Apple Inc. unveiled the first iPhone on June 29 a decade ago. Nobody had expected that handset would change the world so dramatically.
The company has obviously benefited tremendously from the iconic product.
Its share price was around US$120 on June 29, 2007; on Tuesday it closed at US$143.7, but that is after a seven-for-one split. In terms of market capitalization, Apple has expanded 730 percent over the 10-year period to US$747 billion.
By comparison, the Dow Jones and Nasdaq indices rose 60 percent and 140 percent respectively during the same period, while Berkshire Hathaway and Google’s share prices soared 130 percent and 260 percent respectively.
Apple sold as many as 6.1 million iPhone 1 handsets worldwide, but that looks nothing compared with its iPhone 7 sales, which have already surpassed the 100 million mark.
The tech giant has sold over 1 billion iPhones so far.
Members of iPhone’s supply chain have also enjoyed the ride.
Taiwanese company Foxconn, Apple’s largest contract maker, is one of the biggest winners. Its parent Hon Hai Precision Industry now has a market cap of NT$2 trillion (US$65.8 billion), around 70 percent more than its value of NT$1.2 trillion on June 29, 2007.
The year before the launch of iPhone, Hong Hai reported a net profit of NT$60 billion on NT$1.3 trillion worth of sales. Last year, its sales revenue hit NT$4.4 trillion and net profit spiked to NT$148.7 billion, with nearly half of its revenue coming from Apple.
A number of parts suppliers to Apple, including AAC Technologies Holdings (02018.HK), Sunny Optical Technology Group Co. (02382.HK), Lens Technology Co. (300433.CN), and Luxshare Precision Industry Co. (002475.CN), have also done very well, creating a bunch of new Chinese billionaires over the last decade.
Tencent Holdings (00700.HK) is another big, yet indirect, beneficiary.
The company used to have a narrow base of revenue a decade ago. But iPhone came along and kicked off a smartphone boom in China and elsewhere in the world.
Jumping on the trend, Tencent launched its social media app WeChat in 2010, which turned out to be a huge success. The instant messaging app has accumulated over 800 million users since then.
That has enabled the tech giant to diversify its revenue sources thanks to the smartphone era led by iPhone.
Last year, Tencent’s revenue and net profit jumped to 151.9 billion yuan and 39.1 billion yuan respectively. Its market cap hit a record high of HK$2.7 trillion.
But there are also losers. Traditional cellphone brands such as Nokia and Motorola have gone out of favor. Also, several leading web portals such as Yahoo!, Excite and AOL have lost their edge for failing to catch up with the smartphone era.
This article appeared in the Hong Kong Economic Journal on June 28
Translation by Julie Zhu
[Chinese version 中文版]
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