A New York University professor said that as Apple’s various businesses continue to expand, its annual revenue could reach a trillion dollars, and acquisitions and investments in areas such as banking, search, health and the long-rumored Apple car could help Apple hit that milestone by 2030.
In January, Apple became the world’s first public company with a market value of $3 trillion. But while it is a giant in the stock market, it still lags other companies in terms of revenue.
In exploring how Apple reached a trillion-dollar annual revenue, NYU marketing professor Scott Galloway noted that Apple earned $366 billion, just over a third of the way to the milestone. However, this is far behind Amazon’s $470 billion and Walmart’s $559 billion.
Galloway suggested Friday that there are quite a few areas where Apple could work to catch up to that level. However, in the process of driving growth, it may have to expand and grab the market from other incumbents.
Apple has benefited from having its hands in many different areas, with its ecosystem and services cobbled together and tightly connected to each other. So much so that the professor believes that “no one has such an ability, and no one has such an identifiable pathway”.
In order to expand, Apple needs cash flow, and in 2021, it generated $93 billion in free cash flow, plus a $22 billion R&D budget, which would end up with $126 billion a year to invest in its various businesses, including through acquisitions.
Combine that with the fact that it can use its stock as currency, and tech companies typically make acquisitions for around 10% of their market cap, and that could give Apple another $290 billion in viable funding.
Income Path
The first option Galloway sees is consumer banking, as Apple has both the money and trust that banks provide to customers, as well as Apple Pay and Apple Credit Cards. Suppose Apple could offer an Apple Cash consumer account, along with other standard account-related features, before expanding to loans, investments, and mortgages.
With the big U.S. banks managing about $35 billion in consumer banking revenue each year, the professor believes Apple Banking could become a massive $75 billion business by 2030.
Search is also a potential route, which would start with Apple paying billions of dollars from its Safari default search deal with Google. This “strategic unlocking” that keeps search within Apple’s ecosystem and integrates search results with contacts, calendar and other user information could make the business more valuable.
While Apple may not generate as lucrative revenue as Google, it is estimated that it will generate $50 billion in revenue by 2030.
While Apple has been interested in healthcare for some time now, Galloway speculates that Apple could move to services and potentially make $17 billion a year by making CVS its “default integrated healthcare provider on iPhones ” dollars, the agency could deliver any healthcare item to users’ doorsteps, which could net $75 billion by 2030.
On a health-related issue, the value of the acquisition of Peloton in the fitness equipment segment was reduced to about $10 billion, making the sports bike company a potential acquisition target. While Peloton forecasts $5 billion in revenue in 2022, the professor stressed that “that doesn’t count as much as Apple is behind it,” which could make fitness a $20 billion business for Apple by 2030.
Home automation is considered an $80 billion market, and one that can be accelerated by a “$22 billion R&D engine.” While Apple may not dabble in connected refrigerators, opting instead for other more typical smart home elements, it’s considered “another $20 billion opportunities.”
He proposed that the long-rumored Apple car could potentially generate “the first $250 billion-plus value transfer” from Tesla once it launches. After “conservative estimates” take Tesla’s $25 billion in sales and EVs are a high-growth market, it’s projected to be a $50 billion business by 2030. Identity and education services could add another $10 billion to the total.
Then there’s business-to-business, such as payment processing, which can be facilitated by the upcoming “click to pay” feature to make payments on mobile phones. That would give businesses payment processing power without the need for additional hardware, and it would also take some of Square’s pie.
Ultimately, Apple wants to spend $10 billion on infrastructure, its own data centers, so it can take a break from Google and Amazon Web Services. It has been suggested that Apple could enter the same field and serve externally. Taken together, Professor Galloway’s advice could help Apple reach $100 million in annual revenue.