From tech player to trillion-dollar company: Adrian Weckler on Apple’s rise
WITHIN hours of Apple becoming the first ever company to climb to a $1trn (€860bn) market capitalisation, the conversation shifted to when it would reach double that figure.
“Apple’s race to $2 trillion has officially begun,” screamed a headline on the US financial website thestreet.com.
It’s not hard to see why. According to its most recent bumper earnings, Apple now brings in €1bn of sales every two days. Its profit level is equally obscene at €1bn every 10 days.
It is the greatest money-making enterprise in history, with over €200bn now amassed in a cash pile that it scarcely knows what to do with.
Its path to its trillionaire status has largely been built in the last seven years, since Tim Cook took the helm from the late Steve Jobs in 2011.
Since then, Apple’s value has grown 20 times over, buoyed by steady growth of the iPhone, solid commercial expansion in giant markets such as China and understated success in new product categories such as the Apple Watch.
The latter product line is especially relevant. While the iPhone still represents 60pc of Apple’s sales fortune, Apple’s new ‘wearables’ division – which includes the Apple Watch and Apple Airpod earphones – achieved sales of $10bn (€8.6bn) in the last 12 months.
This meant that even with iPhone sales finishing slightly shy of expectations in the last quarter, the difference was more than made up by products like the Apple Watch, which is now the world’s best-selling watch.
For Apple boss Tim Cook, this is particularly satisfying as the Watch was the first new product introduced under his stewardship.
Apple’s diversified portfolio is also being buoyed by Apple Music, which has just overtaken Spotify as the top music paid streaming service in the US market.
And its iPad division, which had seen sales falling in the last four years, has now recovered and is showing growth again, thanks to Apple’s shift to bigger, work-friendly iPad Pro models.
Only Apple’s laptop and PC division – the ‘Mac’ – appears to be suffering lower sales at the moment, with Apple experiencing issues ranging from a lack of update specifications to user complaints over new MacBook keyboards.
But it is still the mighty iPhone that is Apple’s bellwether product. Even in a non-holiday quarter, the company still sells almost a million of the phones every 48 hours.
And its last earnings report showed that the average selling price of the iPhone has risen to over $700, further putting the lie to the claim that people won’t buy a phone for €1,000. (The iPhone X retails for €1,179 in Ireland.)
Success breeds success, including the financial clout to do new things.
While Apple’s future roadmap is still largely based on its phones and other hardware, the company is now diversifying further into entertainment, allocating an annual budget of around €1bn to making new TV shows and movies, bidding to become a competitor of Netflix and HBO.
There have also been persistent rumours of it designing a car, or products around a car.
Among all of this, Apple retains only one self-managed factory outside the US – Cork.
The tech giant physically makes iMacs in Holyhill and has continued to expand its overall operations – now employing over 6,000 people – in Ireland’s second city since its establishment there in 1980.