd-sourced Wi-Fi hotspot and cell tower locations, and other technologies to determine your devices’ approximate location
  • Unless you provide consent, this location data is collected anonymously in a form that does not personally identify you and is used by Apple and our partners and licensees to provide and improve location-based products and services.

Additional Data Collection Resources

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Hardware

iPhone

History:

Adoption:

Future Plans:

Relevant Acquisitions and Investments:

iPad

History:

Adoption:

Future Plans:

  • We’ve got some exciting things coming on iPad and I’m optimistic about where things are headed,” said Apple CEO Tim Cook. “Customer satisfaction is through the roof. iPad Pro at 99%. So I see a lot of good things and hope for better results.”
  • So Apple’s path will not lead them down the direction of touch Mac screens, as they’ve stated. Instead, Federighi suggests that making the iPad Pro, which they feel has a better drawing experience, work better with the Mac is the answer. “We recognize customers often [use both] — we all certainly use both — so we’re really focused on making them work well together,” he says. “Because we think in many tasks, that’s actually the best solution. So all of our customers should feel free to buy multiple products,” he jokes, laughing. “We encourage that.”

Relevant Acquisitions and Investments:

Intrinsity, Acquisition $127M

iMac

History:

Adoption:

Future Plans:

  • Some folks in the media have raised the question about whether we’re committed to desktops. If there’s any doubt about that with our teams, let me be very clear: we have great desktops in our roadmap. Nobody should worry about that.

Macbooks

History:

Adoption:

Mac Mini

History:

Future Plans:

Mac Pro

History:

Adoption:

  • A “single digit percentage” — and it’s safe to assume the very low end of that single digit scale — of Apple’s Mac customers are Mac Pro customers

Future Plans:

Apple TV

History:

Adoption:

Relevant Acquisitions and Investments:

Matcha.tv, Acquisition $1M-$1.5M

Apple Watch

History:

Adoption:

Future Plans:

Relevant Acquisitions and Investments:

Passif Semiconductor, Acquisition

  • AUGUST 2013 – Passif’s expertise lies in low-power communication chips with very small footprints, something Apple could presumably bring to bear on future iPhones and iPads — or as-of-yet unannounced wearable devices like, say, a watch or band.

iPod

History:

From Statista:

The first line of iPods was introduced to the market in 2001, Apple’s first foray into consumer electronics. Two years later, Apple launched the iTunes Music Store. The iPod, along with iTunes, revolutionized the music industry by offering a smooth combination of software and hardware in a pocket-sized device. With several hundred million units sold over the years, the iPod can be considered one of the company’s biggest successes.

Adoption:

Accessories

Apple-branded and third-party accessories

History:

Adoption:

  • SEPTEMBER 2012 – Apple will generate about $40 million in revenue in the next fiscal quarter from customers worldwide paying for cables that work with the iPhone 5’s new dock connector and at least $100 million in revenue from the new cablesover the course of the next year, according to an estimate provided to Mashable by Michael Morgan, a senior analyst with ABI Research covering mobile devices.

Future Plans:

  • Instead, the company gave us a preview: it’s working on a charging mat, called AirPower, that’ll charge not only iPhones, but also the Apple Watch and AirPods. All three devices can charge at once. Apple says it’s working with Qi to incorporate this into the standard. The mat features fast charging, too. The AirPower charger will be available next year.

Relevant Acquisitions and Investments:

PowerbyProxi, Acquisition

  • OCTOBER 2017 – Apple is unlikely to keep the development of wireless recharging technology in New Zealand after buying Auckland firm PowerbyProxi, Graeme Muller, the chief executive of technology industry body NZTech forecasts.

AirPods

HISTORY:

Adoption:

HomePod

History:

Adoption:

Future Plans:

Other Relevant Acquisitions and Investments:

LuxVue, Acquisition

LinX, Acquisition $20M

  • APRIL 2015 – Apple has purchased Israeli camera technology company LinX Imaging for approximately $20 million, reports The Wall Street Journal. LinX specializes in creating multi-aperture camera equipment for mobile devices and it’s possible that Apple will use the company’s technology in upcoming iOS devices.

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Software

iOS

History:

Adoption:

Future Plans:

Relevant Acquisitions and Investments:

Placebase, Acquisition

Poly9, Acquisition

Imsense, Acquisition

C3 Technologies, Acquisition

WifiSLAM, Acquisition $20M

Locationary, Acquisition

HopStop, Acquisition

Embark, Acquisition

Algo Trim, Acquisition

Topsy, Acquisition $200M

Broadmap, Acquisition

Catch.com, Acquisition

SnappyLabs, Acquisition

Spotsetter, Acquisition

Dryft, Acquisition

Coherent Navigation, Acquisition

Mapsense, Acquisition $25M-$30M

LegbaCore, Acquisition

Indoor.io, Acquisition

  • DECEMBER 2016 (secondary source) – Apple quietly acquired a Finnish company called Indoor.io to help it map indoor spaces, Bloomberg reports.

Workflow, Acquisition

MacOS

History:

Adoption:

Future Plans:

WatchOS

History:

Adoption:

Future Plans:

tvOS

History:

Adoption:

  • DECEMBER 2015 – We’re seeing tremendous developer interest,” Cue told BuzzFeed News. “Already we have over 2,000 apps live in the store
  • OCTOBER 2016 Today, the app store has grown to include 8,000 apps, the exec said, 2,000 of which are games. A year ago, the store had just 1,000 apps, which indicates steady if not remarkable growth for the Apple TV app store, as well as developer interest in creating games for the living room device..

Future Plans:

CarPlay

History:

Adoption:

Future Plans:

Safari

History:

Adoption:

Future Plans:

iWork

History:

Adoption:

Final Cut Pro

History:

Adoption:

  • APRIL 2017 – Apple has announced that it now has two million Final Cut Pro X users – or ‘seats,’ in the terminology used when speaking to an audience at the National Association of Broadcasters’ annual conference.

Logic Pro X

History:

Adoption:

Relevant Acquisitions and Investments:

Other Relevant Acquisitions and Investments:

  • Particle, Acquisition
    • OCTOBER 2012 – Sources believe Apple completed the Particle acquisition late last month, with some, but not all of Particle’s employees staying to work at Apple. CNET believes Apple purchased Particle because the Cupertino, Calif-based corporation has been trying to improve services that utilize HTML5, including iCloud and iAd

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Digital Media (Music/Video)

iLife

iPhoto, iMovie and GarageBand

History:

iTunes and iTunes Store

History:

Adoption:

  • OCTOBER 2010 – According to the Port Washington, N.Y.-based firm, Apple owned a 64 percent share during the second quarter (Q2) of 2012 and 29 percent of all music sold at retail.
  • DECEMBER 2010 iTunes users are now renting and purchasing over 400,000 TV episodes and over 150,000 movies per day.
  • MAY 2014 At his appearance at the Code Conference, Apple SVP Eddy Cue “noted that Apple just crossed 35 billion songs soldthis past week,”
  • JULY 2017 – The company’s market share for renting and selling movies has been falling for several years, tumbling to between 20% and 35% from well over 50% as recently as 2012, according to people with knowledge of the matter.
  • OCTOBER 2017 – The tech giant on Thursday reported that its services division — which includes iTunes, Apple Music and other software — had generated record quarterly revenue of $8.5 billion, up 34 percent from the same period last year

Future Plans:

Relevant Acquisitions and Investments:

Apple Music

History:

Adoption:

Future Plans:

Relevant Acquisitions and Investments:

TV App

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Voice

Siri

History:

Adoption:

Future Plans:

Relevant Acquisitions and Investments:

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Communication Products

Mail

History:

Pulled from Mail Wikipedia:

Mail (also known as Apple Mail or Mail.app) is an email client included with the operating systems macOS, iOS and watchOS by Apple Inc. Originally developed by NeXT as NeXTMail, a part of their NeXTSTEP operating system, it eventually became Mail after Apple’s acquisition of NeXT.

The current version of Mail utilizes SMTP for message sending, POP3, Exchange and IMAP for message retrieval and S/MIME for end-to-end message encryption. It is also preconfigured to work with popular email providers, such as Yahoo! Mail, AOL Mail, Gmail, Outlook and iCloud (formerly MobileMe) and it supports Exchange. iOS features a mobile version of Mail with added Exchange ActiveSync support, though it notoriously missed the functionality of attaching files to reply emails until the release of iOS 9.

Adoption:

iMessage

History:

Adoption:

  • OCTOBER 2012 – The CEO also noted that Apple device users have sent 300 billion messages using iMessage, and the service currently delivers an average of 28,000 messages per second.
  • FEBRUARY 2016 – Apple’s iMessage handles an absurd amount of messages: sometimes as many as 200,000 per second, according to Apple services boss Eddy Cue

Future Plans:

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Digital Text

iBooks and iBooks Store

History:

Adoption:

Future Plans:

Relevant Acquisitions and Investments:

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Server Products and Cloud

iCloud

iCloud Drive, iCloud Photo Library, Family Sharing, Find My iPhone, iPad or Mac, Find My Friends, Notes, iCloud Keychain, iCloud Backup

History:

Adoption:

Xserve

History:

Adoption:

  • DECEMBER 2010 – Apple’s server market share is less than 4%, according to IDC

Relevant Acquisitions and Investments:

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3rd Party Applications and Developer Ecosystem

Various Statistics: http://www.businessofapps.com/data/app-statistics/

App Store

History:

Adoption:

Future Plans:

Relevant Acquisitions and Investments:

Mac App Store

History:

Adoption:

TV App Store

History:

Adoption:

Development Kits

WebKit, CloudKit, SiriKit, MFi Program, Homekit

History:

Adoption:

Xcode

History:

Adoption:

Relevant Acquisitions and Investments:

Swift

History:

Adoption:

  • JANUARY 2016 – In January, Swift overtook Objective-C to become the 14th most popular language in the TIOBE index.
  • OCTOBER 2017 – In the March 2017 Tiobe index, Swift ranked in 10th place, with a rating of 2.268 percent. But it has been declining since then. This month, Swift was in 16th place, with a rating of 1.668 percent. Not surprisingly, C# and JavaScript are gaining at the expense of Swift and Java.

Future Plans:

TestFlight

History:

Relevant Acquisitions and Investments:

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Virtual/Augmented Reality

History:

Adoption:

  • JANUARY 2018 – Customers are now enjoying close to 2,000 ARKit-enabled apps spanning every category on the App Store.

Future Plans:

Relevant Acquisitions and Investments:

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Machine Learning / Artificial Intelligence

CoreML

https://developer.apple.com/machine-learning/

History:

Adoption:

Future Plans:

Relevant Acquisitions and Investments:

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Third Party Advertising

iAds and Search Ads

History:

Adoption:

Future Plans:

Relevant Acquisitions and Investments:

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Payments

Apple Pay

History:

Adoption:

Future Plans:

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Social

Ping

History:

Adoption:

  • MAY 2012 – We tried Ping and the customer voted and said, this isn’t something I want to put a lot of energy into. Some customers love it, but there’s not a huge number that do, so will we kill it? I don’t know. I’ll look at it.
  • AUGUST 2012 – The service rapidly attracted two million subscribers but people were quick to label it a flop

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Healthcare

GymKit, HealthKit, ResearchKit, Carekit

History:

Adoption:

Future Plans:

Relevant Acquisitions and Investments:

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Education

Analysis of Education offering from Apple, Google and Microsoft:

iBooks Author

History:

Relevant Acquisitions and Investments:

Swift Coding Curriculum

History:

Adoption:

Future Plans:

Apple Devices/Apps in Education

History:

Adoption:

Relevant Acquisitions and Investments:

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