Magellan's view on Apple

Apple enjoys strong brand recognition globally and extensive market penetration for its flagship products, most notably the iPhone. We estimate that iPhone and iPhone-related services represented around 70% of Apple’s revenue and 80% of Apple’s gross margin in FY15. Despite its relatively high price, there is strong demand for the iPhone in both developed and emerging markets, with China now contributing 24% of Apple’s total revenue. Apple’s growth has been driven by its position as a consumer hardware vendor. There are few, if any, examples of consumer hardware vendors which have endured over the long term as the products have typically commoditised over time. However, having built a powerful, enduring ecosystem, we view Apple today as a leading mobile platform and services company with sales of its devices reflecting effectively a “subscription” payment to access its platform and services. Apple displays several attractive investment characteristics which support our longer-term outlook for the company. Read our fund update for the full report. (VIEW LINK)