Nobody can replace the simplicity and genius that Steve Jobs brought to Apple. But Tim Cook is bringing in lower costs, more revenue opportunities, and ultimately higher profit margins for shareholders.
That’s the key takeaway from the Apple event earlier this week. The tech company is adding a suite of services, from a credit card to a digital news subscription service to a video subscription service and so on.
While many may have been hoping for some new, outside-the-box product, this is a great development for shareholders. The company has been long derided for coming out with slightly newer versions of the iPhone each year, and sales there have likely plateaued. But as Apple has sold hardware to its large customer base, it’s mostly overlooked the software space. The exception has been iTunes, a high-margin business for the company that doesn’t have the physical labor entailed with assembling an iPhone or iPad.
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By expanding its service offerings, Apple can increase its revenue but with a lower cost compared to making physical products. That’s a sign that Apple will be focusing on increasing its profit margins going forward, the kind of metric that really focuses on delivering value to shareholders. Looking at this new suite of offerings, it may feel underwhelming, but it will likely be beneficial to the company’s bottom line. Sounds like good news to shareholders to me! Consider buying or adding to your stake in Apple at or near today’s prices.