Do you remember all the static, noise, and criticism Apple received because iPhone was such a success? At one time iPhone was almost 70-percent of Apple’s revenue and profits and that somehow meant doom.
Diversification can be difficult for a company that runs a one-trick-pony operation. Think Google. The company is a search engine advertising company and little else. Hardware sales to compete with Apple are absolutely anemic by comparison. Meanwhile, Apple invented another new revenue and profit center.
How Many Now?
Even non-certified Apple watchers have heard of the rapidly growing Services category. Only iPhone brings in more revenue and profits and Services have grown to about the same size as Mac and iPad. Combined.
By my count Apple has five very prominent businesses, each a leader in the industry. iPhone tops the list, of course, then Services, then the Mac, and then iPad, right? Nope. iPad is dead last and now eclipsed by a new product group that Apple decided was worthy of some show and tell.
Think Watch, AirPods, Beats headphones, and other accessories. OK, but how big is big? In the most recent quarter, normally a small one for Apple, Mac generated nearly $6-billion in revenue, iPad just over $5-billion, and Wearables, smack in the middle at $5.5-billion.
That means Mac, iPad, and Wearables will generate over $20-billion in annual revenue. Each. Services will top $40-billion. Right now everything at Apple is growing and every product group is profitable. Apple itself shows up at #3 on the Fortune 500 list, just behind Walmart at #1 but ahead of Amazon at #5.
How do Apple’s products compare to companies on the Fortune 500 list?
- iPhone – Apple’s iconic phone would top Ford and General Motors in the Top 15. By itself.
- Services – Darling Services at more than $40-billion in revenue would compete with Best Buy, Delta or American Airlines, and American Express in the Top 75. By itself.
- Mac – Yes, the Mac will generate well above $20-billion in annual revenue and that puts it ahead of Tesla, Southwest Airlines, and McDonald’s. By itself in the Top 150.
- iPad – Even Apple’s iconic tablet will generate more than $20-billion a year in revenue; more than West Digital or Visa. Also a Top 150 in the Fortune 500.
- Wearables – Yes, this group is the fastest growing and likely will be #3 on Apple’s list next year as it passes the Mac, but at a projected $24-billion in revenue Wearables competes with Starbucks, Union Pacific, and Eli Lilly, among many other brand names.
What does that say about Apple’s diversification? What does it say about Wearables, which seems to have come out of nowhere to be competitive with upper level Fortune 500 companies already, higher than iPad, and closing in on the Mac?
Kudos for Apple and Tim Cook for pulling Wearables out of the hat, but so far most of what Apple has done since Steve Jobs died is make accessories for iPhone’s 1-billion strong customer base.