Pixel Envy

Written by Nick Heer.

The iPhone Company

The second bit of strange news isn’t really that strange. At least, it shouldn’t be. MG Siegler:

You see, because of the downward trend of both the Mac and the iPod (in terms of revenue), the iPhone is becoming increasingly important to Apple’s bottom line. We’ve known for a while that Apple “lives or dies” each quarter based upon how many iPhones they sell, but it’s never been as reliant on that one device as it is right now.

iPhone sales now represent nearly 60% of Apple’s entire revenue stream. Meanwhile — and this is the part I find hard to comprehend — the iPod represents about 2%. From the company that was once “The iPod Company” to a company for which iPod sales now approach a rounding error.

Which brings me to Siegler’s other big point:

[I]t’s hard to envision another product line that can match the money-making ability of the iPhone. Remember that the iPhone is unique in that it’s a very expensive device that has been heavily subsidized in the U.S. by the mobile carriers. This is part of the reason why it struggles to sell as well in other countries — it’s simply much more expensive in other markets.

It’s also unique in that it’s a product which is inherently convergent, and therefore arguably more essential than any other product line in the technology market today. Tech companies aren’t having a hard time coming up with new product lines because of any other reason than they’re trying to force it. Smart watches feel forced; internet-connected televisions feel forced; other wearable stuff does as well. The humanity of the smartphone is what made it so wildly successful as a category.