How Does Apple Make its Money?

It’s always an interesting question: how does X plc make its money. We know its sales are £million or billion; we know that they have some excellent products and services; and so on. Which product and which service brings in the most profit though?

As they were discussing Apple’s second quarter 2015 results earlier this week I decided I would try to answer my own question: this is what I did.


To answer my questioon, I not onlu needed to know sales, profit and and so on but which products they sell and how many of them. Normally, getting hold of such information in detail is a problem: it’s just not possible to get it. So it proved with Apple. That is, in the time I allowed myself to find it.

I was looking for sales units of iPhones, iPads, Mac desktops, Mac laptops and so on. I found a mixture of quarterly and annual data. As far as mac computers are concerned, I had to estimate those sales. However, I was reasonably pleased that at least I had this:

Year Sales ($bn) Macs iPhone iPad Gross Profit ($bn)
2007 24.6 10.8 1.39 0 2.18
2008 37.5 14.2 11.63 0 11.58
2009 42.9 20.9 20.73 0 13.84
2010 65.2 27.6 39.99 7.46 26.71
2011 108.2 33.5 72.30 32.39 45.52
2012 156.5 36.4 125.04 58.31 71.93
2013 170.9 32.6 150.26 71.04 71.06
2014 182.8 37.8 169.22 67.99 78.48

The sales and gross profit figures are in $ billions and the sales of macs, iPhones and iPads are in millions of units.

I used the Data Analysis ToolPak to provide me with the regression equation and so on and, making Gross Profit my Y variable, I generated four different models, which you can see in the spreadsheet linked to the bottom of this page: The main part of the output of model four follows:

Regression Statistics
Multiple R           0.9996
R Square           0.9992
Adjusted R Square           0.9985
Standard Error           2.4609
Observations 8
df SS MS F
Regression 3   29,164.5307 9,721.5102   ,605.2518
Residual 4           24.2243        6.0561
Total 7    29,188.7550
Coefficients Standard Error t Stat P-value
Intercept          14.0494            3.4576        4.0634       0.0153
Macs             1.0860            0.1970        5.5119       0.0053
iPhone             0.3771            0.0998        3.7774       0.0195
iPad             0.9334            0.1864       5.0074       0.0075

The Interpretation

This page is just a summary page so I will assume that you understand the variables and results you see here. The outcome is, however, that Gross Profit can be said to be a function of the sales of macs, iPhones and iPads. In addition, we can see that the computers are the most significant items that are sold, b coefficient of 1.0860, followed by iPads with a b coefficient of 0.9334 and iPhones are far behind in their significance with a b coefficient of just 0.3771.


This is a very small study with just 8 years’worth of annual data but it does give us a small insight into the importance of the contribution of the various products that the company sells.

download my file apple_analysis

Duncan Williamson

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