Apple Set to Earn $1 Trillion in Revenue From iOS Ecosystem By Middle of 2017

[MacRumors]

Apple's iOS ecosystem is on course to generate over $1 trillion in revenues for the company by the middle of this year, according to Asymco analyst Horace Dediu.

Dediu's prediction is based on several factors, starting with an expectation that Apple will have sold at least 1.2 billion iPhones in its first 10 years, earning it the rank of "most successful product of all time" and laying the foundations for the company's iPad, Apple TV, iPod touch, and Apple Watch categories.

In its first 10 years, the iPhone will have sold at least 1.2 billion units, making it the most successful product of all time. The iPhone also enabled the iOS empire which includes the iPod touch, the iPad, the Apple Watch and Apple TV whose combined total unit sales will reach 1.75 billion units over 10 years. This total is likely to top 2 billion units by the end of 2018.

Dediu claims revenue from iOS device sales will total about $980 billion by the middle of this year, and adds to that estimate more than $100 billon in revenues from supporting services (including app content sales), putting the ecosystem's total worth above the $1 trillion mark.

The analyst notes this excludes payouts to iOS app developers of around $60 billion, with the rate of payments now reaching $20 billion per year. Those numbers would appear to tally with comments made by Apple CEO Tim Cook last August that the company has paid out more than $50 billion to developers over the lifetime of the App Store, which first launched for the iPhone in 2008.

Dediu points to the locked-in nature of Apple's ecosystem ensuring the iPhone's resilience and longevity, despite strong competition from so-called "iPhone killers" that come and go, while its robust feature set and attached services continue to earn it the market reputation as the premium smartphone to beat.

In addition, the analyst claims that Android users are now more likely to switch to iOS rather than the other way around - a trend supported by previous reports from both market analysts and Apple, including, notably, comments made in the company's Q4 2016 earnings call.

Dediu ends by predicting not another "Big Bang" for the iPhone, but a "process of continual improvement" as the smartphone enters its second decade. Indeed, the analyst expresses more excitement for its network of "ancilliary smart accessories" like the Apple Watch, the AirPods, Apple Pencil, and other possible new wearables that point toward a future where the iPhone is a hub to a mesh of personal devices. "The seamless integration of such devices is what has always set Apple apart," Dediu concludes.

Article Link: Apple Set to Earn $1 Trillion in Revenue From iOS Ecosystem By Middle of 2017

 

[Apple Knowledge Navigator]

$1 trillion.

Yet they're (reportedly) moving Mac Pro production out of the U.S. to create "more ambitious products". Hmm....

 

[djcerla]

In an alternate, but very possible universe, the iPhone got crushed by Android. Developers flocked to Android-first or Android-only. Apple tried to stop the hemorrhage by creating cheap iPhone models, that ultimately devalued the brand, thus spiraling down even more.

In this universe, thankfully, Apple is a very well run company, and the iPhone thrived, leaving only the market scraps to the competition.

 

[StevieD100]

I'm so pleased that my total contribution to the App Store of $4.99 will be useful in them in reaching this target (sic)

 

[Starship77]

I'm so pleased that my total contribution to the App Store of $4.99 will be useful in them in reaching this target (sic)

Considering you are in this ecosystem for a while, I wonder what app was worth of being the only one you ever spent money on? Care to share?

 

[travelsheep]

and yet here I am, receiving a measly $50 / year developer payout (app name: "Sounds like Chinese", 6 months development time, me + one designer)

 

[Rogifan]

To be fair Dediu is usually pretty bullish on Apple which is exactly what this analysis is. But wouldn't good analysis also include potential risks? Where is the next trillion going to come from?

 

[Gandalf.Fix]

It's the only ecosystem I've managed to teach my parents

 

[Santabean2000]

No wonder the Mac is relegated in priorities...

They could afford to make zero on their Macs and provide us with the ultimate machines. *dreams on...*

 

[Gandalf.Fix]

and yet here I am, receiving a measly $50 / year developer payout (app name: "Sounds like Chinese", 6 months development time, me + one designer)

Does that mean Apple made $71 revenue and sent you 70%? Or are there lots of hidden fees that make it worthless?

 

[apolloa]

I've been shot down ssoooooo many times on this forum whenever I argued just how important and lucrative the app stores earnings are to Apple...

This report is the main reason the 'freemium' business model and Apples 30% cut is promoted and enforced so much.

 

[otternonsense]

No wonder the Mac is relegated in priorities...

Which makes zero business sense, because we NEED the Mac and Xcode to create those spiffy apps in the first place.

 

[AbSoluTc]

In an alternate, but very possible universe, the iPhone got crushed by Android. Developers flocked to Android-first or Android-only. Apple tried to stop the hemorrhage by creating cheap iPhone models, that ultimately devalued the brand, thus spiraling down even more.

In this universe, thankfully, Apple WAS a very well run company, and the iPhone thrived, leaving only the market scraps to the competition.

When your only money making item is a phone and you have no other diversity, you can only ride that wave for so long before it vanishes. Apple is skating on thin ice and they need to diversify and bolster their current offerings and stop relying so heavily on ONE device to keep them going.

 

[Rogifan]

When your only money making item is a phone and you have no other diversity, you can only ride that wave for so long before it vanishes. Apple is skating on thin ice and they need to diversify and bolster their current offerings and stop relying so heavily on ONE device to keep them going.

So is Google skating on thin ice too since 90% of their revenue is from advertising?

 

[macsmurf]

Interesting, considering I just switched to Android (Google Pixel) and am quite happy with the phone. I switched because I was generally unimpressed with the iPhone 7 and because I'm fairly sure that my next laptop will not be a Macbook Pro, since my priorities seem to be very different to what Apple see as their future laptop line. Of course, that is still a couple of years down the road so Apple might still surprise me.

 

[Kajje]

If we want to believe the rants about Macs on this forum, all this revenue is backed up by disgrunted xcoders on subpar machinery.

 

[oftheheavens]

In an alternate, but very possible universe, the iPhone got crushed by Android. Developers flocked to Android-first or Android-only. Apple tried to stop the hemorrhage by creating cheap iPhone models, that ultimately devalued the brand, thus spiraling down even more.

In this universe, thankfully, Apple is a very well run company, and the iPhone thrived, leaving only the market scraps to the competition.

Loved your humor and thinking in this post but I have to make one correction. From the front lines (consumers with educational background in business) it seems that Apple has gone "stale", possibly when they released the first apple watch that was far from impressive (still own S0 and S2 so not bashing). I don't feel like looking up the video but look back at Tim Cook saying "we have amazing products in line to release this year", well we got the S2 which got minor tweaks (love it though), another iPhone with practically the same features plus a non-physical home button, and a MacBook that really isn't that impressive for how long the wait was. We didn't get anything from any of the other product lines, we didn't get anything "new", and nothing earth shattering as Cook seemed to have hyped it up, and we actually lost product lines like the monitors. This isn't a bash on Cook or an Apple was better with Jobs rant, just saying that the hype didn't seem to deliver last year like it was supposed to.

 

[faded_glory]

Coming soon - a price rise across the range. Times are hard m'boy, times are hard.

 

[otternonsense]

Loved your humor and thinking in this post but I have to make one correction. From the front lines (consumers with educational background in business) it seems that Apple has gone "stale", possibly when they released the first apple watch that was far from impressive (still own S0 and S2 so not bashing). I don't feel like looking up the video but look back at Tim Cook saying "we have amazing products in line to release this year", well we got the S2 which got minor tweaks (love it though), another iPhone with practically the same features plus a non-physical home button, and a MacBook that really isn't that impressive for how long the wait was. We didn't get anything from any of the other product lines, we didn't get anything "new", and nothing earth shattering as Cook seemed to have hyped it up, and we actually lost product lines like the monitors. This isn't a bash on Cook or an Apple was better with Jobs rant, just saying that the hype didn't seem to deliver last year like it was supposed to.

According to Cook, the best is always coming. It's hard to believe him though, because it never actually does.*

*this is a quasi-bash on Cook's Apple.

 

[nt5672]

Unfortunately, as we all should know, curve fitting past performance has absolutely nothing to do with future performance when considering a single entity like Apple. Today Apple is in the process if shooting themselves in the foot, will they recover? That is the big questions, with revenue and profits this high it seem unlikely that they have the brain power and will to see past their rose covered glasses.

 

[smacrumon]

I'd take this article a little more seriously if the reporting across all MacRumors articles weren't as biased as they can be at times, or fail to omit some news worthy details that other outlets seem to cover earlier or even at all. Wishing 2017 a year of more balanced coverage.

 

[doelcm82]

Loved your humor and thinking in this post but I have to make one correction. From the front lines (consumers with educational background in business) it seems that Apple has gone "stale", possibly when they released the first apple watch that was far from impressive (still own S0 and S2 so not bashing). I don't feel like looking up the video but look back at Tim Cook saying "we have amazing products in line to release this year", well we got the S2 which got minor tweaks (love it though), another iPhone with practically the same features plus a non-physical home button, and a MacBook that really isn't that impressive for how long the wait was. We didn't get anything from any of the other product lines, we didn't get anything "new", and nothing earth shattering as Cook seemed to have hyped it up, and we actually lost product lines like the monitors. This isn't a bash on Cook or an Apple was better with Jobs rant, just saying that the hype didn't seem to deliver last year like it was supposed to.

agreed. Cook has been doing a fine job, and the Apple Watch is great and the iOS ecosystem is amazing.

 

[McDonkel]

It seems that 3/4 of the people on this forum think that Apple is doomed and Tim Cook should be fired, and that the key to Apple's turnaround is to turn the iPad into a Surface Pro and to make Macs more like Hackintoshes.

No amount of evidence, such as this article, will convince them that Apple is doing fine and making good choices that are popular with customers. They want their inch-thick iPad with mouse support and a file system, they want their Mac with a GTX 1080. And unless Apple delivers these things to them ASAP, Apple is doomed and Tim Cook is the worst.

 

[TroyBoy30]

that'll extend the 2nd trip down the tubes a bit. it will happen, even to apple

 

[sammich]

That title is not well phrased, as it really sounds like Apple is on track to earn $2 trillion this year.

Maybe:

Apple Set to Cross $1 Trillion Mark in Revenue Earned From iOS Ecosystem By Middle of 2017

Or:

Apple's Total Earnings from iOS Ecosystem to reach $1 Trillion by mid-2017