Apple's Quest for the Next Big Thing: Navigating Beyond the iPhone Era
2min read For years, Apple enthusiasts and investors have been preoccupied with a pressing question: what will be the company's next blockbuster product? Many have anticipated a new offering with the same revenue potential as the iPhone, a device that could serve as a fresh growth engine for the tech giant.
This challenge remains daunting. Over a billion iPhones are in use globally, anchoring Apple's ecosystem. Consumers show little desire to replace this robust, pocket-sized computing platform with a bold new product.
The iPhone annually generates over $200 billion for Apple, surpassing half of its total revenue. It also indirectly fuels an additional $100 billion in service revenue and accessories sales. Products like the App Store, Apple Watch, music services, TV+ streaming platform, and AirPods owe much of their popularity to the smartphone's launch nearly two decades ago.
For the past 15 years, Apple has endeavored to augment the iPhone with new product categories. While the iPad generates over $25 billion annually, and the wearables and home products division brings in roughly $40 billion per year, none have reached the iPhone's magnitude.
The reality is becoming evident: another iPhone-level success seems unlikely. It's difficult to imagine a single product that can replicate half of Apple's revenue. In effect, Apple has established itself as an "iPhone company," with other products functioning as accessories. Even the Mac has thrived partly due to the iPhone's influence.
Nonetheless, Apple must continue seeking new revenue streams. The iPhone won't vanish, but its capacity to drive sales growth diminishes. Therefore, to achieve growth, Apple must introduce multiple products similar in impact to the iPad, Mac, or Apple Watch, rather than waiting for one monumental opportunity.
The development of the Vision Pro has demonstrated these challenges. Apple executives hoped it would achieve the success of the Apple Watch, but its potential appears limited. Instead, a broader Vision product line—encompassing smart glasses, augmented reality eyewear, and iPhone-linked headsets—could evolve into a $25 billion business.
AirPods, introduced in 2016, represent another growth avenue. Currently generating an estimated $10-15 billion annually, these headphones could expand into a larger category by incorporating health features and advanced technologies. Sensors and cameras could enhance their ambient awareness, offering practical insights. Apple's AirPods lineup now includes four models, with prices reaching $550.
The smart home sector also holds promise, where Apple aims to make significant strides. The company plans to launch two new products: a smart display in 2025 and a high-end home hub with a robotic arm in the following years. Together with new HomePods and TV set-top boxes, these innovations could bolster Apple's presence in the home market.
Other areas of interest include Apple's secretive development of mobile and humanoid robots, exploring how they might assist with household tasks in the next decade. Although these initiatives may never mature into marketable products, they reflect Apple's ongoing commitment to the future. Additionally, the company contemplates transforming its health features into subscription services and evaluates forays into home energy solutions.
In the near term, Apple will focus on incremental upgrades to its existing offerings. Expect faster chips, thinner designs, and touchscreens for Mac computers, while iPads will become more functional with larger and potentially foldable displays. The Apple Watch will enhance health monitoring with blood pressure and glucose tracking. Meanwhile, advancements in design, cameras, and artificial intelligence aim to render the iPhone more indispensable.
These enhancements should stabilize Apple's business in the years to come. However, for Apple to truly flourish, it must translate more innovative ideas into practical products. Success doesn’t demand another groundbreaking hit but rather a diverse portfolio of valuable products.