Apple’s gadget lineup offsets weaker iPhone sales to boost market value

Strategy marks departure from Steve Jobs’s vision with ‘peripheral’ products

In 2010, before he became chief executive officer, Apple Inc.’s Tim Cook said all the company’s gadgets could fit on a table, arguing such focus resulted in better products.

At the time, the company’s website offered 14 Apple products. Now, under Cook’s leadership, the lineup has ballooned to 27 products available in more than 200 different versions. The strategy — a departure from cofounder Steve Jobs’s minimalist approach — is helping Apple grow even as the market for its most-important product, smartphones, stalls.

Products such as the Apple Watch and AirPod wireless headphones, combined with more iPhone versions and surging sales from a growing variety of software services, drove revenue growth in the mostrecent quarter. That offset weakerthan-expected phone unit sales and helped Apple’s market value top $1.1 trillion this week — a first for a U.S. company.

“There was a concern with the reliance on one product, but they’ve been able to find ways that aren’t necessarily innovative to continue to sustain growth,” BTIG analyst Walt Piecyk said. The services business supports profit margins “while the company is able to maintain growth from peripheral products.”

Apple is in a very different position from when Cook made his tabletop comment at an investor conference seven years ago. That fiscal year, revenue jumped 52 per cent as consumers fell over themselves to buy more iPhones. Now, with most developedworld consumers already using smartphones and Apple’s annual revenue exceeding $274 billion, growth is harder to achieve.

Apple’s “Other Products” are picking up some of the slack. Sales of gadgets such as the Watch, AirPods, Beats headphones and Apple TV jumped 31 per cent to $3.9 billion in the fiscal second quarter. On May 2, Cook said that Watch sales almost doubled year-over-year and compared this appendage of Apple’s business to a Fortune 500 company.

The iPad has endured a precipitous three years, with unit sales at about a third of their peak. The response has been to offer a plethora of options. There’s the iPad Pro, iPad and iPad Mini 4 in with at least 60 memory, colour and connectivity options.

Apple gets almost two-thirds of its revenue from the iPhone, compared with 39 per cent in 2010. However, those sales come from 58 different iterations of the device.