Horace Dediu on what Apple really sells:
The result is that the valuation of a consumer electronics vendor is based on the momentum of individual products. Apple has always been valued this way. Each hit product is considered to be a stroke of luck/genius and the chances of recurring are discounted to about zero. Regardless of the fact that it has a track record of “home runs”, Apple’s hit rate is not considered sustainable.1. Certainly Apple is not valued as being able to generate reliably recurring revenues.
But what if we were to value Apple on the basis of what people are buying rather than what it’s thought to be selling?
The model is simple enough: determine the number of users, estimate the lifespan of the products, the services attached to the products and given the price, obtain a price per product per day. You then can get a recurring revenue figure.
I did just that and the results are in the following table:
Just when I think we’ve hit “Peak Apple Naysayer” a whole new season of haters crops up, and Apple breaks its previous records.