Apple – running out of new customers

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Since 2003 Apple has shipped 1.8B devices – the equivalent of one for 30% of the world’s population (see the Figure for shipments by quarter). On average we gave it $39 each if you divide its $235b 2015 revenues by everyone in the world. But of course not everyone’s a customer: some of us have lots of Apple products – my family has 2 Macs, 3 iPhones, 2 iPads, 6 iPods at least. However it looks likely that it will see diminishing revenues in 2016 as it runs out of new people to sell to. In Q4 its revenues only grew by 2% and its iPhone shipments were ‘only’ 75M – up just 311k on Q4 2014. It also suffered the indignity of being overtaken by Google as the world’s highest valued company in January.

regionOver the years Apple has expanded significantly internationally (see Figure for its quarterly revenues by region since 2007). It has targeted China, which accounted for 18% of its business last year. Its success there is quite remarkable given the poor economic outlook and the falling shipments of the indigenous suppliers. However I believe China will spend less on IT and Communications in 2016 than it did in 2015 – so Apple may find it difficult to expand further there.

As for new products – I’m not as optimistic about the chances of the iWatch and Apple TV as I am about Apple Pay, which is being adopted by many banks around the world. These are designed to get more money from existing customers. It would need (but is unlikely) to launch a cheaper iPhone if it wants to expand its customer base in the year.

At $54b Apple’s net income was higher than any other supplier in 2015: so as the years go on it might want to think about maximising those, rather than growing its revenues. Whatever it does it looks likely that it will stay in the lead of our market, even if its revenues decline.