Apple Inc. - World’s most valuable company has perfected the Luxury Tech Business Model
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Apple Inc. - Worlds 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. Apples 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 Apples 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 Apples supremacy in the field lies in the companys game-changing products and services. Looking at how important each of these offerings has been to the companys present success shows how important new innovations will be for its future.
- Personal devices have been the biggest drivers of Apples 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.
Scope
- Understand Apples 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
Reasons to Buy
- 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?
Summary
In April 2020, Apple became the first company in the world to reach a $2tn market cap. Apples 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 Apples 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 Apples supremacy in the field lies in the companys game-changing products and services. Looking at how important each of these offerings has been to the companys present success shows how important new innovations will be for its future.
- Personal devices have been the biggest drivers of Apples 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.
Scope
- Understand Apples 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
Reasons to Buy
- 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?
TABLE OF CONTENTS
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 Apples landmark iMacs and Macbooks
2.1.2. The iPod was Apples first inimitable device innovation
2.1.3. The iPhone combined Apples luxury offering with genuinely unmatched functionality
2.1.4. The iPad brought the luxury offering to a far wider consumer base
2.1.5. Apples 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 Apples LTech model
3.2.2. Microsofts Surface products are quickly making ground despite their open ecosystem
3.3. Apples vulnerability to LTech rivals is reflected in its defensive restructuring of product ranges
3.4. Apples 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 Apples 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: Apples privacy-focused marketing campaign
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