Apple’s 5 Business Segments that investors should be aware of

Since its founding in 1976, Apple Inc. (APPL) has seen tremendous growth in sales, profits, and share price. The tech company was also the first U.S. corporation to hit and pass the $1 trillion market capitalization in 2018. Its solid sales and profits have been, by far, driven by the sales of its iPhone products which have gained global acceptance in major cities of the world.

While Apple is popularly known for its iPhone and MacBook products, it has other products and services it offers to consumers. In the fiscal year 2019, the company’s sale of iPhone accounted for 54.7%, its services segment accounted for approximately 17.7%, sales of Mac generated 9.8%. The Wearables, Home, and Accessories segment generated 9.4% of total revenue, while the sales of iPad accounted for approximately 8.1%. So far for the fiscal year 2020, in the first quarter, Apple reported an all-time high record for its net income at $91.8 billion and revenue, at $22.2 billion.

In a time like this when the demand for gadgets and other technology hardware devices has dropped due to the impact of the coronavirus, the demand for software technologies has increased. This has caused Apple to channel its focus towards developing its other products and services beyond hardware devices. Apple Inc. is on a relentless journey to transform itself into one of the leading providers of tech and digital services.

iPhone

iPhone is Apple’s leading and core product, generating over half of the company’s revenues. Since 2009, the iPhone has been ranked as the top 5 smartphones in the world. At the end of the 2020 fiscal year first quarter, the sales of the iPhone alone generated $55.96 billion, contributing to the sales was the popularity of the latest iPhone models. The company also reported that the Q1 2020 was its most profitable quarter yet. With regard to the first quarter’s performance CEO Tim Cook said, “We are thrilled to report Apple’s highest quarterly revenue ever, fueled by strong demand for our iPhone 11 and iPhone 11 Pro models, and all-time records for Services and Wearables.”

Services

Next to the iPhone is Apple’s Services business segment which accounted for 17.7% of total revenue in Q1 2020. In the fiscal year of 2019, the Services segment generated revenue of $46.3 billion and $12.72 billion for the first quarter of the 2020 fiscal year. This segment includes sales of services such as Apple Music subscriptions, Apple Store, iCloud storage services, and AppleCare warranties. There are over 450 million paid subscriptions on Apple’s services platform, according to the company. New additions have been made to Apple’s services segment, they include the Apple Card, a new video game subscription Apple Arcade, and a streaming movie and TV service Apple TV.

Mac

The Mac is another of Apple’s popular products, accounting for 9.8%, or $25.7 billion of total revenue in the fiscal year 2019. Although Apple’s Mac product is popular, its sales have gradually fallen, affecting the overall company sales which is a result of the slow demand in the computer industry worldwide. Despite its low revenue generation, Mac still plays a vital role in Apple’s overall business as part of the broad family of the iOS operating system.  

iPad

The Apple iPad was launched in 2010, and it quickly became one of the leading computer tablets in the market. Within the first three months after its release, the device sold over three million units. In the Q4 of 2019, the iPad held 36.5% of the tablet market globally. In the overall fiscal year of 2019, the iPad generated 8.1% or $21.3 billion of total revenue.

Wearables, Home, and Accessories

The last segment of Apple’s businesses is made up of its wearables and accessories. This segmented accounted for 9.4% or $24.5 billion in sales for the fiscal year 2019. The products found in this segment include such as Apple Watch, AirPods, and HomePods. Sales in this segment were driven by the launch of Apple’s wireless headphones and noise-canceling AirPod Pro wireless headphones, both launched in 2019.