Want to Diversify Your Revenue Streams? Learn From Apple

The computing giant had a really good quarter recently, thanks in large part to the fact that it has focused on diversifying its revenue streams of late.

Let’s say that you have a hugely successful product line—one that has traditionally reflected most of your profit, but is starting to mature in a way that could threaten long-term growth.

Where do you go next? In the case of Apple, a company that has seen a full decade of success largely driven by the iPhone, what was most interesting about its latest quarterly earnings report was that the company seemed to answer the question for itself.

Quartz noted that while the iPhone has represented as much as 70 percent of Apple’s total revenue in some quarters, it only represented 55 percent of total revenue in the third quarter of 2017, a quarter in which it saw its revenue jump to $45.4 billion—up 7 percent from the same time last year.

“This means the company is finding new sources of revenue, which could set it up nicely for future quarters like this where there aren’t a lot of new products,” Quartz reporter Mike Murphy noted.

So what made the difference here? A few basic lessons that could translate to associations pretty handily:

Focus on services. Perhaps the most telling piece of news here is that Apple is not just a device company anymore, but one that sells a variety of services to its customers, including streaming music, cloud hosting, software distribution, and mobile payments. Apple Insider notes that if you were to break out Apple’s service-based revenue over the past 12 months, it would be a Fortune 100 company by itself—one that makes slightly more revenue than Facebook. The result is that, even if iPhone sales slow, it still makes lots of revenue without having to sell any new devices.

Don’t be afraid to drop prices at the low end. If there was a weak spot in the iOS line, it was probably the iPad, a device that drew a lot of attention upon its release, but failed to maintain its momentum as users decided not to upgrade their devices with each successive generation. While still focusing on its high-end iPad Pro line, Apple recently did something uncharacteristic with the iPad—it cut prices on the low-end models. You can now get a full-sized iPad for $329, a price level that opens the device up to different markets. While iPad revenue was up only by 2 percent in the most recent quarter, sales were significantly up—they grew year over year for the first time since 2013. And, according to a recent report by the research firm Strategy Analytics, this low-end cut didn’t necessarily come at the cost of the high-end prices.

Don’t ignore smaller business lines. In recent years, Apple has taken lumps for not properly appreciating business customers who have a strong attachment to the Mac. Things have slightly improved on this front in the last couple of months, with a recent round of upgrades proving a big shot in the arm—and Apple’s recent financial report shows that customers ultimately aren’t looking away. Likewise, the Apple Watch, which has gotten a little less attention compared to some other business lines, has proven successful for Apple in recent months, with sales jumping by 56 percent from a year ago.

If your revenue picture seems like it doesn’t have enough “buckets,” maybe it might help to approach it more like Apple’s.


Ernie Smith

By Ernie Smith

Ernie Smith is a former senior editor for Associations Now. MORE

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