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When Apple sells their other hardware they can make money with other things that go along with it. App royalties, cloud storage, TV shows, movies, and music, ac

by dangus 3y ago

When Apple sells their other hardware they can make money with other things that go along with it. App royalties, cloud storage, TV shows, movies, and music, accessories (watch bands, phone cases, more royalties especially with lightning stuff but also with MagSafe). When you sell a router that’s it. You’ve got to provide security updates forever for free or convince your customers to upgrade at some point. Some router companies are trying to do the service thing but I don’t know how successful that is. From what I can see TP-Link’s annual sales revenue is reported to be $2.8 billion. That’s the world’s leading networking company in sales with close to a 20% global marketshare. For comparison, Apple makes $8 billion per quarter just on home/wearables/accessories, which is only 10% of its total revenue. $385 billion in revenue for all of 2023. That means if Apple put a bunch of effort into making networking equipment and took 100% of TP-Link’s marketshare, it would increase their revenue by less than 1%.

PlunderBunny 3y ago
But there must be so many people that buy iPhones, iPads, and macBooks that don't then give Apple any recurring revenue too.
- airstrike 3y ago
  The % that does give them recurring revenue more than makes up for that difference Plus network effects of having more devices "out there"
- dangus 3y ago
  Whatever the number of iPad users is that pays for additional services, it’s a lot more than the 0% of AirPort Extreme customers buying anything that directly goes along with their network equipment. Apple sells dozens of accessories like cables, adapters, cases, etc. Plus, iPads can cost upward of $1,000 and have high profit margin upgrades at every price point (internal storage space). Their network equipment didn’t drive Mac sales, it was really the other way around: a Mac user might consider Apple network equipment, but there was no strong driving factor that would send you that direction. Apple also couldn’t price their network equipment far above their competitors because it has very few differentiators. WiFi is WiFi is WiFi. For an iPad, Apple can charge more money because it has iPadOS which is only one of two choices in the mobile OS space. Network equipment is almost completely vendor agnostic commodity equipment. Maybe doing Time Machine backups or streaming iTunes music over your network would lead you to AirPort products, but both bring in zero recurring revenue for Apple and have been made obsolete in terms of convenience and customer preferences by cloud storage and music streaming/AirPlay. Let’s not forget that Apple was never actually able to maintain any kind of market leader status on WiFi equipment. Their best case scenario of eclipsing a market leader like TP-Link never happened because their product line was simply not popular. That’s why it was discontinued in the first place.

by dangus 3y ago

PlunderBunny 3y ago

But there must be so many people that buy iPhones, iPads, and macBooks that don't then give Apple any recurring revenue too.

airstrike 3y ago
The % that does give them recurring revenue more than makes up for that difference Plus network effects of having more devices "out there"
dangus 3y ago
Whatever the number of iPad users is that pays for additional services, it’s a lot more than the 0% of AirPort Extreme customers buying anything that directly goes along with their network equipment. Apple sells dozens of accessories like cables, adapters, cases, etc. Plus, iPads can cost upward of $1,000 and have high profit margin upgrades at every price point (internal storage space). Their network equipment didn’t drive Mac sales, it was really the other way around: a Mac user might consider Apple network equipment, but there was no strong driving factor that would send you that direction. Apple also couldn’t price their network equipment far above their competitors because it has very few differentiators. WiFi is WiFi is WiFi. For an iPad, Apple can charge more money because it has iPadOS which is only one of two choices in the mobile OS space. Network equipment is almost completely vendor agnostic commodity equipment. Maybe doing Time Machine backups or streaming iTunes music over your network would lead you to AirPort products, but both bring in zero recurring revenue for Apple and have been made obsolete in terms of convenience and customer preferences by cloud storage and music streaming/AirPlay. Let’s not forget that Apple was never actually able to maintain any kind of market leader status on WiFi equipment. Their best case scenario of eclipsing a market leader like TP-Link never happened because their product line was simply not popular. That’s why it was discontinued in the first place.