In my early days as a Mac user and Apple follower there was this argument pro and con about whether or not Apple was a hardware company or a software company. Any technology company as large as Apple is bound to have some diversification, but based on where the revenue and profits come from these days, Apple is mostly a hardware company.
Every product manager with any basic experience will tell you that whatever they’re working on is a product, and I understand the sentiment. How about this? Apple hasn’t had a new product since 2010 when Steve Jobs introduced the original iPad? And by product, I mean the products that Jobs himself preferred. Mac, iPod, iPhone, iPad. Not the accessories Apple pushes out the door to support the major product lines.
Yes, we can argue that Apple is becoming more of a services company thanks to iTunes, Apple Music, Apple Pay, iTunes Music Store, Mac App Store, iOS App Store, but does anyone think those will become Apple’s main revenue and profit sources in 10 years.
Nope. But Apple has a problem. Every piece of hardware Apple sells beyond the core of iPhone, Mac, and iPad is more of an accessory than a true product that can stand on its own as a substantial portion of the company’s revenue and profits.
The big dawg in the yard is iPhone, which now accounts for nearly 70-percent of the company’s revenue and profits. The Mac and iPad don’t average 10-percent each, despite being Fortune 500 companies on their own. The Services group is growing fast, more in thanks to a customer base exceeding one billion than anything else. Oh, other than the fact that everything in Services also serves to act as an accessory to one of Apple’s hardware products.
Wait. I know what you’re thinking. Watch is a product, right? AirPods is a product, too. So are Beats headphones, and each Apple Store is decked out with plenty of accessories, both Apple branded and not.
So what? Name one of those major accessories– Watch, AirPods, Beats headphones, the App Stores, Apple Music and Apple Pay or nearly anything else– that is not tied to iPhone, Mac, and iPad.
What’s scary about that statement is how factual it is. Apple’s revenue and profits come in four major chunks– iPhone, Mac, iPad, and Services (something of a catch all for everything else tied to the first three products). What’s also scary about that list is the iPad was Apple’s last new major product. Everything else since then is designed to live and prosper based upon a relationship with one of the main three products.
Sure, CEO Tim Cook knows how to milk a cash cow to extraordinary profits. Yes, Sir Jonny Ive knows how to make hardware look pretty. And, of course, Apple’s engineering staff and manufacturing partners put pretty gadgets on the shelves, but so far as anything new and great– a new product line with the substance of iPhone, Mac, or iPad– Apple hasn’t done much of anything since Steve Jobs died.
Apple’s new products are not really new products at all.