APPLE INC IN CONSUMER ELECTRONICS (WORLD)

January 2022
INTRODUCTION
STRATEGIC EVALUATION
COMPETITIVE POSITIONING
MARKET ASSESSMENT
GEOGRAPHIC AND CATEGORY
OPPORTUNITIES
KEY FINDINGS
INTRODUCTION

Scope

Apple Inc (Apple) is one of the most recognised brands in the world. This report Disclaimer

looks at the company’s transformation from hardware to services. Much of the information in this
briefing is of a statistical nature and,
while every attempt has been made
to ensure accuracy and reliability,
Euromonitor International cannot be
held responsible for omissions or
errors.
Figures in tables and analyses are
calculated from unrounded data and
may not sum. Analyses found in the
Consumer briefings may not totally reflect the
Electronics companies’ opinions, reader
discretion is advised.

Portable
Computers Consumer Apple achieved its highest ever sales
Electronics in 2021 amidst an ongoing challenging
economic situation. Apple shifted its
business to be less dependent on
iPhones, and revenues from services
and wearables received a boost due to
the Coronavirus (COVID-19) pandemic
Smart Wireless
Laptops Tablets Smartphones as consumers showed increased
Wearables Speakers
willingness to purchase, while further
concretising its sustainability
priorities.

© Euromonitor International CONSUMER ELECTRONICS: APPLE INC PASSPORT 3

INTRODUCTION

Key findings

Services growing in Services, which includes revenues from its AppStore, Apple Music and Apple
importance TV, continues to grow rapidly as its huge user base continues to expand. Apple
users continue to get locked onto its ecosystem, thus benefiting its services
revenues.

Apple for the masses?
Apple wants to attract as many consumer segments as possible underpinning
its shift in strategy. Apple also followed this trend in 2020 with the introduction
of the Apple Watch SE. In addition, Apple also enhances its offering of
financing models which offer consumers the chance to buy Apple products via
a monthly fee instead of a one-time purchase.

Apple aims for net-zero
climate impact by 2030
Even though Apple registered a record year when it comes to sold products in
2021, the company keeps shifting towards a more service-driven and more
environmentally-friendly company future, where third-party players can repair
its products, accessories are minimised and sales of new products are
compensated for. This sets up the company for a dynamic future in consumer
electronics.

Apple opens up integration Apple used to be known for its closed integration approach where only Apple
approach software such as iOS and hardware for example the iPhone can be used
together, and nothing else. As of 2021 Apple opened up Apple Music to other
operating systems including Android.

© Euromonitor International CONSUMER ELECTRONICS: APPLE INC PASSPORT 4

INTRODUCTION
STRATEGIC EVALUATION
COMPETITIVE POSITIONING
MARKET ASSESSMENT
GEOGRAPHIC AND CATEGORY
OPPORTUNITIES
KEY FINDINGS
STRATEGIC EVALUATION

Apple’s record run goes on

Apple Inc ▪ Apple’s sales in 2021 continued to post

record levels after recovering in 2020
Headquarters: Cupertino, CA, USA and showing negative growth in 2019
induced by the start of the pandemic.
Regional
Global ▪ Ever since financial year 2019 the
involvement:
pandemic appears to have had a positive
Category Computers and peripherals, portable
impact on Apple sales, as Apple’s
involvement: consumer electronics
widening of product range and the
enhanced budgets of consumers drove
Apple Inc Financials, FY2017-2021 sales beyond USD360 billion in 2021.
400
▪ Apple’s sales revenue grew 32% in 2021
350 while its net income nearly doubled. The
300 strong net income growth bears
250
testament to Apple’s premium branding
and also its push towards services which
USD billion

200
offered higher profit margins than
150 hardware sales.
100 ▪ Lastly, the ongoing rising demand for its
50 new peripheral products such as AirPods
0 and Apple Watch also contributed to the
2017 2018 2019 2020 2021 successful year in 2021.
Sales Net Income
Source: Apple

© Euromonitor International CONSUMER ELECTRONICS: APPLE INC PASSPORT 6

STRATEGIC EVALUATION

Transition from hardware to services ongoing

Sales by Category, FY2020/2021

2020

2021

0 50 100 150 200 250 300 350 400

USD billion

iPhone Mac iPad Wearables, Home and Accessories Services

▪ Overall, Apple‘s sales in 2021 increased by 32% in value terms compared to 2020 and almost 40%
compared to 2019, as many consumers replaced their devices after the first hit of the pandemic during
2020, while at the same time services sales kept accelerating and showed a shifting paradigm.
▪ iPhone products show by far the biggest growth in contrast to the trend of the previous year when Apple’s
iPhone sales declined by 3%. Within that time frame Apple showed great focus on attracting more
consumers in different price segments especially by the introduction of its SE models as well as making
models such as iPhone 13 and iPhone 13 Pro more price competitive which is increasingly accepted by
consumers throughout the world. It would seem that the increased variety paid off, with sales growth of
20% in 2021. However, while Apple‘s transition from hardware to software is in full swing, all named
products showed positive growth between 2020 and 2021, which immensely favours Apple’s plan to
enhance its customer base.

© Euromonitor International CONSUMER ELECTRONICS: APPLE INC PASSPORT 7

INTRODUCTION
STRATEGIC EVALUATION
COMPETITIVE POSITIONING
MARKET ASSESSMENT
GEOGRAPHIC AND CATEGORY
OPPORTUNITIES
KEY FINDINGS
COMPETITIVE POSITIONING

Apple continues its positive trajectory

© Euromonitor International CONSUMER ELECTRONICS: APPLE INC PASSPORT 9

COMPETITIVE POSITIONING

Apple’s product portfolio overlap with the competition

© Euromonitor International CONSUMER ELECTRONICS: APPLE INC PASSPORT 10

COMPETITIVE POSITIONING
Asian competitors - three companies, different strategies
Samsung
▪ Samsung recovered in 2021
despite ongoing pressure from
Chinese competitors. Its biggest
category by far remains
smartphones followed by LCD
TVs, with the former largely
responsible for the overlap with
Apple in total sales. While
Samsung’s strategy to be
present in every price segment
is well established, Apple only
recently adopted this.
▪ Within the fight against Xiaomi,
Apple mainly profits from its
dominance in the US, while
Xiaomi is still barely visible in
the US, Apple benefiting largely
from an early-mover advantage
and thus higher trust built over
the years compared to Xiaomi.
© Euromonitor International
Xiaomi
▪ Xiaomi keeps winning market
share globally in 2021, due to its
digital-first strategy. This
strategy covers segments in
consumer appliances and
consumer electronics in a
holistic approach.
▪ Xiaomi sticks to budget pricing
in smartphones. The budget
pricing allows it to increase the
customer base fast and thus
enhance the company’s
services potential. In pandemic
times especially, the e-
commerce trend favours Xiaomi
and its strong performance/price
ratio.
CONSUMER ELECTRONICS: APPLE INC
Lenovo
▪ While Apple’s other main
competitors such as Samsung
and Xiaomi are extremely
diverse when it comes to
product range and categories,
Lenovo remains focused mainly
on computers and peripherals in
which its generate more than
three quarters of its sales.
▪ Lenovo mainly entered markets
and gained share by acquisition,
for example the German
computer manufacturer Medion.
PASSPORT 11
INTRODUCTION
STRATEGIC EVALUATION
COMPETITIVE POSITIONING
MARKET ASSESSMENT
GEOGRAPHIC AND CATEGORY
OPPORTUNITIES
KEY FINDINGS
MARKET ASSESSMENT

Apple performs strongly against tough competition

Smartphone Volume Sales, FY2020-2021 ▪ Smartphone volumes for Apple increased

the first time since 2015 which was a result
300
of new smartphone introductions such as
iPhone 13 and iPhone 13 Pro models but
especially due to models in lower price
250
segments such as iPhone SE.
▪ BBK with brands such as Vivo and Oppo
keeps growing its smartphone business
200
especially due to huge marketing
investment and exposure in Europe within
Million units

the last few years.

150
▪ Also Samsung continues to grow in 2021
after slumping in 2020, despite strong
100 competition from BBK and Xiaomi.
Samsung benefits from its long-term
strategy to offer products across every price
50 segment.
▪ Despite the strong competition, Apple
performed well, mainly because Apple
0 consumers are typically brand loyal and
Apple BBK Electronics Corp Samsung usually do not switch to other brands but
FY2020 FY2021 also due to switching costs in terms of the
operating system.

© Euromonitor International CONSUMER ELECTRONICS: APPLE INC PASSPORT 13

MARKET ASSESSMENT

Tablets: Apple bets on a shrinking market

iPad Revenues, FY2019-2021 ▪ iPad sales showed good performance

mainly due to the fact that in many
30 households tablets were required for home
schooling and iPads often were preferred
20 given the greater flexibility compared to
USD billion

laptops while also boasting improved

performance. Consequentially, in FY2021,
10 iPad revenues increased by 31%.
▪ For Apple, with models in almost every
0 price segment starting with iPad Air, iPad
2019 2020 2021 mini followed by iPad Pro, which is powered
Source: Apple’s financial reports by Apple‘s M1 chip, in the longer run, the
iPad will be another tool to leverage the
Forecast Tablet Volume Sales, 2019-2023 Apple ecosystem. Higher- priced models in
160 particular enjoyed good demand among
140 consumers underpinning the high revenues.
120 ▪ In the future, conventional tablet usage is
Million units

100 expected to continue as a niche market

80 which Apple tackles from a creative
60 viewpoint, for example as a tool for writing,
40 reading or drawing in conjunction with the
20 iPencil. Some iPad models are also moving
0 up in price and iPad Pro is marketed as a
2019 2020 2021 2022 2023 laptop replacement instead.

© Euromonitor International CONSUMER ELECTRONICS: APPLE INC PASSPORT 14

MARKET ASSESSMENT

Apple leads growing earbuds market while competition is catching up

Apple AirPods Volume Sales, FY201-2021 ▪ Overall, headphones grew by 10% while TWS
earbuds grew by 25%, a segment in which Apple
80 holds 23% of volume sales in 2021. Within TWS
70 earbuds, Apple became a trendsetter just as in
Million units

60 other categories in the past.

50
▪ Apple removed the default headphone jack from
40
30
new models in its iPhone line-up in 2020 starting
20 with iPhone 12. This is underpinned by a
10 business strategy as Apple will be able to charge
0 extra for headphones once consumers have to
2017 2018 2019 2020 2021 replace broken devices.
▪ Apple’s latest model, AirPods 3, was introduced
TWS Earbuds Volume Sales, 2019-2023
to the market in 2021 and AirPods become an
500 increasingly important revenue stream for Apple
in an overall shrinking hardware business within
400
Apple’s product portfolio.
Million units

300 ▪ The competition is catching up evidenced by

Samsung and Xiaomi while also domestic sound
200
players such as Sony and Bose are gaining
100 volume share as well benefiting from long
histories in the headphones business.
0
2019 2020 2021 2022 2023

© Euromonitor International CONSUMER ELECTRONICS: APPLE INC PASSPORT 15

INTRODUCTION
STRATEGIC EVALUATION
COMPETITIVE POSITIONING
MARKET ASSESSMENT
GEOGRAPHIC AND CATEGORY
OPPORTUNITIES
KEY FINDINGS
GEOGRAPHIC AND CATEGORY OPPORTUNITIES

Priority lies on the installed base

Forecast Global TV Volume Sales, 2019-2023 ▪ One of Apple’s main strategic goals
for the future is to enhance the
200
installed base, which is already strong
150
in smartphones, to further enhance its
Million units

services revenues. Thus, the

100 importance of own sold devices
declines relatively, rather Apple is
50 more interested in consumers having
a device at all. This is why Apple pays
0
2019 2020 2021 2022 2023
huge attention and effort to the
heavily booming smart watch market
rather than TVs themselves.
Forecast Global Smart Watch Volume Sales, ▪ While over the time frame 2019-2023
2019-2023
140 smart watch volumes are expected to
120 double, TV sales will more or less
100
remain stagnant especially given
Million units

80
already high saturation and
penetration in the market.
60
40 ▪ Even though Apple does not sell a
20
stand-alone TV device, it is offering its
Apple TV service on TVs of other
0
2019 2020 2021 2022 2023 brands and even other devices such
as laptops.

© Euromonitor International CONSUMER ELECTRONICS: APPLE INC PASSPORT 17

GEOGRAPHIC AND CATEGORY OPPORTUNITIES

Will Apple’s strategy pay off? A shift around the corner…

▪ Apple is drifting away from the idea of owning a small volume

share of the market with high value to adopt its competitors’
strategy which is owning as much if the market as possible, but
for different reasons.
▪ The reason for this is not shrinking profits per phone which
used to underpin Apple’s financial performance in the previous
decade. It is rather the fact that the future will be about
revenues generated by subscription, as high possession rates
throughout the consumer electronics landscape limit hardware
potential. In this future, exposure to the iOS system among
consumers has to be as huge as possible to maximise profits.
▪ An additional option however is to offer its services not only on vs
its own iOS platform but on other platforms too, which also
contrasts sharply with Apple’s strategy in the past, as this loses
control over the end-user experience. Apple did this by
launching Apple Music in 2015 also on other platforms such as
Android. The same development is expected for all other Apple
products including the MacBook due to this strategic shift.
▪ Another hint towards a services-driven future was seen at the
end of 2020 when Apple stopped buying chips from AMD and
Intel, instead producing chips itself, which given the benefits of
vertical integration could allow Apple to reduce prices for
MacBooks, iPhones or iPads drastically, if needed, to attack the
Android customer base further.

© Euromonitor International CONSUMER ELECTRONICS: APPLE INC PASSPORT 18

GEOGRAPHIC AND CATEGORY OPPORTUNITIES

Will Apple’s strategy pay off? Subscription is a plan…

Source: Apple.com

▪ Although Apple used to be entirely premium focused, which provided it a competitive advantage, this does
not appear to be the strategy anymore. Apple still offers premium products such as its flagship iPhone 13
Pro, but also offers products such as iPhone SE in lower price segments.
▪ The company is also increasing comparison within its advertising and keynotes to either its former models
or even the competition. For a long time, Apple was known for not comparing itself against the competition,
now it is doing exactly that.
▪ In addition, similar to Tesla for example, Apple was known to rely on word-of-mouth recommendation rather
than for example social media presence let alone collaborations with influencers or model-specific TV
advertising. For a couple of years now, it has been undertaking all of the above mentioned. A reason for
this strategy shift is stiffer competition through the rise of fast internet and consumers’ ability to compare. In
other words, a competing Samsung phone is only one click away in an internet search.

© Euromonitor International CONSUMER ELECTRONICS: APPLE INC PASSPORT 19

GEOGRAPHIC AND CATEGORY OPPORTUNITIES

…for Apple to become a services-driven company

Apple
Fitness +

Apple Apple
News Health

Apple TV
+
Apple One Apple Pay

Apple Apple
Music Cloud

iCloud

▪ Apple commits further to its strategy to reduce dependence on its hardware products in highly saturated and
competitive markets such as iPhones and MacBooks but rather to use these products in the future as a gateway for
its service offerings and leverage the installed base through iOS.
▪ The advantage of more focus on services is the reoccurrence and predictability in terms of revenue streams
especially compared to hardware. Thus, at the end of 2020, Apple introduced Apple One, a bundle offering including
services such as Apple Cloud, Apple Music and other services, which gained reasonable traction among consumers.
▪ In 2017, this strategy was no more than a rumour among market experts, by now it has become clear that Apple’s
future will be about services and thus prices of its traditional hardware are expected to decrease further on average
while further models will be introduced to the market. As soon as a consumer has access to iOS, they become a
potential service subscriber. Thus, in the coming years further services introduced by Apple can be expected as well
as further price drops of its hardware to a point where the hardware becomes free of charge altogether and a part of
its services-based subscription model. The strategy shift by Apple is timely given the declining hardware sales ahead
while software will become ever more important to the consumer.

© Euromonitor International CONSUMER ELECTRONICS: APPLE INC PASSPORT 20

GEOGRAPHIC AND CATEGORY OPPORTUNITIES

Ecosystem + market momentum = Apple VR glasses

▪. ▪ In 2021, the installed base of virtual reality (VR)

2021: headsets in North America rose from 10% to
12.7% 13%, while Apple has not introduced a AR/VR
2020: headset to the market just yet. In 2025, in North
Ownership of a
9.5% Virtual Reality America the rate is expected to have reached
Headset in North almost 20%, thus every fifth North American
America would own a VR headset. From 2020 to 2025 on
a global scale, volume sales of AR/VR headsets
are expected to increase by some 33% to reach
16.9 million devices sold in 2025.
▪ Apple is expected to launch its first Apple Glass
in late 2021 or early 2022. Compared to other
AR/VR Headsets: Forecast Volume Sales (million
units), 2020-2025 consumer electronics companies such as HTC
and Samsung, Apple is acting as a relatively late
16,000
mover. As with most innovation the right timing
14,000
is a crucial success factor.
12,000
10,000 ▪ Given Apple’s rising shift towards a services
8,000 strategy in the near future, AR/VR glasses can
6,000 become another immersive component to the
4,000 smart watch and smartphone. This step is likely
2,000 to be favoured by consumers’ growing interest in
0 virtual reality as well as the technological
2017 2018 2019 2020 2021 2022
advances taking place in this field recently.

© Euromonitor International CONSUMER ELECTRONICS: APPLE INC PASSPORT 21

GEOGRAPHIC AND CATEGORY OPPORTUNITIES

Apple’s multi-step sustainability strategy

Source: unsplash.com Source: Apple.com

▪ Apple announced that by 2030 every Apple product sold will have “net-zero climate impact”, while the
company has already been carbon neutral regarding global operations since 2020. In addition, Apple
removed chargers and headsets from new iPhone packaging in 2020 as well.
▪ At the end of 2021, it announced the introduction of “Self Service Repair” in 2022 which includes tools and
spares starting for iPhones 12 and 13 but soon for Macs and other products, as encouraging consumers to
frequently buy new devices clearly raised a conflict of objectives between sustainability goals and its overall
business model.
▪ The reasons behind all these shifts are many. While obviously environmental responsibility plays a role, the
removal of headsets and chargers also reduced costs and met sustainability consumer trends.
Furthermore, sustainability is a calculated side effect of moving towards a services-driven business model.
Another reason is political, as the “right to repair” has been debated in many countries around the world,
which increased the institutional pressure regarding more sustainable approaches undertaken by Apple but
also many other consumer electronics companies.

© Euromonitor International CONSUMER ELECTRONICS: APPLE INC PASSPORT 22

INTRODUCTION
STRATEGIC EVALUATION
COMPETITIVE POSITIONING
MARKET ASSESSMENT
GEOGRAPHIC AND CATEGORY
OPPORTUNITIES
KEY FINDINGS
INTRODUCTION

Key findings

Services growing in Services, which includes revenues from its AppStore, Apple Music and Apple
importance TV, continues to grow rapidly as its huge user base continues to expand. Apple
users continue to get locked onto its ecosystem, thus benefiting its services
revenues.

Apple for the masses?
Apple wants to attract as many consumer segments as possible underpinning
its shift in strategy. Apple also followed this trend in 2020 with the introduction
of the Apple Watch SE. In addition, Apple also enhances its offering of
financing models which offer consumers the chance to buy Apple products via
a monthly fee instead of a one-time purchase.

Apple aims for net-zero
climate impact by 2030
Even though Apple registered a record year when it comes to sold products in
2021, the company keeps shifting towards a more service-driven and more
environmentally-friendly company future, where third-party players can repair
its products, accessories are minimised and sales of new products are
compensated for. This sets up the company for a dynamic future in consumer
electronics.

Apple opens up integration Apple used to be known for its closed integration approach where only Apple
approach software such as iOS and hardware for example the iPhone can be used
together, and nothing else. As of 2021 Apple opened up Apple Music to other
operating systems including Android.

© Euromonitor International CONSUMER ELECTRONICS: APPLE INC PASSPORT 24

FOR FURTHER INSIGHT PLEASE CONTACT
Tim Vattmann
Senior Analyst
tim.vattmann@euromonitor.com
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