How Does Apple, Inc. Make So Much Money?

Ever wonder how Apple is able to sell $170 billion worth of stuff? Here's how!

Jamal Carnette, CFA
Jamal Carnette, CFA
Jul 29, 2014 at 12:30PM
Technology and Telecom

Did you buy an Apple (NASDAQ:AAPL) gadget last year? Well, if you didn't it is very likely you know somebody that did. Apple reported nearly $171 billion in sales its last fiscal year. For perspective, with roughly 7 billion people on the planet, Apple earned the equivalent of $24.50 per person in that period.  

The company has grown revenue at an average of 40% annually over the past four years. While many analysts throw around terms like "margin compression" and "cannibalization," to truly understand Apple individual investors must first understand how the company actually makes money. 

For a large electronics company, Apple keeps a rather slim product line and simply sells massive numbers of each item. While many know the products by heart, it is important -- especially for investors -- to know which products fuel Apple's top line and which are dragging down its growth.