Apple’s iOS Dominance Warrants a Wide Economic Moat

Apple’s consumer hardware dominance stems from its ability to package hardware, software, services, semiconductors, and third-party applications into sleek, intuitive, and appealing devices. This expertise, coupled with its walled garden approach for its unique iOS ecosystem, enables the firm to capture a premium on its devices, unlike most of its peers that rely on open operating systems, Windows and Android, in particular. We see no other technology titan with comparable expertise across consumer hardware, software, services, and chip design. In turn, we believe this integration allows Apple to build premium devices that command industry-leading average selling prices and margins, most notably the firm’s crown jewel: the iPhone.