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

🔗 appleinsider.com/articles/22/01…

• • •

Missing some Tweet in this thread? You can try to force a refresh
 

Keep Current with Trung Phan 🇨🇦

Trung Phan 🇨🇦 Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @TrungTPhan

3 Jan
Tim Cook has been Apple's CEO since Aug. 24, 2011. Over this span, Apple's market cap has jumped from $340B to -- just today -- $3T.

Despite this massive gain, Cook is only worth $1.5B.

LESSON: You don't get rich being an employee. Image
For more timeless business lessons, check out my Saturday email: trungphan.substack.com

Side Note: when Jobs approached Cook to join Apple in 1998, many thought he should have stayed at Compaq. Apple was in a bad place.

His starting salary: $400k + $500k signing bonus (CNBC). Image
People, the Cook tweet was a joke. Let's talk about the actual biggest $AAPL winner: in absolute dollar terms, Buffett.

Between 2016-2018, Berkshire bought ~1B shares (adjusted for 4-1 stock split) for $36B.

That's now worth $150B+: Image
Read 7 tweets
2 Jan
When Steve Jobs unveiled the iPhone in Jan 2007, the maker of BlackBerry — Research in Motion (RIM) — had a market cap near Apple's ($60B vs. $75B).

Now, it’s $5B vs. ~$3T.

While Jobs positioned iPhone perfectly, RIM made 5 decisions that led to its fall.

Here's a breakdown🧵
1/ The BlackBerry vs. iPhone story is not as clean as it seems in hindsight. When iPhone officially hit markets in June 2007, many thought it would fail.

Former Microsoft CEO Steve Ballmer famously balked at the price ($500) and design ("no keyboard").

Tech media was skeptical:
2/ Blackberry sales actually grew for many years after iPhone's launch.

In 2007, RIM moved <10m BlackBerry units.

In 2011, RIM moved more than 5x the units, selling 50m+ handsets for the year.
Read 21 tweets
1 Jan
WIFE: How did our portfolio do in 2021?

ME: A Warren Buffet calibre year.

WIFE: Amazing!

ME: Actually, like 1974, when Berkshire Hathaway fell 49%.
For more timeless investing stories, check out my Saturday email: trungphan.substack.com

Buffett actually gave a Forbes interview in November 1974 with his standard thoughtful analysis:
Buffett’s 1974 Forbes interview also had this quote.

🔗 forbes.com/2008/04/30/war…
Read 4 tweets
30 Dec 21
The most memorable interview I did this year was w/ Stanley Druckenmiller, who famously made $1B shorting the British Pound.

The trading legend's track record includes a 30-year stretch returning 30%+ a year (without a single down year).

Here are 8 investing lessons🧵
1/ Make concentrated bets in high conviction plays
2/ Concentrated bets can sometimes *reduce* risk
Read 14 tweets
27 Dec 21
In 1998, Marvel offered Sony all of its heroes + villains for $25m. Sony said it *only* wanted Spider-Man (and paid $10m for it)

While “No Way Home” is the first pandemic-era film to make $1B, the other Marvel films grossed $13B+ for Disney.

LESSON: Always take the first offer.
For other timeless business lessons, check out my Saturday email: trungphan.substack.com

Here is more background on the Spider Man deal from WSJ:
Notes:

◻️The $13B+ is prob closer to $20B (WSJ article from 2018)
◻️ Tom Holland Spider-Man series (Homecoming, Far From Home, No Way Home) co-produced by Disney-owned Marvel Studios and Sony-owned Columbia Pictures (w/ Sony handling distribution)

🔗 wsj.com/amp/articles/t…
Read 4 tweets
26 Dec 21
Here's a wholesome Reddit thread for the holiday weekend: "What is random great advice?"

12 legit ones🧵
"You spend half your life walking and sleeping. Never buy cheap shoes or a shitty mattress."
"Don’t take criticism from people you’d never go to for advice."
Read 18 tweets

Did Thread Reader help you today?

Support us! We are indie developers!


This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal

Or Donate anonymously using crypto!

Ethereum

0xfe58350B80634f60Fa6Dc149a72b4DFbc17D341E copy

Bitcoin

3ATGMxNzCUFzxpMCHL5sWSt4DVtS8UqXpi copy

Thank you for your support!

Follow Us on Twitter!

:(