Apple has a clear path to $1T in revenue by 2030

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in AAPL Investors
Apple could hit a trillion dollars in annual revenue with a continued expansion of its various businesses, according to an NYU professor, with acquisitions and investments in fields such as banking, search, health, and the long-rumored Apple Car able to help edge Apple to the milestone by 2030.




In January, Apple became the first publicly-traded company in the world to reach a market capitalization of $3 trillion. But while it is a giant in the stock market, it still falls behind others when it comes to revenue.

In an exploration of how Apple could reach a trillion dollars in annual revenue, NYU professor of marketing Scott Galloway points out that Apple earned $366 billion in revenue, just over a third of the way to the milestone. However, that's far behind Amazon's $470 billion and Walmart's $559 billion.

Galloway offered on Friday that Apple has quite a few areas it can work on to reach that level. However, in pushing for growth, it may have to expand and steal markets away from other incumbent firms.

Apple already benefits from having its fingers in many different pies, with an ecosystem and a patchwork of services that are closely linked to each other. So much so that the professor believes "Nobody else has this, or any discernible path to it."

To expand, Apple needs capital, and in 2021 it generated $93 billion in free cash flow. Added with a $22 billion research and development budget, Galloway proposes that Apple has $126 billion per year to invest into its various businesses, including through acquisitions.

Add in that it could use its stock as currency, and that tech companies typically make acquisitions at around 10% of its market cap, that could give Apple another $290 billion to feasibly play with.

The revenue path

Galloway's first port of call is consumer banking, as Apple has both the capital and trust that banks offer to customers, as well as its Apple Pay and Apple Card businesses. Hypothetically, Apple could offer an Apple Cash consumer account, as well as other standard account-related features, before expanding into loans, investments, and mortgages.

As large U.S. banks manage around $35 billion in annual consumer banking revenue, the professor thinks an Apple Bank could become a $75 billion business by 2030.

Search is also a potential route, which would start with Apple losing its billions from the Safari default search deal with Google. However, this would be a "strategic unlock," as Galloway reckons keeping searches within Apple's ecosystem and integrated results with contacts, calendars, and other user information could make the business more valuable.

Though Apple may not managed the same revenue as Google from ads, it's reckoned to manage $50 billion in revenue by 2030.

While Apple has been interested in healthcare for a while, Galloway speculates that Apple could shift into services, and could earn $17 billion a year from making CVS its "default integrated healthcare provider on the iPhone."

It's also hypothesized that Apple "could justbecome CVS," by following the "Jokr-like dark stores" model to deliver any healthcare item to the user's doorstep. This could net $75 billion by 2030, it's believed.

Connected to health, the fitness side Galloway brings up the reduced value of Peloton at approximately $10 billion, which makes the exercise bike-selling firm a potential acquisition target. Though Peloton forecasts $5 billion in revenue in 2022, the professor highlights "that's without the power of Apple behind it," which could make fitness a $20 billion business by 2030.

Home automation is reckoned to be an $80 billion market, and one that could be accelerated by "that $22 billion R&D cannon." While Apple probably won't stray into connected refrigerators, in favor of other more typical smart home elements, it's thought to be "another $20 billion opportunity."

Prof. Scott Galloway's proposals could help Apple reach $1T in annual revenue.
Prof. Scott Galloway's proposals could help Apple reach $1T in annual revenue.


The long-rumored Apple Car is potentially going to generate "the first $250+ billion transfer of shareholder value" from Tesla once the first vehicle is unveiled by Apple, Galloway proposes. After a "conservative estimate" of taking $25 billion of Tesla's sales as well as electric vehicles being a high growth market, a $50 billion business by 2030 is speculated.

Galloway also offers that identity and educational services could add another $10 billion to the total.

Then there's business-to-business operations like payment processing, which can be boosted by the forthcoming "Tap to Pay" feature enabling payments on phones. This would give businesses payment processing without needing the extra hardware, which will eat some of Square's lunch.

Lastly, there's Apple's $10 billion it wants to spend on infrastructure, namely its own data centers so it can pull away from Google and Amazon Web Services. It's offered that Apple could go into the same space, offering businesses access to spare capacity.

Under B2B, Galloway says it could be a $50 billion segment within eight years.

Slow and Steady

Despite laying out a considerable investment plan, Galloway concludes that it may not necessarily happen, as Apple is run with considerable discipline. As an example, the largest acquisition by the company is Beats, which it made for just $3 billion almost eight years ago.

"They've been looking at cars, AR, and televisions for a decade or more," the professor says. "If it's the first company to get to $1 trillion, and we think it will be, it'll likely be because Cook & Company isn't in a hurry to get there."

Read on AppleInsider

Comments

  • Reply 1 of 19
    crowleycrowley Posts: 10,143member
    As large U.S. banks manage around $35 billion in annual consumer banking revenue, the professor thinks an Apple Bank could become a $75 billion business by 2030. 
    ... what?
    FileMakerFeller
  • Reply 2 of 19
    Thanks to China 🇨🇳 
  • Reply 3 of 19
    lkrupplkrupp Posts: 9,991member
    Not going to happen. Apple will be broken up into little pieces by regulators all over the globe. They’ve gotten too big for the politicians to tolerate. 
  • Reply 4 of 19
    lkrupp said:
    Not going to happen. Apple will be broken up into little pieces by regulators all over the globe. They’ve gotten too big for the politicians to tolerate. 
    Unfortunately with the way our politics are, this sounds very likely. 
  • Reply 5 of 19
    cg27cg27 Posts: 169member
    Come on guys, on what basis?  Being too successful in terms of running the business astutely and thus having high margins/profits?

    Globally Apple’s products are not dominant in terms of market share.  They have plenty of room to grow while the Android and PC/Windows junk will still grab the majority purely due to low price points.

    As for Home Automation aka HomeKit they need to focus more attention.  Including routers, as that is the weak link in security since they exited.


    blastdoorspock1234dope_ahmineBeatsjas99byronlwatto_cobra
  • Reply 6 of 19
    badmonkbadmonk Posts: 1,075member
    Or maybe Apple can just keep on doing what Apple does well and ignore this stupid advice from an armchair academic.  Apple knows enough to not embark on businesses that is not in its DNA.

    The Economist a number of years ago discussed the results of large M&A deals between corporations.  Often the resultant companies had worse performance.  It certainly did not result in any benefits for shareholders and I personally doubt it helped the companies.

    A
    radarthekatbyronlAnilu_777watto_cobraFileMakerFeller
  • Reply 7 of 19
    cg27 said:
    Come on guys, on what basis?  Being too successful in terms of running the business astutely and thus having high margins/profits?

    Globally Apple’s products are not dominant in terms of market share.  They have plenty of room to grow while the Android and PC/Windows junk will still grab the majority purely due to low price points.

    As for Home Automation aka HomeKit they need to focus more attention.  Including routers, as that is the weak link in security since they exited.


    Even if Apple was dominant, who cares? 
    That’s called winning. Success, etc. 

    whst matters is if they are oppressive to the point where no one else can compete. 

    They aren’t a monopoly in any category at all. 

    And you can’t look at their combined successes as a monopoly. 

    They’ve broken no laws related to such, have managed their business, their stakeholders, shareholders, the environment, and competition exceedingly well and even held back on some things to avoid undue scrutiny. 

    Apple Is the epitome of the American dream. America should not punish them for it. 
    edited February 19 gregoriusmtyler82spock1234Beatsjas99byronlAnilu_777watto_cobramaximara
  • Reply 8 of 19
    blastdoorblastdoor Posts: 2,680member
    cg27 said:
    Come on guys, on what basis?  Being too successful in terms of running the business astutely and thus having high margins/profits?
    I mostly agree.

    Maybe they pass a law that makes it harder for companies above a given size to acquire other companies. That could slow growth, because you have to build up from within rather than buy. But longer term, building up from within might be better anyway. So maybe growth is slower but more enduring. 
    watto_cobra
  • Reply 9 of 19
    radarthekatradarthekat Posts: 3,497moderator
    The example of Apple not building an actual television illustrates well Apple’s philosophy of entering only those markets and building only those products where it believes it can offer meaningful differentiation from existing products and services.  Read this article again with that in mind and you’ll quickly realize that Apple is unlikely to be interested in most of what the good professor suggests.
    applguyblastdooraderutterjas99mjtomlinbyronlAnilu_777watto_cobraStrangeDaysmaximara
  • Reply 10 of 19
    I still think it’s an interesting and inspiring analysis of semi-feasible business opportunities that Galloway presents. Sure, they are dream scenarios but they have a good deal of expertise and thoughts behind them. At least they got me excited.
    Beatsjas99watto_cobra
  • Reply 11 of 19
    mjtomlinmjtomlin Posts: 2,570member
    lkrupp said:
    Not going to happen. Apple will be broken up into little pieces by regulators all over the globe. They’ve gotten too big for the politicians to tolerate. 

    The only divisions that I can see being "broken off" is services and applications (to make competing on Apple's own platforms more "fair"). At which point most other "platform" companies would have to follow suit, because laws cannot single out a company unless it is considered a monopoly in its respective market... You can't just break up Apple, because they've gotten too big or make too much money. Companies are broken up when it is determined that the market cannot sustain fair competition when there's one company that can control that market and influence other markets due to its size and share of that market. Two of the largest examples are Standard Oil and AT&T. Two other companies that come to mind, but were never broken up are IBM and Microsoft. Both of which had a stranglehold on their respective markets. Microsoft snuck in under the radar and stole IBM's thunder and the mobile market basically killed off Microsoft's dominance.
    edited February 20 watto_cobramaximara
  • Reply 12 of 19
    mjtomlinmjtomlin Posts: 2,570member
    blastdoor said:
    cg27 said:
    Come on guys, on what basis?  Being too successful in terms of running the business astutely and thus having high margins/profits?
    I mostly agree.

    Maybe they pass a law that makes it harder for companies above a given size to acquire other companies. That could slow growth, because you have to build up from within rather than buy. But longer term, building up from within might be better anyway. So maybe growth is slower but more enduring. 

    Most of Apple's acquisitions were made to help enhance their products and ecosystem. Rarely are they ever made to overtake or increase their share of a market. Which is why I don't understand how they are lumped in with companies that have; Google, Microsoft snd Facebook.
    danoxbyronlAnilu_777watto_cobrasconosciuto
  • Reply 13 of 19
    danoxdanox Posts: 952member
    cg27 said:
    Come on guys, on what basis?  Being too successful in terms of running the business astutely and thus having high margins/profits?

    Globally Apple’s products are not dominant in terms of market share.  They have plenty of room to grow while the Android and PC/Windows junk will still grab the majority purely due to low price points.

    As for Home Automation aka HomeKit they need to focus more attention.  Including routers, as that is the weak link in security since they exited.


    Even if Apple was dominant, who cares? 
    That’s called winning. Success, etc. 

    whst matters is if they are oppressive to the point where no one else can compete. 

    They aren’t a monopoly in any category at all. 

    And you can’t look at their combined successes as a monopoly. 

    They’ve broken no laws related to such, have managed their business, their stakeholders, shareholders, the environment, and competition exceedingly well and even held back on some things to avoid undue scrutiny. 

    Apple Is the epitome of the American dream. America should not punish them for it. 

    Long Apple 🍎 
    watto_cobrasconosciuto
  • Reply 14 of 19
    The example of Apple not building an actual television illustrates well Apple’s philosophy of entering only those markets and building only those products where it believes it can offer meaningful differentiation from existing products and services.  Read this article again with that in mind and you’ll quickly realize that Apple is unlikely to be interested in most of what the good professor suggests.
    Especially banking. It is a highly-regulated and scrutinized industry. It’s not in Apple’s interest to have a banking department and offer loans, mortgages etc. Apple Card and Cash work within its ecosystem as Apple isn’t the bank behind it. There’s an actual bank that services the Apple Card (only available in the US though).
    watto_cobramaximarasconosciuto
  • Reply 15 of 19
    Is Galloway trying to take Damodaran’s job? Valuation is his thing. 
    watto_cobra
  • Reply 16 of 19
    Though Peloton forecasts $5 billion in revenue in 2022, the professor highlights "that's without the power of Apple behind it," which could make fitness a $20 billion business by 2030. 

    APPLE. IS. NOT. BUYING. PELOTON.

    edited February 21 FileMakerFeller
  • Reply 17 of 19
    lkrupp said:
    Not going to happen. Apple will be broken up into little pieces by regulators all over the globe. They’ve gotten too big for the politicians to tolerate. 
    I actually think the opposite. Regulators will get taken down by money. Just an opinion. Will be fun to see what happens. 
  • Reply 18 of 19
    This professor needs to remember some of the aphorisms about business, primarily:
    "It's not how much money you make. It's how much money you keep."

    Growing the top line with no regard for the bottom line is... well, let's just say sub-optimal. Which would you rather have - Apple's net income of ~US$95billion for 2021, or Amazon's ~US$33billion, or Walmart's ~US$14billion?

    Amazon and Walmart have higher revenue, but it's pretty easy to equate that to "having to do more work to earn less money" which, last I looked, is not laudable efficiency.

    The creativity involved in this "report" is worthwhile, but the underlying assumptions are a hot mess so I rate it a wasted effort.
    Beats
  • Reply 19 of 19
    crowleycrowley Posts: 10,143member
    This professor needs to remember some of the aphorisms about business, primarily:
    "It's not how much money you make. It's how much money you keep."

    Growing the top line with no regard for the bottom line is... well, let's just say sub-optimal. Which would you rather have - Apple's net income of ~US$95billion for 2021, or Amazon's ~US$33billion, or Walmart's ~US$14billion?

    Amazon and Walmart have higher revenue, but it's pretty easy to equate that to "having to do more work to earn less money" which, last I looked, is not laudable efficiency.

    The creativity involved in this "report" is worthwhile, but the underlying assumptions are a hot mess so I rate it a wasted effort.
    Agree with this.  The report is quite nicely written, and has some interesting analysis, but its focus on revenue for Apple seems misguided, as Apple's financial motivation seems to always be profit before revenue.
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