StatsPanda recently released data showing that the 2020 revenue of one of Apple’s products – Airpods – eclipses those of several major tech companies, including Twitter, Spotify, Shopify, Uber and Adobe. Apple brought in more than $23 billion from Airpods sales alone, to overtake Adobe’s total 2020 revenue at $12.87 billion, double Uber’s $11.14 billion , more than twice Spotify’s $9.55 billion and more than six times Twitter’s $3.72 billion.
You’ll think that’s pretty impressive until you go back and read it again, only to realize that we’re talking about single product revenue. This figure does not take into account revenue from sales of iPhones, Macs or any of Apple’s services. This is just a unique – but now top-tier – product that was introduced in late 2016. Of course, you might have read other expert reviews that explain just how much higher this figure is. to the annual budget of some countries, but that is not the problem. here.
Thinking about it, I thought there were a few lessons that startup founders could learn from Apple.
First, AirPods were introduced to the market at a time when Apple was already seeing declining sales of its iPhones and other products. Falling global demand for smartphones and Apple’s decision to stop disclosing unit sales of iOS devices and Macs in its financial reports have raised fears that the financial situation is truly dire. The space was getting competitive and Apple had the rest of the smartphone companies as competitors.
The lesson for founders here is that when you encounter a drop in sales or the competition gets tougher, it may be time to inject a new product. The smartphone space was becoming saturated and unique as were Apple’s offerings, competitors seemed to be offering equally sleek designs, but below Apple’s premium prices. It would have seemed at that time that simply injecting a new iPhone model could not solve the problem. Apple did their research and came up with this little product that is now bringing in so much revenue for the company.
Second lesson. When Airpods were introduced in late 2016, people thought the innovation was a bit ridiculous. Some feared that they would fall out of their ears and be easily lost. It’s become the center of some really tough jokes. Maybe a foie gras entrepreneur in a similar situation would have taken the product off the market, but Apple didn’t. They have certainly made improvements and additional features to the product since its innovation, but deep down the value remains. With it, you don’t need to have wires tied all around you to use an audience.
The final thing to note in Apple’s strategy is that services still make up a significant portion of Apple’s revenue. iCloud subscriptions, Apple Music, the App Store and more are those little services that will continue to generate revenue for Apple. The fact that you cannot use any of Apple’s products without the services means that as long as the products are in the market, Apple will continue to earn revenue from its services. Even when iPhone sales slumped, service revenue remained.
Never joke with your services. It’s a great idea to have products and solutions, but whenever possible and as soon as possible, get an ongoing maintenance service that you can offer to the market. Tie your services to your products, so that even if you fail to make new sales, you will earn revenue from serving customers who already have your products. If all of your income can only be attributed to your products, you are setting yourself up for continuous work. In most businesses, there will be periods of declining sales, and if declining sales significantly reduce your revenue, making it difficult to stay operational, then you don’t have a sustainable model yet. It’s a bit of both, services and products.