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A Deep Dive into Apple's Dominance in the Smartphone Marketby@legalpdf
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A Deep Dive into Apple's Dominance in the Smartphone Market

by Legal PDF: Tech Court CasesMarch 23rd, 2024
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Delve into Apple's commanding position in the smartphone market, analyzing revenue sources, market shares, and growth patterns influencing the technology sector.
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United States v. Apple INC Court Filing, retrieved on March 21, 2024 is part of HackerNoon’s Legal PDF Series. You can jump to any part in this filing here. This part is 3 of 25.

II. Defendant Apple

19. Apple is a global technology company with headquarters in Cupertino, California. Apple is one of the world’s most valuable public companies with a market capitalization over $2.5 trillion. In fiscal year 2023, Apple generated annual net revenues of $383 billion and net income of $97 billion. Apple’s net income exceeds any other company in the Fortune 500 and the gross domestic products of more than 100 countries.


20. The iPhone, Apple’s signature product, is the primary driver of Apple’s growth and profitability, routinely commanding profit margins of more than 30 percent on devices alone—significantly higher than its smartphone competitors. iPhone sales have made up a majority of Apple’s annual revenue every year since 2012.


21. Apple increasingly extracts revenue from iPhone users beyond the initial smartphone sale. For example, Apple offers iPhone upgrades, apps and in-app payments, paid digital subscription services (e.g., Apple’s music streaming, TV, news, gaming, fitness, and cloud storage subscriptions), accessories (e.g., tracking devices, headphones, chargers, iPhone cases), and more. Apple refers to these offerings as “Services” and “Wearables, Home, and Accessories,” respectively. In fiscal year 2023, these offerings accounted for nearly one-third of Apple’s total revenue, or four times what Apple earned from selling Mac computers. Some of the largest drivers of revenue within these categories are Apple’s smartwatch, the Apple Watch, and Apple’s App Store, where iPhone users purchase and download apps. In recent years, Services have accounted for an increasing share of Apple’s revenues, while the iPhone has remained the primary gateway through which U.S. consumers access these services.


22. Apple’s U.S. market share by revenue is over 70 percent in the performance smartphone market—a more expensive segment of the broader smartphone market where Apple’s own executives recognize the company competes—and over 65 percent for all smartphones. These market shares have remained remarkably durable over the last decade.


23. Apple’s smartphone market shares understate Apple’s dominance and likely growth in key demographics, including among younger American consumers. For example, one-third of all iPhone users in the United States were born after 1996, as compared to just 10 percent for Samsung, Apple’s closest smartphone competitor. Surveys show that as many as 88 percent of U.S. teenagers expect to purchase an iPhone for their next smartphone. iPhone users also tend to come from higher income households. Because smartphone users generally use a single smartphone to access related products and services, locking up key user groups allows Apple to capture greater spending on iPhone-related products and services, realize higher margins per user as compared to its smartphone rivals, and exercise greater control over developers and other smartphone ecosystem participants.


24. In fiscal year 2023, Apple spent $30 billion on research and development. By comparison, Apple spent $77 billion on stock buybacks during the same year.


25. Apple was founded in 1976. During its first 25 years, the company focused in large part on producing and marketing personal computers. Although the market for personal computers expanded over the next several decades, Apple struggled to gain customer adoption for its higher-priced products relative to its lower-cost competitors, including IBM and Microsoft. In the late 1990s, Apple significantly restructured the company and embarked on a new strategy focused not just on selling personal computers, but also consumer devices like the iPod, which led to the development of the iPhone.


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About HackerNoon Legal PDF Series: We bring you the most important technical and insightful public domain court case filings.


This court case retrieved on March 21, 2024, from justice.gov is part of the public domain. The court-created documents are works of the federal government, and under copyright law, are automatically placed in the public domain and may be shared without legal restriction.