Why is Apple so valuable?

While there are a handful of companies that have touched a market capitalization of $1 trillion, Apple was the first to touch $2 trillion. So what is it about Apple that makes it so valuable?

The iPhone continues to be the biggest brand ambassador. Owning it is the ultimate status symbol whether you are a commoner or a millionaire. It was released by Steve Jobs in 2007 and after all this time its charm remains undiminished. Its worth has been equated to a human kidney in running jokes and memes.

Here’s an interesting observation. In terms of market share, the Mac never beat Windows and was usually way behind. That’s both in the laptop era and the desktop era. In terms of global market share, Android beats the iPhone OS. The MP3 player era, which Apple totally dominated, is gone. Interestingly Amazon makes more money than Apple but it still values at about half its amount. What gives?

The reasons for that are many...

The sheer ubiquitousness of Apple

Quick. Name a company that has successfully sold desktop, laptop and mobile hardware and software. You don’t have to think too much because it is Apple all the way. Whether it’s the actual desktop, computer or mobile, or the chip or the Operating System, Apple is an all-rounder which can do everything. There are many which are a No. 1 in one or two things. That itself gets a bucket load of money. Apple is something like a No. 2 in each and everything and that it seems translates into two bucket loads of money and loads of power too.

It’s always been the trendsetter

The mouse. Graphic user interface. The connected printer, which led to the desktop revolution. It’s been Apple all the way. But that was the last century. This one is no different. The MP3 player was a game-changer. iTunes was a revolution and took the Napster fallout head-on. The iPhone touchscreen became a standard for the entire industry. It’s amazing how it's been one innovation after another. The market recognizes this and so do the consumers.

The Apple Ecosystem

Another thing that keeps Apple going is tremendous brand loyalty. That a good chunk of Apple consumers is at the high-end of the earning pile makes that a force multiplier. Those with a Mac wanted a Macbook and they were the first to go in for an iPhone. When the Apple Watch came, the Apple Ecosystem was fully formed. This troika has become very popular with loyal Apple customers. Tomorrow if the Apple Car takes off, then the ecosystem will be widened. You can control your home with Siri and going forward it could also become a big feature of Smart Homes.

Rise of services

The future is services. While Apple is a master of both hardware and software, it has been getting big in services also. In the last quarter, it made close to $16 billion in services. That includes services like iTunes, AppleCare, Apple Pay, digital content and Apple's online entertainment library. Apple is a player in the troika of desktops, laptops and smartphones. Apple also rules the troika of hardware, software and services. In Indian lingo, that’s two hat-tricks!

Appetite for a fight

Apple is the only player that can take on the other tech giants. While Facebook’s entire business rests on harvesting data, Apple is looking to change that. There is a privacy change with the iOS 14 update where an App Tracking Transparency has been introduced. This gives Apple customers control over all the apps that are being tracked by third parties. Facebook is worried and even put out a front-page ad criticizing this move.

Imagine if Apple decided to get into everything tomorrow and removed the entire Google-Facebook ecosystem from iPhones. Default settings are very important. What if tomorrow Apple Maps, Apple Messenger, Apple Social Network… all took off. Apple has the ability to be a super app and you could spend your life in the Apple ecosystem. Right now we have the Silicon Valley ecosystem and the China ecosystem. Tomorrow Apple could be the third and maybe even Make in India could take off for a fourth. This is the only way it can challenge the Google-Facebook monopoly.

Apple came with a bang in the 1980s. It had some setbacks in the 1990s and came back bigger in the 2000s. It really consolidated in the 2010s. Now, it is booming in the Covid Era and looks to dominate the 2020s too.