Famed investor Warren Buffett was interviewed by CNBC on Monday about a wide range of issues, including his thoughts on Democratic presidential candidates Michael Bloomberg and Bernie Sanders, as well as the future of Berkshire Hathaway. But it was his comments on Apple that might have the most impact.
Buffett called Apple “probably the best business I know in the world.” He added that his company’s stake in Apple, worth about $72 billion, was its third-largest holding behind insurance and railroad investments.
Buffett’s comments shouldn’t be taken lightly. In fact, you could take it a step further and look at Apple as the perfect business model for any company heading into the 2020s.
First and foremost, any company that isn’t a tech company in some form or fashion will be in trouble going forward. Technology has transformed our world and our lives, and any company that isn’t investing in technology or utilizing it as a platform will be left behind.
It’s hard to find a company that’s as big and powerful in the technology space as Apple. But more than that, Apple has found a way to utilize a range of technology solutions to solidify its power. And that’s something that even non-tech companies can learn from.
Apple has created a true ecosystem around its products that other companies should emulate. When you buy one Apple product, you have easy access to other Apple products. Apple has made it simple to buy an iPhone, get apps from its App Store, sign up for Apple Music, and do it all in no time. Along the way, you’re paying Apple for each service you use.
Gone are the days when companies could (or should) get by with a single revenue stream. Now more than ever, you need to follow Apple’s lead and find multiple streams to drive value to your company’s profits.
After all, Apple’s iPhone is a high-margin product, but the company’s Services division, which includes iCloud, Apple Music, and others, has even higher margins. If Apple can profit on your iPhone sale and make an even higher margin on your software purchases, it expands its margin on you, the customer.
There’s also an element to Apple’s business that keeps customers coming back. Because they’re so invested in Apple’s other businesses, like Services, they find it more palatable in many cases to buy another iPad or iPhone. And in turn, Apple continues to benefit from that cycle.
So, what does that mean for your retail business or furniture business or service business? It means you need to think clearly about how you can incorporate technology into your customer experience. And it also means you need to think about developing new revenue streams that are both complementary to your existing business and keep customers coming back to you.
Apple might be Apple. But there’s no reason you can’t learn from what the company has done and deliver a similar result, regardless of the business you’re in.
Published on: Feb 25, 2020
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