Apple (AAPL) has always been a different kind of company. Since its founding by Steve Jobs, it has consistently done things differently than its competitors. That trend of being different continued for Apple after Jobs took over the helm again in the late 1990s, and Tim Cook has held onto that approach since Job’s death.
Modern Apple products are famous for being designed around the entire user experience rather than an individual facet of a given product. To maximize this experience, the company has used many partnerships and collaborations. Here are Apple’s six most lucrative partnerships.
Apple’s history of successful collaborations and partnerships has powered its stock and profits for years. Looking at Apple's stock performance history shows a company with explosive growth in the last decade. And no partnership of Apple’s has been more instrumental to this success than its partnership with Foxconn.
Foxconn, also called Hon Hai Precision, is the Taiwanese manufacturing partner that builds most of Apple’s iPhones. The partnership has proven to be lucrative for both firms, with Apple raking in billions in profit since the launch of the iPhone, and Foxconn making its own billions by building the phones at a wholesale cost.
Foxconn’s recent quarterly earnings report in August saw the firm earn $798 million in profits. The company is Taiwan’s second most valuable company by market cap. Foxconn’s founder, Terry Gou, is worth a reported $6.3 billion. It’s fair to say though that the partnership has been more beneficial for Apple than Foxconn, as Apple’s profit margins have doubled since 2007, while Foxconn’s have fallen somewhat.
While Foxconn might be Apple’s biggest partnership, its longest-running collaborator is with tech rival Microsoft (MSFT). Microsoft and Apple had a famously contentious early history that was highlighted in the 1999 TV movie “Pirates of Silicon Valley.”
As time has gone on, Microsoft and Apple have found common ground in many areas. From the $150 million that Microsoft poured into Apple stock in 1997 — which would likely be worth around $30 billion today — to taking on Google in 2011, the two tech giants have not always been bitter rivals. While Microsoft founder Bill Gates was vastly successful without Apple's help, the richest man in the world surely owes a portion of his nearly $80 billion fortune to Microsoft’s work with Apple.
Microsoft has also been one of numerous partners Apple has relied on to build apps for its AppStore, which is a major element in the firm’s success with the iPhone. Today, Apple’s AppStore has 1.5 million different apps. Each of these apps is a collaboration that benefits both Apple and the app developer.
Rounding out collaborations with tech giants, Apple's recent partnership with IBM (IBM) highlights how Cook is moving beyond Jobs' vision to expand Apple products for enterprise use. IBM’s collaboration with Apple will see the firms work together to build business applications for big data and business intelligence capabilities into iPhones and iPads.
The hope is that by introducing a new suite of products that are relevant to business users, more corporate IT departments will buy iPads for employees and then pay for IBM’s products to run on those iPads. IBM is a huge company in its own right, so any effects on the firm’s bottom line will be small for now. But over time, IBM management is undoubtedly hoping the partnership will help boost Big Blue’s beleaguered stock.
4. Beats Electronics
The iPod was one of Apple’s first ancillary product lines. While sales in that area have slowly faded as other products like the iPhone have grown, music has remained a major part of the Apple ecosystem.
Cook and Apple moved to solidify that market position in music by partnering with and acquiring Beats Music and Beats Electronics. The Beats brand had a streaming music service that fit nicely with iTunes, while Beats Electronics headphones, speakers and audio software all complement Apple’s other product lines.
Acquisition-shy Apple had long avoided buying other companies, but the product lines here were compelling enough that Apple paid a whopping $3 billion for the acquisition. Beats co-founders Jimmy Iovine and Dr. Dre joined Apple as part of the deal, and both men saw their net worth spike to nearly $1 billion as a result of the deal.
Apple has gone even further afield as of late, branching out into the watch business. As part of that effort, the company contacted famed French fashion company Hermes about collaborating on a watch. Apple’s watch partnership with Hermes is still developing but given the pedigree on both sides of the deal, there is a good chance the product will be a success.
The watches are slated to cost between $1,100 and $1,500, and they represent a fusion of style that incorporates elements of both Hermes and Apple. Apple’s design chief Jony Ive emphasized how unusual the partnership was, but presumably both firms felt the end product was worth the cost.
Hermes is not the only partner Apple is leveraging for its wearable products. The firm is also working with famed sports brand and apparel company Nike (NKE) to create new software and product experiences for users.
Nike already has a Nike+ app for use with the Apple watch, and the athletic apparel company has more than 60 million users of its digital fitness products. All of those customers add up to big potential sales for Apple watches and should help ensure that Nike stock sees healthy growth.
Apple’s relationship with Nike is not new. The firms have worked together for years, with Cook sitting on Nike’s board of directors. Nearly a decade ago, Apple created a special chip for Nike shoes to allow users to track steps on their iPods. Apple and Nike built on this technology by later installing step-tracking sensors in the iPod touch and the iPhone 3GS.
Apple appears poised to continue pursuing partnerships in the future with firms both big and small. Apple’s new fourth-generation Apple TV is launching soon with a slate of new features. Early reviews of the product look intriguing, but the real question is which content partners will sign on with the device over time.
Finding cable content partners has been notoriously difficult for many hardware companies in the past, but Apple is purportedly in talks with partners like Disney, CBS and Fox. Given the close relationship between Jobs and Disney, there is a good chance that if any firm can create a win-win partnership with Disney and other media giants, it’s Apple.