Under the strong traffic pressure of Huawei Mate XT's triple-folding screen mobile phone, from the "toothpaste-squeezing update" at the hardware level to the "Apple turning into Android" and "iOS18 is ugly" complaints at the software level, Apple's iPhone 16 finally ushered in its annual new product delivery day.

Did you grab a Huawei Mate XT today? Did you get the first iPhone 16 today?

We always compare Apple's iPhone with domestic mobile phones such as Huawei and Xiaomi, and it is easy to conclude that Apple's iPhone is "far behind", but its sales are still the highest globally, and its ridiculed new designs and features will also be borrowed and imitated by Android phones.

While all other mobile phone manufacturers are competing in configuration and price, Apple has more profitable businesses beyond mobile phones, which is the true strength of its leading position.

Apple's iPhone is not only renowned for its excellent hardware design and technological innovation, but it has also built a comprehensive ecosystem. This unique service combination not only brings sustained revenue and profit growth to Apple but also enhances user stickiness and loyalty.

The three major revenue channels within Apple's ecosystem - iCloud, Apple Care, and the App Store - far surpass the simple hardware sales model of other mobile phone manufacturers, which is the fundamental difference in profit models between Apple and domestic mobile phone manufacturers.

1. iCloud: Long-term revenue generation based on the subscription model and user ecosystem lock-in

iCloud is Apple's cloud storage service, allowing users to store photos, files, contacts, app data, and device backups in the cloud.

iCloud offers different storage capacity packages, and users can choose between free service or paying monthly or annually for more storage space. This subscription model generates stable revenue for Apple, not only at the initial purchase of an iPhone but throughout the device's lifecycle.

Apple devices (such as iPhone, iPad, Mac) seamlessly synchronize, share, and back up data through iCloud, enhancing the user experience across devices and fostering dependency on Apple's ecosystem. Once users enter the Apple ecosystem, it is difficult for them to leave, as this high level of integration is challenging for other mobile phone manufacturers to replicate.

Cloud storage is a highly profitable business with relatively low ongoing operational costs once the initial infrastructure investment is made. This makes iCloud one of Apple's significant sources of profit, surpassing mobile phone manufacturers that rely solely on hardware profits.

2. Apple Care+: Increasing service revenue and enhancing user loyalty and brand value

Apple Care+ is Apple's extended warranty and after-sales support service. Users can purchase this service to receive an extended warranty, accidental damage coverage, and around-the-clock technical support.

As a high-value-added service revenue project, Apple Care+ not only extends the warranty period but also covers accidental damage and technical support. This value-added service increases the additional revenue per device while providing additional protection, enhancing the user's purchasing and usage experience.

Apple Care+ offers standardized global services, ensuring users receive consistent and high-quality after-sales experiences worldwide, reducing usage costs, enhancing satisfaction and loyalty, and ultimately elevating the overall value of the Apple brand.

The costs associated with extended warranties and accidental damage coverage are relatively low, while Apple generates direct revenue from Apple Care+ fees, driving device repairs and replacements, indirectly boosting hardware sales.

Compared to one-time profits from hardware sales, Apple Care+ provides long-term, sustained service revenue, further improving Apple's overall profitability.

3. App Store: High commissions and sustained revenue generation from content ecosystem

The App Store is a vital component of Apple's ecosystem and the primary channel for users of iPhone and Mac to access apps and content.

Apple charges developers a commission (typically 30%) on in-app purchases, subscriptions, and downloads through the App Store. This app-sharing revenue model generates significant income for Apple, especially with a large user base, where economies of scale amplify profits beyond hardware sales alone.

iPhone users are globally distributed and generally have high spending power, willing to pay for premium apps and services. Through in-app purchases and subscription commissions, the App Store generates substantial revenue for Apple while incentivizing developers to continuously innovate and optimize apps.

Apple's strict review standards ensure app quality and security, fostering a healthy and diverse app ecosystem. This attracts millions of developers worldwide, providing users with a rich selection of apps, strengthening Apple's dominant position in the content market, and enabling sustained profits through content consumption.

The App Store, in conjunction with iCloud and other Apple services, forms a complete closed-loop ecosystem, promoting collaborative sales of hardware and services. When users purchase apps, subscribe to services, or make in-app purchases, it reinforces their dependence on Apple's ecosystem, increasing user retention and lifetime value.

From Retina displays and in-house processors to Face ID, fingerprint recognition, and robust data encryption fostering strict privacy policies and security, Apple leads the industry in technological innovation and industrial design, driving industry standards in multiple areas.

From its ecosystem, deep integration of hardware and software, strong brand influence and user loyalty, exceptional customer service and after-sales support, robust security and innovation capabilities, and diversified revenue and profit sources, Apple has long been a leading force in the tech industry.

Through iCloud's subscription model, Apple Care+'s extended warranty service, and the App Store's revenue-sharing system, Apple has transcended traditional hardware sales models, transcending reliance on single product cycles to create a long-term, stable, and profitable ecosystem.

These three major revenue channels not only generate consistent income for Apple but also enhance its brand value and user loyalty. It is through these three "stable sources of income" that Apple achieves sustained, robust profit growth and market dominance, outpacing other mobile phone manufacturers.

In contrast, domestic mobile phone manufacturers resemble a "one-time transaction" model and need to further explore and innovate their profit models to build more sustainable and diversified revenue sources.

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