How Apple avoided Big Tech Layoffs 2022-2023 | Apple Business Model explained | Pavan Sathiraju
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Tech industry layoffs have been the talk of the town for well over a year now. It’s obvious that with FAANG companies laying off employees these big job cuts in 2022 have massively impacted the big tech. But while we heard the news of Meta layoffs, Snap layoffs, Amazon layoffs, Google layoffs, and Netflix layoffs, among others we are yet to hear about any layoffs at Apple. Apple layoffs 2022 or Apple layoffs 2023 have made it to the news because this one big tech company has steered clear of the layoff saga lately. But how was apple able to avoid layoffs? In this video, we’ve covered the 3 reasons why Apple was able to avoid layoffs.
Apple is also going through the same economic crisis as other companies. In fact, the sales of iPhones are going down and secondly, there were multiple supply-side issues faced by Apple because of China’s covid restrictions.
The total employee headcount of Apple pre-covid was 1,37,000 and in the last 2-3 months was 1,64,000. This means that the employee headcount has increased by 20%. Amazon has grown from 8,00,000 employees to 15,00,000 employees. Almost a growth of 93%. Meta has grown by 95% and Google has grown by 60%. All these big tech companies have grown massively in the last few years except for Apple. Apple has aimed for that stable and steady growth. Apple played a long-term game instead of not running in a race. Because of the economic turbulence other big tech companies panicked and started firing employees. Apple did not factor in so much growth because of which they are relatively fine.
Google’s revenue in the last quarter was $69 Billion. Out of this the advertising revenue accounted for $54 Billion or 75% of the total revenues. On the other hand, if we look at Facebook or Meta then the total advertising revenue was $31 Billion and the total revenue was $32 Billion which means about 95-96% of the revenue is coming from advertisements. In the case of Apple, with $120 Billion quarterly revenue only 50% comes from iPhones. Macbook contributes 5-10%, iPad contributes another 10%, and there are multiple streams of revenue coming in. That’s why even because of the supply side issues, Apple was only facing a problem with their 50% revenue contributor while the other sources of revenue still worked fine.
If we think about Google, if marketers around the world don’t run any ads during the recession then their revenues are impacted by 75%. For Facebook on the other hand the impact is at 95% of their revenues. This is why when the largest source of income for these companies was impacted, they resorted to layoffs. Apple is shock resistant because of this. The third reason why Apple was able to avoid layoffs is that it didn’t place any massive bets on the new experiments. For example, Amazon Alexa is running into losses worth $10 Billion. If one product brings in so many losses then it’s evident that Amazon would try to cut down on this product and also on the employees working on this product.
In the case of Facebook, they put a massive bet around Metaverse. When Metaverse did not bring in good numbers they started cutting down on employees working in these divisions. Because of not putting massive bets on experiments, the growth was slower for Apple but it didn’t have to fire any employees. Apple is working on driverless cars and AR headphones. While these experiments are still going on, Facebook and Google’s experiments are hitting a dead end. On the other hand, Apple is investing slowly in these new experiments and growing slowly. In the end, I’ve covered the two takeaways you can derive from this video which are income diversification and taking small bets rather than big ones. Hope you like this video, please let me know what other videos you’d like me to cover in the future.
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Chapters
0:00 - Intro
1:08 - Video Pointers
1:28 - Headcount Growth
3:13 - Business Model
4:55 - Business model takeaways
5:25 - Small bets VS Massive bets
7:12 - Takeaways
7:57 - Outro