Analysts say tech giant’s greatest advantage is pursuing projects that others in industry believe are doomed to failure
Despite fears of sapped inspiration, slowing sales, tariffs and suffocating regulation, Apple is now shining brighter than any other private-sector company in history, as the first with a $1 trillion market value.
Since starting out in a family garage in Silicon Valley more than 40 years ago, Apple weathered boardroom drama, market missteps, and even a close call with bankruptcy on its path to the milestone, thanks to products that radically transformed lifestyles and the way we communicate with each other.
The symbolic stock market accomplishment is a “natural result” given Apple’s winning steps, and is “certainly not the finish line,” Creative Strategies analyst Carolina Milanesi reasoned in an AFP interview.
Apple has sold more than a billion iPhones. The handsets account for more than half of the Cupertino-based company’s revenue.
In the second quarter of this year, the company recorded profits that jumped more than 30 percent to $11.5 billion, besting market expectations despite selling slightly fewer iPhones than analysts projected.
Apple’s revenue in the fiscal third quarter soared 17 percent to $53.3 billion from the same period a year earlier on the back of sales of pricier iPhones, online services and wearable devices.
However, iPhones accounted for 14.7 percent of the smartphones sold in 2017, while South Korean consumer electronics behemoth Samsung had 21.6 percent of that market, according to industry tracker IDC. Apple shipped 41.3 million iPhones, claiming 12.1 percent of the global market compared to 20.9 percent for Samsung and 15.8 percent for Huawei.
Apple has seen sales of Mac computers grow despite overall shrinking in the market.
Since the death of legendary Apple co-founder and pitchman Steve Jobs in 2011, analysts have watched for the company to wow the world with the next “big thing” that will shake up culture and fuel revenue like the Macintosh, the iPod or the iPhone. While that kind of innovation has yet to reach store shelves, Apple has consistently defied dour predictions.
In early May, Apple unveiled a new $100 billion share buyback plan, alleviating worries about the iPhone’s prospects and a hit from U.S.-China trade tensions.
The company has managed to notch higher revenues, even when iPhone sales fall shy of expectations due to a trend of Apple making more money off each handset.
Apple chief executive Tim Cook has remained firmly bullish, touting the company’s product pipeline and championing good sales of the iPhone X, a recently unveiled model whose $1,000 price tag analysts worried would be excessive.
Benedict Evans of Silicon Valley venture capital firm Andreessen Horowitz saw strength in Apple’s tendency to do the unexpected in a way of thinking it likely inherited from Jobs. “The tendency of so many people in tech to presume an Apple product will fail because it makes choices that they wouldn’t have made is one of Apple’s greatest competitive advantages,” Evans said in a missive fired off on Twitter.
And while online pre-orders and global product releases have whittled down the long, colorful queues at Apple shops on iPhone launch days, throngs still make pilgrimages to lay hands on devices. “The brand still stands for quality product, great design, ease of use and a customer-first approach to technology,” analyst Milanesi said of Apple.
Apple has managed to shine despite bruises to its image that included being accused of keeping young people addicted to smartphones, slowing performance of older iPhones to motivate upgrades and sidestepping taxes by nestling cash in offshore havens. The company has battled with the U.S. government over making iPhones so secure that even police can’t peek at data, and prides itself on not making money off people’s personal information the way ad-targeting companies such as Facebook do.
“Tim Cook has made privacy a religion at Apple,” Gene Munster of Loup Ventures said in an online post early this year. “We expect over the next year investors will look favorably on Apple given the company’s privacy-first ethos in an age where privacy is becoming a more prevalent topic.”
Apple has spotlighted the growing amount of money it takes in from music, applications, games, subscriptions and services it sells to people using its devices. Money made from services is seen as an important element of diversification away from having to rely heavily on selling iPhones.
Rises in services revenue have come with jumps in Apple Pay, Apple Music and other programs. “It is not just about inventing new products, it is about delivering more value to current products through services and apps that can deliver revenue,” said analyst Milanesi. “I think the biggest challenge for Apple will be the move to the cloud, as Apple does not own the cloud in the same way Google, Amazon and Microsoft do.”
Evans did not expected anything surprising from Apple in the near future, with many “boring quarters” in store before the company unveils smart glasses or high-tech cars.