In his book entitled "After Steve," Tripp Mickle predicted that Jony Ive's departure would be enough to wipe out 10% percent of the company's stock price. Seeking Alpha Jony Ive's legacy and Tim Cook's challenges ahead And the most successful computer businesses (or hardware in general) such as DELL again only earn a fraction of what AAPL earns. Its net profit margin consistently exceeds 20%, leading LVMH consistently by about a whopping 10% over the years. And Apple keeps gaining market share, as Macs sales grow twice the rate of other PC brand names in Q4 2022.Īs a result, in terms of bottom-line margin, AAPL is even more successful than the top luxury brand as you can see from the following chart. Yet, users are more than willing to pay such premier pricing - a hallmark of a successful luxury brand.Īccording to this Dediu report, with 7% of the global market shared, the Mac series captures almost 60% of all the profit in the global laptop market. And once you pick some larger memory and hard drive, the price tag rises to $6,099 - even before any software or accessories. The newly released 2022 Mac Pro starts with a base price of $3,499. Fast-forward to now, the trend continues. The base configuration cost $5,999, not only far above the most powerful Mac ever sold but also far above any other topline laptop even in today's market. Take the then-new Mac Pro 2019, for example. But the gist just jumps out: the pricing is outlandish, but people are still flocking to buy. It is a busy chart with quick a bit of information. Here I want to draw your attention to the following chart and use the Mac Pro as an example to showcase AAPL's pricing power and its fashion nature. Probably, the elevation is even more vivid when we descend from the forest level, and we look closer at some of AAPL's specific products in the next section. In contrast, the most successful computer (or hardware in general) typically earns a fraction of the margin. You can see that its margin is comparable to or even higher than top luxury brands such as LVMH Moët Hennessy - Louis Vuitton ( OTCPK:LVMHF), both boasting EBITDA margins above 30%. Thanks to Ive and Jobs' wicked talent for design and marketing, AAPL is the one tech company (the only one to my knowledge) that successfully completed the elevation from a tech business into a luxury brand. But luxuries cater to an even stronger human need: the need to be different. But compared to the mainstream designs (e.g., the IBM models at the same time), it was an immediate hit and sold more than 800k units in the year of its release.Īuthor Elevation from mundane hardware to a luxury brandĪs mentioned above, Tech caters to the eternal human need to do things faster. The translucent shell may not seem the sleekest design today. The first-generation iMac short after Jobs' return serves as a good example as you can see from the photo below. Both of them share an almost paranoid pursuit of design (and also dyslexia). However, everything changed when Steve Jobs came back to take over AAPL in 1997. In his earlier days with AAPL, it was an understatement to say that design was not the focus of the business, and Jony Ive planned to leave. Ive had either led or left his touch on the design of pretty much every AAPL device - both hardware and software - in the past 3 decades starting from its Newton (introduced back in 1993) all the way to the more recent AAPL watch and augmented reality headset. Jony Ive's partnership with AAPL started about 30 years ago. With this, let's dive in and see Ive's legacy, together with Tim Cook's opportunities and challenges ahead, more closely. Tim Cook's went a step further and make AAPL also the most efficiently run luxury brand. This differentiation is the key to why I feel comfortable investing in AAPL not only for myself but also in our inter-generational account. And in my view, this is the key difference between AAPL and pretty all the other big tech names. Tech caters to a pretty strong and eternal human need: the need to do things faster. In my mind, Jony Ive, together with Steve Jobs, transitioned (or more precisely, elevated) AAPL from a tech business to the most successful luxury brand (or fashion brand if you want to call it). This new article is totally "new" in that it just wants to pay tribute to Jony Ive. I have been thinking over and preparing this article since then. Shortly after that article, I read the news on July 13 that Jony Ive, AAPL's former Chief Design Officer, has officially ended his relationship with AAPL. That article analyzed why AAPL is a good candidate for an inter-generational account. ( NASDAQ: AAPL) was co-produced with Envision Research earlier this month.
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