Apple had a gross margin percentage of 41.8% in 2021, an increase of nearly 360 basis points (bps) as compared to the 38.2% of gross margin percentage in 2020. The net sales and sales volume were high during 2021.
Although the iPhone has been the hot selling product for Apple amongst its line of products, the other products like the iPad, Mac, AppleCare, and digital content offered through Apple’s App store have increased their sales over the years. The gross margin percentage for the services segment is almost twice that of the products segment. In 2021, the gross margin percentage for the services segment was nearly 70% as compared to the 35% gross margin percentage from the products segment. But sales of product segment was roughly four times than that of the services segment. In 2021, the sales from the services segment were $68 billion whereas sales of products amounted to $297 billion.
Apple’s gross margin percentage of products increased in 2021 compared to 2020 primarily due to a different product mix, improved leverage, and the strength in foreign currencies relative to the U.S. dollar.
Services gross margin percentage for Apple increased during 2021 compared to 2020 due to different services mix and improved leverage, partially offset by higher services costs.
But to maintain the gross margin percentage, Apple must mitigate the risks associated with technological changes, semiconductor supply shortages, manufacturing challenges, logistics disruptions, and manufacturing defects in products.
Products segment includes iPhone, iPad, Mac, AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch, and accessories.
Services segment includes Advertising, AppleCare, cloud, digital content, payment, and other services.
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