Now about the intellectual laziness that says Apple has no innovation

 What are the most valuable companies in the world today? Now it's a common-sense answer, but the answer is Apple.

There are people who sometimes denigrate Apple for lack of innovation after Steve Jobs. Then, why was Apple able to increase its market capitalization by 8 times since Steve Jobs?

Maybe there is something different about Apple that can't be explained only by the outward appearance of the iPhone and iPad.

Apple's History and Future:

Today, I would like to talk about the present and future of Apple, which is evaluated as the world's most valuable company.

What you can see from Apple's performance

First, let's break down Apple's business groups by category.

Apple's business group can be broadly divided into products and services.

Products can be divided into iPhone, Mac, iPad, and wearables and accessories.

Services can be divided into advertising, AppleCare, cloud services, digital content, and payment services.

It can be seen that the proportion of iPhones in sales is unparalleled high.

As of 2021, it accounts for $191.9 billion, or 52% of the total sales of $365.8 billion.

Disregarding the division of business categories into products and services earlier. The shares of services (19%) in sales appear to be insignificant.

But if you go to the profit end, not the sales, the situation is different.

Of the total revenue of 152.8 billion dollars, about 31% or 47.7 billion dollars is generated from services. And the gross profit margin of the service category reaches a whopping 69.7%.

(Source = Apple 2021 4Q 10-K Report)

Apple's Strategy:

In addition, the sales growth of the service sector is remarkably increasing every year. Considering this, the service sector can be seen as a very important axis in Apple's business strategy.

Apple has a share price return of 45% compared to the beginning of the year. And the reason can be easily inferred by looking at the consolidated income statement in the annual report.

Total sales increased by 33% compared to the same period last year. But net income rose 65%, and earnings per share rose 71%. You can check.

If you ask why earnings per share showed a 71% increase that outperformed it when net income rose 65%. The answer would be a decrease in the number of outstanding shares.

It can be seen that the number of outstanding shares decreased from 17.35 million shares in 2020 to 16.7 million shares in 2021.

Apple has announced that it will continue to repurchase its stock at an annual rate of 3-4% and that it will continue to increase the size of its dividend.

In fact, even if these factors are taken into account, the value per share, regardless of the company's performance, will be able to protect against market inflation.

The most notable difference in sales performance in 2021 is sales by region.

Apple's rise in China:

Other regions also showed high sales growth of 20-30% compared to the previous year, but the 70% increase in China is surprising.

Apple rose to the top spot in China's smartphone market sales in October 2021. And it seems to be absorbing Huawei's vacancy.

October is the fourth quarter of 2021, which will be recorded as the first quarter of the US fiscal year 2022. If so, the change in sales in China in the next quarter can only be expected more and more.

Personally, from a financial standpoint, what I am looking forward to for Apple's future are; continued sales and profit growth, very stable financials, and aggressive share buybacks.

Why is Apple's Future Exciting?

From a technical point of view, Apple's promising future is undoubtedly the introduction of Apple's silicon M1 chip and new AR/VR products.

The M1 chip appeared in the world last year, and from this year on, the M1 Pro and M1 Max of the MacBook Pro are shocking the market with groundbreaking performance.

The MacBook with the M1 chip can be thought of as a large iPhone that can be opened and closed. But I am personally looking forward to the change in market share this will open.

https://www.youtube.com/watch?v=7A5-eRfDQ0M

This is because the rapid development of performance centered on the MacBook Pro is expected. But the cost-effectiveness competition centered on the MacBook Air is also expected.

In addition, if the M1 chip can enter the server market... The change of CPU in the PC market is expected to change rapidly within the next 5 or 10 years.

Of course, the ARM-based CPU mentioned here is not only referring to the M1 chip, but it can be said that Apple is the leading company at present.

The attractiveness of high performance and low power will make it an attractive tool not only in terms of cost performance but also in terms of ESG.

In order to move to a decarbonized society, changing the electricity produced from thermal power to renewable energy is an important change in terms of supply, but the development of low-power products with higher performance is also an important change in terms of demand.

Without taking this reality into account, the design of the iPhone still does not change.

Is Apple Intellectual?

There's not much to say about the intellectual laziness of those who denigrate Apple for lack of innovation.

Apple is revolutionizing the legacy system technology that has been fixed for half a century in the invisible realm.

Although it is already the largest company in the world, the implication of additional growth drivers to increase sales and net income is significant.

How about this?

Do you still think Apple is a company that keeps selling the same fancy iPhones?

Or are you starting to understand a little bit why this company has the highest corporate value in the world?

Personally, Steve Jobs was also a great person, but I think Tim Cook, who followed him to create Apple, a solid technology company, is just as great a person as Jobs.

https://ulzzangkorea.net/steve-jobs-v-s-tim-cook-apples-strategy-turnover/

Apple's future moves like this, I want to keep watching with anticipation.