Apple Drives Positive Impact on U.S. Economy
Apple is making plenty of profit, but how is the company’s success impacting the overall U.S. economy? According to Michael Feroli, chief economist for JPMorgan Chase in the United States, the iPhone is “having a measurable impact.”
Apple reported it sold over 10 million new iPhone 6 and iPhone 6 Plus models in the first three days after its launch -- setting a new record. Apple CEO Tim Cook said that number exceeded the company’s expectations. Feroli took notice.
“It’s a little gadget, but it costs a lot and it seems that everybody has one,” Feroli told the New York Times. “When you do the multiplication, it’s going to matter.”
$603 Per Phone
Apple’s Securities & Exchange Commission filing reveals how much it matters. The company is selling various iPhone models at, on average, $603 each and that translates to about one quarter to one third of a percentage point to U.S. gross domestic product’s annualized growth rate, according to Feroli.
And Apple is making a pretty penny off the devices. In fact, Apple may be making a killing on the iPhone Plus. That’s because the larger screen size adds an extra $100 to the sales price but the phablet-size device costs a mere $16 more to make than the smaller iPhone 6. That's according to a breakdown analysis from market research firm IHS Technology.
Apple reported revenue between $63.5 billion and $66.5 billion in the first fiscal quarter of 2015 and paid a tax rate of 26.5 percent, giving the government another reason to smile. There appears to be no end in sight, despite the doom and gloom about Apple’s future after the death of co-founder Steve Jobs. Cook made it clear there are “other great products and services in the pipeline for 2015.”
What Makes Apple Different?
We caught up with Jeff Kagan, an independent technology analyst, to get his thoughts on the Apple effect. He told us Apple continues to hit it out of the park, save a small blip on the radar screen that slowed its year-over-year growth over the last two years. As he sees it, Apple is back stronger than ever.
“The smartphone business is a rapidly changing space, so there are no long-term guarantees,” he said. “However, Apple is not a typical company and it does not have a typical customer base.”
Traditionally, he said, companies that have the kinds of problems that Apple occasionally has suffer more than Apple did after Jobs’ premature death. However, Apple has a unique and valuable relationship with its customers who seem “addicted” to its products, he noted.
That certainly showed with the iPhone 6 and especially the much-anticipated larger iPhone 6 Plus that competes with Samsung in the phablet category. But what about the iPad? Apple introduced the iPad Air 2 in mid-October, billing it as the thinnest and most powerful iPad ever.
“The iPad is not as big a seller as the iPhone. The Apple Watch may not be a big seller either. They are both incremental offerings,” Kagan said. “However, when it comes to the iPhone, Apple keeps winning year after year. This will not last forever. However, at this point I see no end in sight.”