Apple's next $40 billion may be hiding in plain sight

"Apple might not have to make a car—it might just slurp up more automotive features into its own platform" -- Erik Savitz

From Savitz' "Apple Looks to Cars and Banking for Its Next Big Thing" posted Friday by Barron's:

The math is daunting. To boost revenue by 10%, Apple needs to find $40 billion in additional annual sales. That’s about the size of the company’s Mac business, which has been around since 1984, or its entire “wearables, home, and accessories” segment, which includes Apple Watch, AirPods, and HomePods.

This past week, Apple showcased some of its new ideas at its annual Worldwide Developers Conference, or WWDC. Its nearly two-hour keynote address actually seemed light on game-changers. But beneath the surface, there were hints of where Apple might find the next big thing. Here are the options:

    • Augmented Reality: There have been widespread reports that Apple is close to launching glasses for augmented and virtual reality.
    • Cars: While an Apple Car remains pure speculation, there was a new wrinkle at WWDC... Apple might not have to make a car—it might just slurp up more automotive features into its own platform, the same way the iPhone replaced digital cameras, music players, and maps.
    • Finance: While the Pay Later transactions will go through Goldman Sachs and over the Mastercard network, Apple will be taking on the financial risk attached to the service.

My take: Good candidates, but Savitz' math sounds a lot like LOL numbers.

See also: Bumblebee too big to fly

5 Comments

  1. Jerry Doyle said:
    I suspect Apple will do both; slurp-up more automotive features into its own platform and build the Apple car. For the company to continue growing revenues proportionate with its size to produce the needed mathematical numbers it needs, then Apple can target the transportation industry through leveraging an automotive tech platform so user-friendly and filled with data that it attracts all industry participants like blue & violet nectar-rich flowers attract bees. Concomitantly, Apple carries on with its vision to proffer-up to the industry its own unique and innovative competitive offering to enrich fully the transportation experience of a mobile society.

    Apple never has been shy about owning the entire space and making money while doing so.

    3
    June 11, 2022
  2. Jerry Doyle said:
    “…. Finance: While the Pay Later transactions will go through Goldman Sachs and over the Mastercard network, Apple will be taking on the financial risk attached to the service.”

    The BNPL service is a relatively low risk offering as it is a zero interest loan that is very short-term (2 months). You know Apple has this figured down to the pin-head to mitigate credit risks. I suspect applicants approved for BNPL will have been carefully scoured and the amount of credit extended will be proportioned to the level of risk on the amount of credit extended. Apple has sufficient capital itself to fund the endeavor and will profit additionally over the initial sale from the retention of not paying merchant fees.

    3
    June 11, 2022
  3. Jerry Doyle said:
    “…. Apple’s next $40 billion may be hiding in plain sight.”

    I love the topic of this Blog, PED. Erik Savitz is so overwhelmed with the potential sources of new massive revenues for Apple from AR, cars & finance that he omitted inadvertently to denote or even mull over the colossal amounts that potentially awaits Apple in the Health & Wellness industry. It is this industry where Apple’s legacy contribution to society lies. Tim Cook often reminds us of this fact. I am confident that the company is on the brink of some potentially unique, innovative and experimental processes of which it is testing that can change the way the Health & Wellness industry gathers needed patient data. The amount of potential revenue from this vast global industry is mammoth.

    Apple is the company for long term investors who may expect humongous returns.

    5
    June 11, 2022
  4. Fred Stein said:
    Upvoted Jerry.

    Why don’t people take Tim at his word re health? $40B is less1% of the global TAM in health. Hearing aids alone could gross $10B. Remote diagnostics has so much potential, I’m afraid to even guess. Clinical trials has $80B TAM, but Apple would only take a tiny slice, just at they only take .15% of CC transaction.

    Maybe we should take Tim literally. It’s about Apple’s contributions to health, not necessarily revenue. As Tim said long ago about ‘green’ initiatives, paraphrasing, “we don’t always care about the bloody ROI.” Apple has the luxury of, and integrity to, not to worry about any short term financial metrics that so many analysts obsess about.

    1
    June 11, 2022
  5. Fred Stein said:
    Hey Erik, gaming is hiding in plain sight.

    Gruber’s great interview the Jos and Craig made that clear. The coolest thing about gaming is that Apple’s investments in gaming has so many side benefits such as AI, and expanding Mac revenue for avid gamers to migrate from PC, and for game developers who will gulp/slurp/scarf/gobble the highest performance, maxed out Macs because the ROI for these professionals is so high. That same technology may support high-end simulations, drug development, and other high performance niches.

    1
    June 11, 2022

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