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Apple’s $1 Trillion Fortune: Explained

Brian Wallace

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Apple’s $1 Trillion Fortune: Explained

Apple dominates the U.S. tech market, covering 41% of the smartphone sector, 38% of tablet coverage, and 46% of the smartwatch belt. In 2018, Apple became the first publicly traded American corporation to reach a market worth of $1 trillion, equating to more than 1% of the world’s GDP. Today, the tech giant is worth more than the GDP of 183 countries – including Turkey ($851B), The Netherlands ($826B), and Saudi Arabia ($683B). 

 

As of August 2018, Apple’s combined profits outweighed the net worth of 3 of the world’s richest individuals: Jeff Bezos ($148B), Bill Gates ($94B), and Warren Buffet ($84B). Among the likes of other tech giants such as Alphabet, Amazon, and Microsoft, Apple remains the highest valued global tech company. Here’s how.

Macs have many benefits PCs don’t offer – such as having a high-end design and feel, and longer life with fewer support requirements. Furthermore, iOS updates and improvements are released more quickly than their PC counterparts and have seamless integration between all Apple products.

Moreover, Macs are simply built to last. Most Windows and Linux-operated Pcs need to be replaced every four years while a Mac can last nearly 2x as long. Outside of the computer industry, Apple has an impressive track record with its mobile devices, as well. A non-Apple mobile phone can lose more than half its value in just one month; however, iPhones hold their value 1.5x better than competitors.

Apple also stays dedicated to the refurbished market, widening its consumer audience and maintaining its resale value to help offset the cost of its expensive products. Here’s an example: a 2-year-old iPhone can be resold for up to 62% of its original price. Trading in your old phone and buying refurbished could also cover nearly all the costs of upgrading your phone, making it a better decision for the average consumer. Buying a refurbished device typically costs 15-40% less than buying new; and, most consumers are happy with refurbished purchases. As a result, new computers are 2x as likely to be returned as a refurbished Mac would be – another example as to why Apple products outpace the quality of a PC.

Apart from smart business moves and staying in touch with the refurbished community, Apple’s wide-scope of products and services draws in the bulk of their cash flow. In 2018, Apple’s net sales equated to $266 billion. After deducting $164 billion in operational expenses, the tech giant was left with a gross margin of $102 billion. During that year, the iPhone was the primary source of the brand’s income – reeling in 63% of their income, or $167 billion – $3 billion more than it cost them to stay in operation as a brand.

However, the iPhone isn’t the only large driver for Apple’s success. The Mac computer, iPad, and its supply chain of services also draw in billions on an annual basis. In 2018, the aforementioned products in services – excluding the iPhone – earned $81 billion, or 31% of Apple’s revenue for that year. 

No other tech brand has been able to rule the market like Apple. For more information on the ways Apple has risen to, and maintained, massive heights, continue reading below.

Brian Wallace is the Founder and President of NowSourcing, an industry leading infographic design agency , based in Louisville, KY and Cincinnati, OH which works with companies that range from startups to Fortune 500s. Brian also runs #LinkedInLocal events nationwide, hosts the Next Action Podcast, and has been named a Google Small Business Advisor for 2016-present and joined the SXSW Advisory Board in 2019. Follow Brian Wallace on LinkedIn as well as Twitter.

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