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How Does Apple Make Money?

Apple is one of the largest companies in the world but with privacy at its core it can be difficult to understand how the company works.

Apple

Apple Inc. (AAPL) is a well-recognized technology company. Apple designs, manufactures, and sells a range of technological solutions, including smartphones, personal computers, wearables, tablet computers, and accessories. The company, founded on April 1, 1976, by Steve Jobs, Steve Wozniak, and Ronald Wayne, began by selling the Apple I personal computer. A year later, the company incorporated to Apple Computer Inc and released the Apple II, which became a fast best seller. Today, Apple offers a much larger range of products and some of the most innovative technology available.

The company’s main product lineup includes computers and laptops through its Mac line, the iPhone smartphone, the Apple Watch, iPad tablet computer, and Apple TV. In addition to this, Apple also offers a service company that includes the iCloud cloud service. It has also grown its digital content through Apple TV+ and Apple Music.

Core Products iPhone, iPad, and Mac

One of the best ways to learn how Apple makes money is by considering its main or core products. Here is a look at some of the figures available to show Apple’s financials in each of these areas.

The iPhone

The iPhone is the leading smartphone product offered by Apple. While the company has become significantly less financially dependent on the sales of its iPhone lineup, prior to this, the iPhone made up a large percentage of its revenue. In 2016, 63% of Apple’s revenue came from the iPhone. That is one of the reasons the company worked to release a new version with new technology and more innovation year after year.

  • In 2016, the iPhone produced $136.7 billion in revenue for Apple in iPhone sales. It sold 211.8 million phones.
  • In 2017, the iPhone produced $141.3 billion in revenue and sold 216.8 million phones
  • In 2018, the iPhone produced %166.7 billion and sold 217.7 million phones
  • In 2019, the iPhone produced $142.2 billion and sold 186 million phones
  • In 2020, the iPhone produced $137.8 billion and sold 180 million phones
  • In 2021, the iPhone produced $192 billion and sold 250.7 million phones

It's important to note that Apple no longer publishes the revenue it receives from iPhone sales. It stopped doing so in 2018, and as such, the above information is an estimate.

In the grand scheme, iPhone sales have grown about 40% since 2016. In 2021, the iPhone made up 52% of the company’s total sales, making it still the largest component of the company’s revenue.

Mac

Apple’s personal computer line, called the Mac, is another big component of its sales as well as its overall brand loyalty. The Mac, which includes both personal computers as well as laptops, grew in sales by 23% from 2020 to 2021. Yet, it is one of the smallest growth lines for the company.

This includes its product options, such as the MacBook Air, Mac mini, and MacBook Pro models, all of which were available in 2020. A core component of the company's growth in this area was the development and release of the M1 chip. This in-house designed chip for the Mac was first present in the 2020 lineup of products.

Here’s a look at Mac sales:

  • In 2016, Macs made up $22.8 billion in revenue for the company and sold 18.5 million devices
  • In 2017, Macs made up $25.9 billion in sales, and the company sold 19.3 million devices
  • In 2018, Mac made up $25.5 billion in sales, and the company sold 18.2 million devices
  • In 2019, Mac made up $25.7 billion in sales, and the company sold $18.4 million devices
  • In  2020, Mac made up 28.6 billion in sales, and the company sold 20.5 million devices
  • In 2021, Mac made up $35.3 billion in sales, and the company sold 25.1 million devices

iPad

The iPad is Apple’s flagship tablet computer. In many ways, it was one of the first tablets to become available, gaining a lot of attention from consumers when first released for its ability to make computing completely flexible and easy to use on the go.

In 2021, the iPad made up about 9% of the company’s overall revenue. Since 2016, sales of the tablet device have risen by about 54%. From 2020 to 2021, sales are up 23%. Here’s a look at the core sales figures that are available (or estimated):

  • In 2016, iPad revenue was $20.6 billion, and they sold 45.6 million units
  • In 2017, iPad revenue was $19.2 billion, and they sold 43.8 million units
  • In 2018, iPad revenue was $18.8 billion, and they sold 43.5 million units
  • In 2019, iPad revenue was $21.3 billion, and they sold 49.3 million units
  • In 2020, iPad revenue was $23.7 billion, and they sold 54.9 million units
  • In 2021, iPad revenue was $31.9 billion, and they sold 73.8 million units

Wearables, Home + Accessories

Apple continues to innovate and build new products and technology solutions for a wide range of needs. It has maintained its reputation for being highly innovative in the area of wearables, home, and accessories, often leading the industry with new releases of products. Its wearables, home, and accessories sector include Airpods, iPods, Apple Watch, Apple TV, Beats, and Apple Homepod.

Data is limited in terms of sales and revenue for many of these services due to Apple’s lack of releasing such data. However, wearable revenue itself has grown by 58% since 2016. It is also up 25% in 2021 over 2020’s figures. While a smaller area of its revenue, these components still make up a significant portion of where Apple earns its revenue.

Here's a look at some data that is available about the company's wearable product lines:

  • In 2016, Apple had $24.3 billion in revenue
  • In 2017, Apple had $30 billion in revenue
  • In 2018, Apple had 37.2 billion in revenue
  • In 2019, Apple had 24.5 billion in revenue
  • In 2020, Apple had 30.6 billion in revenue
  • In 2021, Apple at $38.4 billion in revenue from its wearable products

There is also data available about Apple’s Airpods. That includes:

  • In 2017, Apple had 49.9 million Airpod sales
  • In 2018, Apple had 61.9 million Airpod sales
  • In 2019, Apple had 61.2 million Airpod sales
  • In 2020, Apple had 76.6 million Airpod sales
  • In 2021, Apple had 95.9 million in AIrpod sales

Apple’s SEC reports do not have a breakdown of the sales for Airpods or most of their owner products. However, Airpods are a very popular product for the company and have continued to be a prominent component of how Apple makes money.

Available Apple Wearables, Home, and Accessories

Apple's lineup of products in this area is impressive, and they continue to launch new product. Here are some of the most lucrative of the company's offerings, though they do not publish individual sales data for any of these areas.

Apple TV

Apple TV launched in November of 2019. Since the start, it has had a rocky road in getting enough subscribers for it compared to competitive products. However, for Apple users who did sign up for Apple TV, it has maintained a strong following.

Apple Watch

The Apple Watch is a smartwatch designed to allow consumers to have a digital way of tracking health, fitness, and other goals on their wrist. It was one of the first wearables Apple launched and one of the first of its products outside of the iPad and iPhone lineup. Sales for the Apple Watch remain consistent year over year, and this has allowed it to become one of the best-selling smartwatches on a global scale.

Beats

Apple’s Beats headphones are one of its strongest players in terms of revenue and product recognition in this sector. They were not developed by Apple, though, which makes them an outlier in this category. The company purchased Beats in April of 2014 (that was a $3 billion investment). While the company has seen significant and steady growth year over year, its momentum in this area has sold down in 2020.

iPod

Apple’s iPod was one of the company's first products to put technology in the hands of the consumer. It was launched well before the iPad and initially only allowed consumers to stream music. Today’s iPods can do a lot more. The company has moved away from this product lineup, though. In 2022, it discontinued to iPod Touch. In prior years, Apple discontinued both the Shuffle and the iPod Nano. The company’s only remaining product is the iPod Classic.

Homepod

Apple wanted to take on the voice assistant market much like competitors like Amazon’s Alexis and Google’s Home. The Homepod was the answer to this. While it launched and has done well for those who are Apple loyalists, the product has seen some mixed reviews, and widespread adoption of it has not happened in the same manner as those competitors. Some note the high price of the product, while others state it lacks enough features to remain competitive.

Services

Though many focus on Apple's product lineup, it also has a strong service sector. In 2021, the service component of Apple's business model made up about 19% of the company's overall revenue, which is a sizable amount. This is also an area that is seeing rapid growth, with triple growth in the last five years. From 2016, Apple's services sector revenue has grown 515% through 2021. Many experts believe that the company will continue to see outstanding growth in this area on an ongoing basis.

Apple’s services are robust and are in a wide range of industries. Some of those include:

  • iCloud, the company’s cloud service provider
  • Apple Music, which has long been a staple in the company's music offerings for digital customers, including for the iPod
  • AppleCare is the company’s warranty component for its products
  • Apple Pay is Apple’s digital method of payment
  • Digital content
  • App Store, the company’s expansive application store
  • Apple Pay’s by now pay later service

Here is a look at the company's revenue from the last few years in just the service sector, which includes each of the areas above.

  • In 2016, service revenue was $11.1 billion
  • In 2017, service revenue was $12.9 billion
  • In 2018, service revenue was $17.4 billion
  • In 2019, service revenue was $46.3 billion
  • In 2020, service revenue was $53.8 billion
  • In 2021, service revenue was $68.4 billion

One of the reasons this component of the business does so well is because these services typically have very high margins for the company.

Apples Financial Figures

As a growing company with an expansive reach, Apple makes its money from numerous sources. In 2022, the company reported a net income of $34.6 billion on revenue of $123.9 billion in Q1 of the year, the three month period ending December 25, 2021. Compared to the prior year, Apple's net income grew by 20.4%, and its revenue grew by 11.2%.

Where Does the Money Come From?

While looking at the company’s business from a product standpoint, it is easy to see the company’s overall demand and growth. Yet, this is a global company with revenue coming from all corners of the planet. Here is a look at some of those figures.

  • The Americas: Both North and South America account for a large share of the company's revenue, with reported revenue in Q1 FY 2022 of $51.5 billion, about 42% of the company's total revenue
  • Europe: Europe saw revenue of $29.7 billion during the same time period. This is about 24% of the company’s revenue
  • Greater China: The Chinese market accounted for $25.8 billion, or about 21% of the company’s total revenue
  • Japan: Japan accounted for $7.1 billion, or about 6% of the total revenue.
  • Rest of Asia Pacific: The region of this area saw $9.8 billion in revenue during that period, making p about 8% of the company’s revenue

Apple’s revenue differs year to year because of many factors, but it is often the case that the company will launch new products and services to continue to meet the needs of its consumers. There is little doubt that Apple will remain competitive in the years to come.

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