Thread by @TrungTPhan

Since August 2018, Apple's market cap has grown from $1T to $3T. Despite delivering huge results, Tim Cook's product strategy is often misunderstood.

Users are going deeper into its ecosystem and Apple is positioned to win the next computing platform: AR.

Here's a breakdown 🧵

1/ The best way to highlight the success of Cook's product strategy is cash. Over the past 3 years, Apple's *free cash flow* has totalled an absurd $225B.

Apple has the world's most profitable:
◻️ smartphone
◻️tablet
◻️ laptop
◻️ desktop
◻️ smartwatch
◻️ wireless headphones

2/ Apple analyst Neil Cybart explains why the company's product line is unmatched:

"Computers small and light enough to be worn on the body are sold next to comps so large that built-in handles are required. All these products are designed to work seamlessly together."

3/ Apple's product strategy has actually changed in recent years. Pre-2018, Apple deployed a "pull" strategy.

Think of the products attached on a rope: management was pulling forward (focussing) on more "personal products" (iPhone,Watch).

Other lines (iPad, laptop, Mac) lagged.

4/ Since then, Apple has pursued a "push" strategy where each product line is improving simultaneously.

◻️ Apple Watch increasingly independent from iOS (e.g, WatchOS)
◻️ iPadOS differentiates iPad from iPhone
◻️ The new Mac/MacBook lines with M1 chips

5/ Why a "push" strategy matters:

"By pushing products geared towards handling the most demanding workflows, Apple has a greater incentive to push the products capable of making tech more personal & relevant."

Its 10yr+ effort to make its own semi chips is crucial to the plan:

6/ And Apple's innovation strategy isn't to "be the first" or "do something different"

Per Tim Cook, Apple's products are meant to "enrich people's lives to help them learn, create, work, play, share, and stay healthy."

Quality > quantity.

7/ Customer love Apple's strategy/product vision

◻️ iPhone: taking smartphone share from Android
◻️ iPad: +20m users/yr (on 300m installed base, 10yr old line)
◻️ Mac: +10m users/yr (oldest product category)
◻️ Watch & AirPods: 100m+ users each
◻️ Services: 500m+ paying subs

8/ Here is a chart of Apple's installed user base.

It passed 1 billion in 2019 and "while new user growth rates have slowed, Apple is still bringing tens of millions of users into the fold" a year.

9/ Apple's competition is flubbing hardware

As its ecosystem gets better "made possible by a clear product vision and a functioning organizational structure that prioritizes design (i.e. the user experience), the competition is rudderless."

10/ Apple is still in the early stages of bringing users deep into their ecosystem.

Per Cybart, ~50% of Apple users still own just 1 product (iPhone).

As these customers move deeper into the ecosystem, it'll remove "oxygen" from the other markets Apple plays in.

11/ While iPhone sales have flatlined, there are clear signs that its ecosystem growth is accelerating.

Not only is Apple service revenue (e.g, subscriptions) growing but so are non-iPhone hardware products.

12/ Apple is in the ecosystem expansion phase. Wearables — Watch, AirPods — are the growth engine (not services). Wearables will do $30B+ in 2021, and is bigger than iPad or Mac.

Wearables unit sales will surpass 100m, about ~40% of total iPhone unit sales.

13/ Wearables also give Apple an edge in the next computing platform: AR.

Apple can offload compute from glasses to other devices users already owns (iPhone, Watch, AirPods), which means it’ll be lighter (+ better battery) than competitors.

Won’t be cheaper, though.

14/ If you enjoyed that, I write interesting threads 1-2x a week.

Def follow @TrungTPhan to catch them in your feed.

Here's one you might like:

https://twitter.com/TrungTPhan/status/1425474143537926150?s=20

15/ PS. I also write a weekly newsletter that rounds up hilarious memes and tweets on trending tech, business and internet topics trungphan.substack.com

16/ For the best breakdown, read Cybart's full work at @AboveAvalon

Ecosystem accelerating: aboveavalon.com/notes/2020/8/1…

Apple pulling away from comp: aboveavalon.com/notes/2020/7/1…

Mac's graduation: aboveavalon.com/notes/2020/11/…

Apple's decade long lead in wearables: aboveavalon.com/notes/2021/5/2…

17/ Had to write this thread after people *misunderstood* this joke tweet

https://twitter.com/TrungTPhan/status/1478076791537352705

18/ Apple Insider just released mock-ups of a general Apple AR Glasses (based on very early leaks).

🔗 appleinsider.com/articles/22/01…