Wednesday, February 18, 2015

Opinion: Apple-onomics

Source: Apple company site
Last quarter (Q1’2015) results for Apple broke records. A profit of $18B made it Apple’s most profitable ever quarter and also the biggest quarter of any public company in history.

Source: Wikipedia

If we extrapolate quarterly revenue of $74,500 M into one full year and consider Apple as a country and compare it with GDP of countries, Apple would displace Singapore and take 37th place in the list. Phew!!!

Source: Data from Apple company site
If you take a look at geographic distribution of its revenue, 59% ($44 B) of it comes from outside of US. All of that are exports for US. Apple's products were approx. 13% of all of US’s exports for that quarter. Since most of the manufacturing for Apple happens outside US, we can exclude direct material and labor costs from that $44 B, it would still amount to $17 B of net contributions to trade. And considering domestic impact, it adds $30 B of economic value to US economy for that quarter.

So it might be clear now. Apple is not just making money for its shareholders but boosting the economics its parent country too.

If Apple was an Indian company, India would be a trade surplus country (India's trade deficit is less than Apple's exports) with a strong current account. And Rupee would have been a currency to seek after!

You will say stop dreaming and I would agree. But those who are making noise with ‘Make in India’ need to take a look at what Apple is doing for US despite the absence of manufacturing facilities for it in US as it sources most of components from Taiwan and South Korea and gets the assembly & testing done in China. Apple has proved it. It is not manufacturing what matters. What makes a difference is innovation, IP rights, marketing and delighting the consumer.

Are we thinking about it? Do we need Foxconn or Apple in India?