First USA company Apple exceeds 2 billion capitalization: further proof that its master plan to keep its users locked in the iPhone ecosystem works flawlessly

Apple has just become the first listed company in the United States to reach a market capitalization of 2 trillion dollars (more than 1.6 trillion euros at current exchange rate), a milestone that would place the company in an exclusive group and lead it to become the most valuable listed firm in history. And all this in record time: the iPhone manufacturer exceeded the trillion dollar capitalization for the first time two years ago.

Apple shares were expected to reach above $ 467.77, as calculated by the US network CNBC, a barrier they have overcome in less than two hours compared to the opening of markets on Wednesday in the United States, reaching above $ 468 for a short period of time.

This achievement is a sign that Apple's strategy of transforming itself into more than just an iPhone company, diversifying into digital entertainment and financial services, is bearing fruit, even in the midst of a global pandemic.

The fact that Apple's wearable and service segments have so quickly become such important parts of the company's business also underscores Apple's biggest advantage and one of the reasons it is so valuable: customer loyalty.

A 2017 study by Alphawise, for example, revealed that 92% of surveyed iPhone users who had any intention of switching phones in the next 12 months planned to buy another Apple phone.

"When a user starts using Apple phones he tends to stay true to the brand," Jeriel Ong, an analyst at Deutsche Bank, tells Business Insider. "Apple tends to be more addictive and that's valued more."

First USA company Apple exceeds 2 billion capitalization

That loyalty, and many of the company's business decisions over the past decade, is perhaps how Apple has found its way into such an exclusive club. Saudi Aramco, the giant oil conglomerate, is the only other publicly traded company that has reached a valuation of $ 2 trillion, briefly rubbing the mark in December 2019.

The loyalty of Apple's customer base has become more important than ever in recent years, as the company has increasingly relied on services and wearables to compensate for the slowdown in iPhone sales.

Apple's services segment, which includes new offerings such as Apple TV Plus and Apple Card (not available in Spain), as well as App Store and Apple Care revenues, is currently its second largest product segment, behind the iPhone, according to data from the fiscal third quarter of 2020. Apple services rose 15% from a year earlier and set a record in the quarter ended in June.

Since the launch of the Apple Watch in 2015 and the AirPods in 2016, Apple has also grown to lead the global wearable market. IDC reported that the company shipped more devices than its rivals, including Xiaomi, Samsung, Huawei and Fitbit, in the first quarter of 2020.

Apple claimed in April 2019 that its wearable division alone was the size of a Fortune 200 listed company, and that in its third fiscal quarter its wearable, home and accessories segment generated $ 6.4 billion in revenue, compared to $ 5.5 billion a year ago.

This is especially important considering that the business of Apple wearables almost did not exist 5 years ago, notes Ong.

This growth has given Wall Street confidence that there is enough room for Apple to grow even if iPhone sales are stagnant, alleviating concerns that Apple had become too dependent on its mobile phone business.

And, apart from the direct impact that the business areas of services and wearables have on the company's income statement, they have also served to reinforce the strength of the Apple ecosystem, making it increasingly difficult for an iPhone user to switch to Android.

Apple's better-than-expected performance in its fiscal third quarter of 2020 also showed Wall Street that Apple's products are valuable enough for its customer base that people are willing to spend money on them during a pandemic, thanks in part to the new and affordable iPhone SE.

"I think that during this period the priority that Apple products can have in the consumer portfolio has been consolidated," says Ong. "And that resilience was evident in the last quarter's numbers."

Apple has spent the last few years demonstrating that it can grow in a new way that does not involve breaking iPhone sales records. But still, 2020 looms as a successful year for the iPhone.

Apple expects to release its first iPhone 5G models later this year, an announcement that many analysts have predicted will return growth to Apple's iPhone business after several quarterly declines.

Daniel Ives, an analyst at Wedbush Securities, described the launch as a "once every decade" opportunity for Apple. That's because the addition of 5G, as well as other improvements, could give current iPhone owners a greater incentive to modernize compared to previous years. In addition, he anticipates that 350 million iPhones are in the window of an opportunity to renew this year.

"These combined forces make this a supercycle," Ives explains to Business Insider.

That resurgence of iPhone renovations combined with the boom in Apple's wearable and service businesses are paving the way for what appears to be an exceptional year for Apple: all factors are based on Apple's ability to keep its users locked in its ecosystem.

After all, an iPhone owner with AirPods and an Apple Watch would have to invest a significant amount of money to get a similar experience in the Android ecosystem.

"The more products of this type are added, The more the idea that the iPhone ecosystem is a bit safer is communicated," says Ong. "And that also affects investors."

End of First USA company Apple exceeds 2 billion capitalization

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