It is 10 years this week since Apple announced the release of the iPhone . Not only has the smartphone transformed our lives, but it has also transformed Apple by generating US$650 billion of revenue over a decade. This is a big number:
1 - the same as the worldwide hedge fund industry’s returns for investors over the same 10 years
2 - twice as big as global box office revenue over the same 10 years
3 - four times bigger than global music industry sales over the same 10 years
Courtesy of healthy margins, Apple has made a US$150 billion bottom-line profit from the iPhone over its 10-year life. To put that in context, the iPhone profit is:
1 - 30% greater than profits of the entire global airline industry over the last decade (despite total airline revenue being 10 times greater than the iPhone!)
2 - almost twice the size of the current market capitalisation of the New Zealand stock exchange
But the smart decision 10 years ago would have been to forego your 8GB iPhone purchase and instead invest the US$600 purchase price into Apple shares. They were trading at US$13.52, now ten years later they are US$119. They have soared 780% (24.3% per annum in US$ terms). If you bought Apple shares 10 years ago with your US$600 you could now buy the 128GB iPhone 7 (cost NZ$1,399) and still have NZ$6,041 invested in Apple shares! On these numbers the lesson of the decade is we should have bought Apple’s shares, not its phone…. but could we have survived the last decade without a smartphone?
John Berry, Pathfinder
Notes: (1) revenue and profit numbers sourced from Deutsche Bank (2) while the iPhone was announced in January 2007, US product sales started in June 2007 (3) while our World Equity Fund does have an exposure to Apple shares, the Pathfinder team are currently Samsung not iPhone users!