Apple Inc. - World’s most valuable company has perfected the Luxury Tech Business Model
Apple Inc. - World’s most valuable company has perfected the Luxury Tech Business Model
SUMMARY
In April 2020, Apple became the first company in the world to reach a $2tn market cap. Apple’s ‘luxury tech’ business model has been as important to its success as its innovation with groundbreaking products like the iPhone and iPad, and has competitors playing catch-up with their own premium devices that put factors like style, user experience and exclusivity on a par with technical performance. As the technical prowess of Apple’s products becomes increasingly less important than the power of its brand, with competitors offering the same technology at lower cost, the future of the model is uncertain. However, Apple is sure to continue relying on its service ecosystem - the key to its marketing strategy - for future profitability.
KEY HIGHLIGHTS
SUMMARY
In April 2020, Apple became the first company in the world to reach a $2tn market cap. Apple’s ‘luxury tech’ business model has been as important to its success as its innovation with groundbreaking products like the iPhone and iPad, and has competitors playing catch-up with their own premium devices that put factors like style, user experience and exclusivity on a par with technical performance. As the technical prowess of Apple’s products becomes increasingly less important than the power of its brand, with competitors offering the same technology at lower cost, the future of the model is uncertain. However, Apple is sure to continue relying on its service ecosystem - the key to its marketing strategy - for future profitability.
KEY HIGHLIGHTS
- The key to understanding the luxury tech business model in its current form and the foundations of Apple’s supremacy in the field lies in the company’s game-changing products and services. Looking at how important each of these offerings has been to the company’s present success shows how important new innovations will be for its future.
- Personal devices have been the biggest drivers of Apple’s success with personal-use consumers. In effectively inventing new product categories where it can set consumers’ expectations from the beginning, the company has been able to make it extremely difficult for others to seriously compete with its personal devices in desirability terms.
- Whilst Apple remains out in front, the kinds of technological innovation which the company got ahead of over the last decade are likely to place less emphasis on devices and more on services in the future. Apple is in a uniquely strong position to lead the emerging IoT theme thanks to its closed ecosystem of products. However, the very utility of closed ecosystems to consumers will make its competitors more determined than ever to copy the luxury tech business model.
- Understand Apple's business model and how its taken Apple to the top
- Learn about the how the company has changed
- See how the model might need to change in future
- What has made Apple so successful?
- What does its business model look like?
- What flaws does it have if any?
- How might the firm need to change in future?
1. OVERVIEW
1.1. Catalyst
1.2. Summary
2. IN LUXURY TECH APPLE HAS PIONEERED A POWERFUL BUSINESS MODEL
2.1. Apple has diversified its LTech model into numerous product and service categories
2.1.1. Rivals are only just catching up to Apple’s landmark iMacs and Macbooks
2.1.2. The iPod was Apple’s first inimitable device innovation
2.1.3. The iPhone combined Apple’s luxury offering with genuinely unmatched functionality
2.1.4. The iPad brought the luxury offering to a far wider consumer base
2.1.5. Apple’s ecosystem of services is also part of its RaR success
3. THE IPHONE HAS MADE THE LTECH MODEL MORE LUCRATIVE THAN EVER
3.1. The iPhone outprices rival smartphones and moves consumer price-points to meet it
3.2. As competitors threaten to catch up with cheaper LTech products, Apple still remains dominant
3.2.1. Samsung luxury tech lacks the ecosystem which underpins Apple’s LTech model
3.2.2. Microsoft’s Surface products are quickly making ground despite their open ecosystem
3.3. Apple’s vulnerability to LTech rivals is reflected in its defensive restructuring of product ranges
3.4. Apple’s continued dominance is a combination of range-restructuring and the power and resilience of its brand
4. THE FUTURE OF THE LTECH MODEL IS IN DIVERSIFICATION AND THE IOT
4.1. IoT will be the next testing ground for the LTech model
4.2. Wearables and healthtech are the future of Apple’s IoT
5. APPENDIX
5.1. Abbreviations and acronyms
5.2. Sources
5.3. Further reading
6. ASK THE ANALYST
7. ABOUT MARKETLINE
1.1. Catalyst
1.2. Summary
2. IN LUXURY TECH APPLE HAS PIONEERED A POWERFUL BUSINESS MODEL
2.1. Apple has diversified its LTech model into numerous product and service categories
2.1.1. Rivals are only just catching up to Apple’s landmark iMacs and Macbooks
2.1.2. The iPod was Apple’s first inimitable device innovation
2.1.3. The iPhone combined Apple’s luxury offering with genuinely unmatched functionality
2.1.4. The iPad brought the luxury offering to a far wider consumer base
2.1.5. Apple’s ecosystem of services is also part of its RaR success
3. THE IPHONE HAS MADE THE LTECH MODEL MORE LUCRATIVE THAN EVER
3.1. The iPhone outprices rival smartphones and moves consumer price-points to meet it
3.2. As competitors threaten to catch up with cheaper LTech products, Apple still remains dominant
3.2.1. Samsung luxury tech lacks the ecosystem which underpins Apple’s LTech model
3.2.2. Microsoft’s Surface products are quickly making ground despite their open ecosystem
3.3. Apple’s vulnerability to LTech rivals is reflected in its defensive restructuring of product ranges
3.4. Apple’s continued dominance is a combination of range-restructuring and the power and resilience of its brand
4. THE FUTURE OF THE LTECH MODEL IS IN DIVERSIFICATION AND THE IOT
4.1. IoT will be the next testing ground for the LTech model
4.2. Wearables and healthtech are the future of Apple’s IoT
5. APPENDIX
5.1. Abbreviations and acronyms
5.2. Sources
5.3. Further reading
6. ASK THE ANALYST
7. ABOUT MARKETLINE
LIST OF FIGURES
Figure 1: The LTech business model versus a traditional consumer tech model
Figure 2: iPhone sales (billions) and the peak iPhone price in each year (2007-2017)
Figure 3: Surface revenues 2015-2019 ($bn)
Figure 4: Apple’s privacy-focused marketing campaign
Figure 1: The LTech business model versus a traditional consumer tech model
Figure 2: iPhone sales (billions) and the peak iPhone price in each year (2007-2017)
Figure 3: Surface revenues 2015-2019 ($bn)
Figure 4: Apple’s privacy-focused marketing campaign
