Is Apple a hardware company? Yes. But if you think about Apple in the ways that railroads companies could have evolved to not be limited to just train tracks and rather as a transportation company, you can extrapolate a lot of what might need to change as far as perspective goes when it comes to a company as successful as Apple.
Will it succeed in the long term? Certainly with enough cash to sustain itself it isn’t going anywhere fast, but with massive projects like the Apple Car burning cash without ever producing a product, and people already having enough devices, is Apple going to become the next MagicLeap when it comes to making expensive tech hardware that no one wants?
Apple Key Statistics
- Apple generated $383.2 billion revenue in 2023, 52% came from iPhone sales
- Apple Services is the second largest division, responsible for 22% of revenue in 2023
- 232 million iPhones, 61 million iPads and 26 million Mac and MacBook units were sold in 2022
- Apple’s home and wearables division declined by 3.6% in 2023
iPhone sales in 2021 surpassed the 2015 peak, but have declined in the past two years.
Phones, tablets, computers, goggles, heck let’s strap some computers to every body part we have. Well, we have reached peak hardware when it comes to traditional means. It is time to think about experiences. The Apple Stores are legendary, but retail shopping is fading and the next generation of consumers want to share experiences with each other. In 2022, 900 million iOS users subscribed to one or more apps on the platform, an increase of 20% on the previous year. So data shows that leaning into software and being a platform for new connected experiences is the future.
If I ran Apple I would acquire VIRZOOM, Oura, and Zwift to build out the experiences to align with the efforts to go further into health and wellness and VR. Imagine the possibilities to pair the health data with the actual activities. {Full disclosure: I am an angel investor in VIRZOOM} It might seem like Apple is big enough to not need to acquire but I assure you that having these highly skilled teams who have been out there in the market will pay off much more than dropping another tens/hundreds of millions into R&D internally. With dedicated communities that use Zwift those people will adopt the advancement better than starting cold. The team at VIRZOOM is stacked with MIT graduates and executives with 20+ years in the video games industry leading Guitar Hero, Rock Band, and Dance Central. Zwift is ripe to be plucked after recent layoffs: https://velo.outsideonline.com/news/trouble-in-watopia-zwift-slashes-staff-loses-co-ceo-in-further-round-of-workforce-reductions/?scope=anon. Zwift has “roughly 1 Million” current subscribers via: https://www.dcrainmaker.com/2023/02/upcoming-increase-subscriber.html.
Sports specific hardware, like Smart Trainers provides substantial opportunities.
Industrial IoT is also another area Apple could take over.
