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Can Apple Continue its Dominance as a One-Product Company?

Ten years ago, Apple’s former CEO Steve Jobs unveiled the first iPhone to the world, changing the trajectory of the company for the next decade and completely revolutionizing the cell phone industry in the process. Thanks to this innovation, Apple has made billions of dollars in revenue. However, the iPhone’s success has been a double-edged sword for the company, as it is very challenging for any company to rely so heavily on one individual product. Many analysts believe that as the iPhone becomes less popular, so does the company.

It is important to note that the iPhone still has major success in the cell phone market, and that does not appear to be changing any time soon. According to the most recent reports, the iPhone 7 beat last year’s all-time unit sales record by a few million, and revenue growth was up by 4.7 percent. Consequently, as seen in the graph below, for the last quarter iPhone revenue is nearly 70 percent of Apple’s earnings.  As shown, the company’s financial results are heavily dependent on strong iPhone sales. This figure does not even include sales from iTunes, the App Store, and Other Products (cases, headphones, etc.) that are major complimentary goods to the Apple iPhone. The revenue dominance raises the stakes for new CEO Tim Cook to keep the company’s (main revenue contributor) marquee handset a top seller.

Last year, the iPhone also received its first decline in sales since it was introduced. Steve Jobs’ successor, Tim Cook is feeling the heat (already receiving a pay cut) as a result. Tim Cook is not as visionary a CEO as Steve Jobs, who transformed Apple from a niche computer company into one of the most profitable companies in the world. Between 2001 to 2008, Jobs reinvented Apple products three times, and each transformation—centering around the iPod and iTunes in 2001, the iPhone in 2007, and the App Store in 2008—drove revenue and profits to new heights. Yet in five years the only truly new product that’s managed to ship is the Apple Watch.

The iPhone alone generated $102 billion in sales in Apple’s last fiscal year, more than Google, Facebook, and Twitter’s annual revenue combined, and it appears to be going nowhere any time soon. Nevertheless, the question still remains: how long can Cook and Apple maintain the exceptionally high product demand of the iPhone before a new innovation takes control of the market? And will Apple be the company with the next great innovation or will another company rise and take over the market?


  1. childresss19 childresss19

    The apparent spike in revenue for Apple upon each release of a new Iphone makes me wonder whether new features in each Iphone are driving sales or if the simple popularity of the Iphone ensures customers obsession with the device. I would hypothesize that a combination of the two factors drives sales, so assuming that Apple continues to add new features to the phone it is safe to assume Apple will profit from the device.

  2. Jordan Krasner Jordan Krasner

    One troubling trend for Apple is its lack of dominance in the highly segmented smart phone market in China where start-ups and Chinese brands such as Oppo, Vivo and Xiaomi all are just as big of players as Apple and Samsung. While the iPhone is the unquestioned leader in the United States, the bulk of the growth in future smart phone sales will come from developing markets such as China, India, Indonesia, Brazil etc. Apple needs to establish the dominance of the iPhone in these markets like it did in the United States if it wants to continue grow as a company relying on the iPhone as its major cash cow.

    • zhengm18 zhengm18

      Iphones have a very niche social following in China, and is definitely a status symbol. But no doubt the smartphone market in China is very segmented, with big players such as Huawei and Xiaomi with deep understanding of the Chinese people aggressively tackling on Chinese market shares. I think the Iphone has succeeded in China relatively, but it faces far more competitors in Asia than it does in America.

  3. embreyp18 embreyp18

    Apple almost certainly has more than enough time on their hands to innovate within their product line up if they are ever actually in danger of losing profitability. However, as Sam mentioned in the comment above, part of the reason iPhones sell so well is simply their popularity. As long as Apple has that on their side, they will be set for years to come.

  4. tuckerj17 tuckerj17

    It’s interesting to see that Apple has so far chosen to avoid expanding into different technological industries in the same fashion that Google and Samsung have been doing. Google, which admittedly has been a much broader company from the start, has had immense success in diversifying its business model. However Samsung, whose structure is much more similar to Apple, has recently done fairly well incorporating VR into its devices. Should Apple hope to survive, they surely need to start branching out and trying new things.

  5. 1: Resting on your laurels was not a good strategy at Nokia.

    2: How strong is the complementary factor? A poll: if you don’t have an iPhone or Mac computer, do you still use iTunes for music? If you do have an iPhone or Mac, do you use something other than iTunes for music?

    3: You all may not remember that Jobs also drove Apple to the brink of bankruptcy and was kicked out of the company. He then began Next Computer, which didn’t do very well, but did serve as the platform for building a unix-based personal computer operating system and other core features of the GUI + mouse [now touchscreen] approach that is now universal.

    • zhengm18 zhengm18

      Spotify is actually beating Apple Music right now, with more than 60m more users and plans to establish a new HQ in New York (opening up 1000 new jobs). It seems like the music industry is leaning towards the streaming route, and Apple was wise enough to recognize but can they execute? As for CEO’s, I place huge emphasis on the leaders’ visions for a company, and I believe Jobs’ second attempt as Apple CEO was a product of a more mature and wise approach to handling the company. Right now, it seems Augmented and virtual reality are the future playgrounds for Tech, and every major tech company is trying to penetrate this. Google may have already made the first big move, with a big acquisition in Magic Leap which is already valued at $4b with no beta or any news surround it. What?????

  6. Regarding what Sam had to say earlier, it seems like Apple continues to make minor changes year after year to the iPhone. Often times they are very subtle, and hardly noticeable. To the average consumer, it may be hard to distinguish any significant benefits from the new model, yet Apple continues to reap large revenues on the iPhone year after year. This suggests that Apple’s brand is in fact strong. It already appears that there are better products on the market with more features and better capabilities than the iPhone, so as long as iPhone remains able to promote its brand, sales should not decline in the foreseeable future. They have established a large market share and dominance in the smart phone industry, and there is nothing to suggest that it will go away anytime soon. Maybe for another blog post, Apple’s market share and power could be examined in terms of its ability to dominate the smart phone market.

    • parkerk18 parkerk18

      On that note though we certainly would have to view market share through a global lens. Apple’s market share in the US is extremely strong however they face stiff competition in markets such as China and India. These developing countries is where Apple may have to innovate more in order to distinguish themselves as superior.

  7. aeschlimand19 aeschlimand19

    Growth of the overall smartphone market has been decelerating since 2013, as smartphone penetration in developed markets like the U.S. is already above 70%. Apple has even seen a drop in market share in China, Apple’s biggest iPhone market. This market share was displaced by Chinese smartphone vendors, who saw their market share rise by 16% from 2015 to 2016. That is not to say that Apple is not making enormous profit on its iPhones anymore, but that it should continue to look into developing other products. There is great potential in Apple’s services businesses alone, which include the App Store, Apple Pay, and iCloud.

  8. kirschnerk18 kirschnerk18

    As a longtime Apple customer, I would really like to see them get into some different products, albeit not “new” ones necessarily like the Apple watch or iPad was. For example, I wonder if they could do well controlling software in automobiles. While a lot of car companies want to control their own software, core features like Siri and integration of Apple music could be extremely successful in cars. I feel like this could actually help certain car manufacturers. Would a partnership with Apple help increase sales? Personally, I think so, but to how much or would it be worth it in the end I have no idea.

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