The public launches of flagship products generate plenty of hoopla these days. Amongst technology companies this is none moreso true than for Apple. And within Apple’s own product line it is none moreso true than for the iPhone. The anticipated announcement of the 6th version of the iPhone (following the 2G, 3G, 3GS, 4 and 4S models) is the most critical for the company to date – and possibly for any technology company, ever. For at no point in Apple’s history has so much of its future depended on the fortunes of a single device.
Apple by the numbers
Apple Inc. quarterly shipment & revenue breakdown, Q2 2007 to Q2 2012
Source Apple Inc. and Informa T&M
By examining Apple’s quarterly financials, the sales pattern for the company’s different product lines becomes clear. Revenue from Mac sales continue today in line with historical pre-‘iProduct’ growth rates.
While iPod sales are ‘bursty’ and peak noticeably in the last quarter of each year as a result of people shopping for Christmas presents. 40% of annual iPod sales occur during this quarter’s reporting but year-on-year totals for iPod sales are falling – presumably as a result of the cannibalisation of the iPod’s primary function as a digital music player by the iPhone.
iPad growth is strong but tablet computers as both a product and a form-factor have a limited addressable market. Tablets are luxury items rather than necessities, designed to drive content consumption and to provide a complementary role to the general-purpose utility of desktop computers and mobile phones. Tablets have distinct limitations in their ability to act as true productivity tools, underscoring their status as a secondary/tertiary computing device rather than an outright replacement for other portable computers like laptops.
But the iPhone has a different sales profile – it is Apple’s bread and butter. The portion of total revenue that the iPhone accounts for is huge – just under 50% of all of Apple’s revenue during 2011; and 40% of all of the company’s cumulative revenue since the iPhone’s launch in Q2 2007. Put simply, the iPhone is a product that Apple cannot afford to be without. Were Apple to no longer offer an iPhone product, the effect on the company’s revenues – and by association Apple’s share price – would be massively detrimental.