How AAPL makes money

Victor Panlilio:

Insightful analysis of AAPL business model

Originally posted on :

Rumor

It has become a routine: rumors and speculations lead up to an Apple event wherein the company introduces products that “fail expectations” but go on to sell out and make huge profits. But why does this happen like clockwork, year after year?

To be sure, part of it comes from market speculators who make money from AAPL price swings, but the inability or unwillingness of analysts and pundits to understand how Apple works is the more likely reason.

The “failure” is declared by comparing Apple’s hardware specs against those of its competitors. Like “covering” a U.S. President through the confines of the White House press briefing room, hardware specs are the lazy person’s ideal tool: short, simple, often numerical, but ultimately not very illuminating.

One of the key ingredients of Apple’s spectacular success over the last decade has been the inability of its rivals to distinguish hardware from product. As…

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