Apple Inc. (AAPL) Building Blockbuster Business

Apple Inc. (NASDAQ:AAPL) has been a revolutionary company. As a result the firm has been difficult to describe. Its business model isn’t all that much like its competitors, and its results are much better. A new report from UBS on the Cupertino-based company takes a crack at describing the Apple business model, and comes up with an interesting analogy.

Apple Inc. (AAPL) Building Blockbuster Business

Apple Inc. (NASDAQ:AAPL) does not operate like a hardware company, according to the report. Instead, it operates like a media company. Relying on a description of a media business model in the book Blockbusters: Hit-making, Risk-taking, and the Big Business of Entertainment by Harvard professor Anita Elberse, the UBS analysts make the case for a new perspective on Apple Inc. (NASDAQ:AAPL).

Apple blockbuster

Apple Inc. (NASDAQ:AAPL) acts like a media company because it relies on blockbusters. The company has a narrow product line and high profile product introductions. Steven Milunovich, the lead author of the UBS report, rests his case on two major attributes of Apple Inc. (NASDAQ:AAPL). The company releases very few products, and it manages to create a “huge hoopla” around the release of each one.

According to Milunovich “Blogs are the Apple version of trailers, product intros are similar to premieres, and first weekend sales are closely watched.” Apple Inc. (NASDAQ:AAPL) relies on making a few releases every year and front loading the sales. In order to do this, it studies the market intensely and uses clever marketing to promote its products.

Milunovich says that in the long run, “evidence supports management’s approach.” For Apple Inc. (NASDAQ:AAPL), modelling its business on the film industry has resulted in immense profits and incredible success. It might be difficult to keep that trend lasting forever, but movie studios have been in business for a long time.

Apple expectations

Unfortunately for investors, the new take on Apple Inc. (NASDAQ:AAPL) does not offer any upside for the stock. The UBS analysis suggests that there isn’t a good chance of shares moving higher in the coming months. The only factors likely to move the stock are a faster recovery in margins, a better product mix or a deal with China Mobile.

Apple Inc. (NASDAQ:AAPL) has one massive blockbuster in the form of the iPhone, and a minor one in the form of the iPad. As the public grows tired of endless sequels, the firm may need to release a new blockbuster.