Did you know that in 1984, the government of the U.S ordered to break AT&T (mostly known as Bell) into pieces? With a concern to break the monopoly of one of the biggest companies- AT&T, the United States Justice Department ordered the company to break up the bell system into different companies referred to as Baby Bells. Surprisingly, that was how one of the world’s largest communication technology companies, Verizon was formed.

One of the largest companies among the baby bells is Bell Atlantic which in 2000, after the acquisition of GTE, changed its name to Verizon Communications. This merger, in fact, is one of the largest mergers in US history. Verizon Communications, commonly referred to as Verizon is derived from the Latin word “veritas” meaning truth, and “horizon”. The company spent around $300 million on marketing the new brand. 

Despite splitting, the baby bell remained as one of the largest telecommunications companies today innovating different products and services. So, want to know how such a large company makes money? Then let’s get into it. But before that let’s see what exactly is Verizon and its business model to better understand its revenue streams.

What is Verizon?

Verizon Communications Inc. is one of the world’s largest American multinational telecommunications companies headquartered in New York City. 

The leading technology, communication, and entertainment products and services provider was formed on June 30, 2000. The 20-year-old celebrating company made over $131.9 billion of annual revenue in 2019. The company ranked 20 in the Fortune list as of 2019.

Verizon offers data, voice, and video solutions and services on its networks and platforms. It delivers customer’s demands for security, control, mobility, and network connectivity. The company serves consumers, businesses, and government agencies with communications, information, and entertainment products and services on its wireline and wireless networks.

Read: Comcast Business Model – How Comcast Makes Money

The company works with a mission to enhance the ability of people, society, and businesses to fast forward the digitization of the world.

So, now lets the business model of the company to quickly understand how it makes money. Shall we?

Verizon Business Model

The business model of Verizon is organized into two segments.

1. Wireless Segment

Verizon’s Wireless segment includes wireless voice and data services and equipment sales. The company sells these products to consumers, businesses, and government customers under the Verizon Wireless brand.

• Verizon’s Wireless data and voice services include the following plans.
• Verizon’s wireless services are available as postpaid and prepaid plans.
• Customers that opted to pay for network service allowance in advance are postpaid connections. The extra services used are billed in monthly arrears.
• The prepaid service doesn’t include a long term contract or payment in advance.
• The company offers messaging services, access to the internet wirelessly on devices that have 3G EV-DO modules, 4G LTE, or other devices such as USB modems, Jetpacks, mobile WiFi, etc.
• Verizon offers some value-added services such as machine-to-machine (M2M). The company purchases a majority of wireless devices and accessories from popular brands such as Samsung, Apple, LG Electronics, HTC, BlackBerry, etc. Verizon makes money from these product’s sales.

The company has the largest Fourth-Generation Long-Term Evolution technology. It also has 3G Evolution-Data Optimized networks of any US wireless service provider.

Read: Apple Business Model – How Apple Makes Money

2. Wireline Segment

The Wireline segment includes voice, data and video communication products and services consisting of broadband data and video services. It also offers corporate networking solutions, security, managed network services, data center & cloud services, and local and long-distance voice services.

Verizon offers its wireline products and services to consumers and businesses across the world.

The wireline segment is again divided into three subsegments.

• Mass markets operations
• Global enterprise
• Global wholesale

Mass markets operations

This includes broadband services including high-speed internet, FiOS Internet and FiOS Video Services, local exchange and long-distance voice services to small business customers as well as residential customers both as bundles and separately.

Global Enterprise

This includes core communication services and strategic services to state and federal government customers, medium and large business customers and multinational companies.

The core communication services in the global enterprise include core data, voice services, customer equipment, installation and maintenance service.

The strategic services comprise of products and solutions related to networking (IP, Ethernet access, optical services) and advanced communication services (IP communication, M2M, security, infrastructure, cloud services, internet access, etc).

Read: Venmo Business Model – How Venmo Makes Money

Global Wholesale

The Global Wholesale segment provides communication services (data, voice, broadband services to local, & long-distance services) for customers using the company’s facilities.

Okay, now that you have seen various segments of Verizon’s business model. Now let’s jump into how it makes money from them.

How Verizon makes money?

As you can see, Verizon has built multiple business strategies and offers different products and services. The company makes most of its revenue from sales.

Okay, let’s discuss that in detail.

Product Revenue

Having said that, Verizon offers devices manufactured by Apple, LG Electronics, Blackberry, HTC etc., for sale. The devices include phones, tablets, headsets and other accessories.

Subscription Revenue

Verizon offers voice, data and video communication solutions as subscription services. It generates a notable portion of revenue from sales of such subscription plans.

Advertising Sales

The company lets brands advertise on its website and devices and generates revenue from it. The companies pay Verizon for using display and search advertising options to promote their brands and products.

Verizon by Numbers

• The annual revenue of Verizon in 2019 is $131.9 billion.
• The company is present in 150 global locations with 133.2k employees.
• The company made $19.7 billion in annual net income in 2019.
• Verizon has about 120 million retail customer base as of 2019.
• The company ranked 20 in the Fortune list in 2019.
• It generated a total of $7.7 billion in Q3 2020.
• It has over 94.544 million retail wireless connections
• Over 5.9 million people subscribed to Fios internet plans and 4.1 million subscribed to Fios video.

Final Thoughts

So, that is how Verizon makes money. With its key strengths such as market dominance, global operations, effective and strategic business model and acquisitions, Verizon has a long way to go. The company has to overcome a few challenges such as over dependence on the US market, lack of diversification and charging extra for data etc., to keep its position, though. However, the company holds many opportunities to grow even bigger and dominate the global market which we might see in the future.

Read: Slack Business Model – How Slack Makes Money

How many songs can you store on your mobile phone or music player? How many apps do you have on your mobile phone? A lot right? But did you ever think all of this was possible when you were a kid? Because a lot of people in the current generation have seen technology evolve rapidly in the past two decades. People can do things with their mobile phones that they wouldn’t have dreamt of in the past decade. If you go further back no one thought that computers would be useful for common people. Looking at the early computers people thought that they would only be useful for companies and scientists. But look at now almost everyone who is working for a company has a computer. Not only that but most of the students have computers. More and more people are buying computers in the current age as it is one of the requirements. 

But how did all of these changes take place? They took place because some companies had a vision for the future like no one else did. Those companies didn’t just want to create products but they wanted to change the world. One of the companies that did succeed in doing so is Apple. Apple, this is the one brand whose products are something that people want to own really badly. This is one of the companies in the world that does not need any introduction. You can go to almost any country and ask about Apple. They will not only think about the fruit but also the company. That’s how much of an impact they have on this current world. Apple is the richest company in the world which is not surprising at all. In the past few decades, the company has created some revolutionary products which made it the richest. However, many people don’t know the business model of Apple. This article is completely about that. But let’s know a little bit about the company before knowing its business model.

What is Apple?

Apple as you already know is a multi-national technology company. Another name that comes to the minds of Apple fans is Steve Jobs. He is one of the co-founders of the company. Steve Jobs worked as the CEO of the company until he died of cancer. But the other important name that often goes unnoticed is Steve Wozniak. He is one of the most important persons in the company from the beginning. Steve Wozniak is the one who built the company’s first computer. The story goes as this Steve Jobs returned from India after seeking enlightenment. He knew Steve Wozniak from the beginning. When Jobs found out that Atari was hiring he took a board designed by Wozniak for pong. Atari hired him thinking that he himself built it. Later Atari asked people to build a circuit board eliminating the maximum number of TTL chips offering $100 for each chip that was removed. Wozniak built a board eliminating 46 chips, a design that could not be produced on an assembly line which showed the genius of Wozniak.

By the year 1976 Wozniak had built the first version of Apple and showed it to Jobs. Jobs told him that he should sell it. Wozniak was hesitant at first but after some time he agreed. On the 1st of April 1976 Steve Jobs, Ronald Wayne, and Steve Wozniak founded Apple in the garage of Steve Jobs. They were able to sell the Apple I successfully and after they never looked back. In 1977 the company was incorporated into Apple computer Inc. Ronald Wayne was not a part of this company as he sold his shares for $800 to Steve. After that, Mike Markkula who is an American businessman and investor invested $250,000 and offered his business expertise to the company. This gave the company the boost it needed. Wozniak built Apple II which was also successful. 

In 1984 Apple created Macintosh which was the first computer that was sold to the public that didn’t have a programming language. They have started the personal computer revolution in the world. The product looked promising in the beginning as the sales were great. But after a while, the sales were declining. In 1985 John Sculley who was made CEO of the company removed Jobs as the general manager of the Macintosh with the support of all board of directors. After a while Jobs was stripped off of all his duties when Sculley found out that Jobs was trying to get him out of power. Steve Jobs resigned and left the company he founded. Apple continued to make products but they were not successful. On the other hand, Steve founded NeXT and also became the majority shareholder of Pixar. 

When Gil Amelio became the CEO of the company Apple acquired NeXT bringing back Steve Jobs to the company. Steve Jobs identified the talent of Jonathan Ive as a designer and they started to work together. Jonathan Ive designed iMac which was a design that was never seen before. It is a product that brought back the status of Apple. The company started to see the rise after this. Apple acquired SoundJam and renamed it iTunes. After that, the company only saw growth. It was successful in designing one of the best music players of all time, the iPod. The company later developed the iPad and iPhone. All of these were designed by Jonathan Ive. There is no need to tell how successful the company is today. 

Business model of Apple

Now that you have learned the brief history of the company let’s look at the things it follows that made it successful. 

Quality of the products

This is one of the biggest reasons that the company is as successful as it is today. When you think about Apple products you always think about the quality of them. From the beginning, the company focused on quality over quantity. This ensured that they built products that stand out. You can look at both the hardware and software aspects of their products. Both of them are unlike the products that are offered by any other company in the world. They decided to make software and hardware products that are exclusive to the company and its users. You can just hold their products to realize how good they are.

Innovation

Apple is known for innovation right from the beginning. Innovation is what made the company famous and rich. Starting from their first product Apple wanted to offer something new. They wanted to sell computers to common people. Apple released the iPod which is a lot portable compared to the Walkman. What is better, carrying a music player that is as big as a diary or a music player that is the size of later that can hold upto 2000 songs? It released the iPad which showed the people what applications are, how to download them, and use them. The iPhone is still one of the safest devices to store your information. It stores all of its users information in iCloud. The user can sync all his Apple devices through iCloud. These are some of the things that only Apple did and does. Apple is constantly observing the changes in the public interest and tries to create products that people like.

Customer support

Apple offers customer support, unlike any other company. If your device has some issues then you must take them to the nearest Apple store if you want to get it fixed without damaging it. The company sells its products exclusively through its stores. It has stores all over the world that offer services to customers.

How does Apple make money?

Though the company manufactures hardware products it is not the only way in which the company makes money. It has more than one way of generating revenue. So let’s look at the ways in which the company makes money.

Selling products

This is the most obvious way in which the company makes money and you already know this. Apple manufactures a variety of products that it sells in various parts of the world. The products have different prices depending on which part of the world you are living in. But no matter which country they are being sold they are always costlier than the other products of that category because of Apple’s brand value. Apple manufacturers different types of products like iPods, iPads, MacBooks, iPhones, Apple Watches, and Apple TV. The majority of its revenue comes from selling iPhones which is about 61% followed by MacBooks and iPads. These hardware products that are of excellent quality manage to bring the majority of the company’s revenue.

Subscription fees

Many people who do not use Apple products do not know that Apple charges a subscription fee from its customers to use some of its services. Apple users have to pay a subscription fee to use it services like iCloud, Apple Music, and iTunes. Without iTunes, you cannot download music into your device. iTunes is one of the most important services because it saved the music industry. When people found that they could download music from the internet the record sales went down. When Jimmy Iovine met Steve Jobs to deal with this issue Steve came with this idea. 

The plan is to allow people to download music through iTunes for a small price. Apple would receive a small commission fee and the remaining would be paid to the artist or the label. So these services are very important and the company has every right to charge the customers. Similarly the iCloud stores all the information in the devices of the customers in case they want a backup. The company needs money to do this so they charge a subscription fee. 

Demanding more money for extended warranty

Not many people know this but the company makes its customers pay more if they want an extended warranty on the products they buy. Apple also sells a few third-party products that are compatible with their devices.

Conclusion

This is the business model of Apple. It is currently the richest company in the world and has more liquid cash than many countries. The products of the company speak for themselves. There is no doubt that the company is going to create more products that are going to be successful. To know more about other business models you can look at other articles that cover the business model of other companies. If you want to know who currently owns Apple click here.

Home Depot, the world’s largest home improvement retailer was founded in 1978. Back then, the founders had no idea that this purely a hardware store would become a leader in the home improvement and retail industry.

Today, Home Depot serves North America with about 2,200 stores with a wide array of products and outstanding customer service. The company recently reported that its sales soared to 23% in Q3 2020 as people stuck at home due to Coronavirus lockdown. This would surely raise the doubt of how the company makes money, right? Well, the business model of Home Depot is quite interesting; it made the company the leading and most reputable retailer in the home improvement industry.

So, let’s see how Home Depot makes money with its brilliant business strategies. Before that let’s quickly jump into what Home Depot is. Shall we?

What is Home Depot?

Home Depot is the leading home improvement retailer in the United States that is headquartered in Atlanta, GA. The company sells a wide range of products of home improvement products such as home decor, furniture, kitchenware, DIY projects, and also offers installation and services at its retail outlets and online.

Bernard Marcus, Ron Brill, Arthur Blank, and Pat Farrah co-founded Home Depot in 1978. The company went public in September 1981 and raised $4.093 million after it built its first two stores. The company made sales of over $256 million operating 19 stores by 1984.

Not only was the company built larger than any of its competitors, but it also became the leading home improvement retailer within a short time.

In 1989, Home Depot surpassed Lowe’s and became the leading home improvement retailer in the US.

The best part is in the recent Fortune 500 ranking, Home Depot is ranked #26 for reporting the highest revenue in the United States.

Read: Amazon Business Model – How Amazon Makes Money

Okay, enough said, now let us see the business model of Home Depot understand how it makes money and stands as one of the highest revenue-generating companies in the world.

Home Depot Business Model

The world’s largest home improvement retailer has a total of 2,295 stores in the US, its territories, Canada, and Mexico. Thus it makes a huge business in North America with thousands of stores and an extensive collection of home improvement products and services. The company sells a wide range of home improvement products, building materials, garden, and outdoor products, and related customer services for both individual and professional customers.

The business model of Home Depot is organized into three key elements to clearly understand its business strategies to keep up its position as a leading retailer in the industry.

1. Home improvement products & services

2. Individual & Professional Customer Segments

3. Product Revenues

Home improvement products & services

Having said that, Home Depot is the world’s largest home improvement retailer with around 2,295 stores across the US, Canada, and Mexico. It offers a huge assortment of products like no other company and even surpassed Lowe’s, a popular home improvement retailer that serves over 18 million customers every week.

Read: Alibaba Business Model – How Alibaba Makes Money

Moreover, not only does Home Depot offer home improvement for its customers, but also it serves them in-store and online with its expert staff. It introduced kids’ workshops, pre-installations, and instant services for customers to provide utmost customer satisfaction. Also, the company always comes up with discounts and interesting deals both in-stores and online to captivate customers.

Furthermore, it manages to provide the best customer service by taking great care of maintenance, repair, and operations. Home Depot’s recent acquisition, Interline (now known as Home Depot Pro) bought 5% of the $50 billion markets in the MRO segment. The company is thus able to deliver the same day and the next day with the help of around 93 distribution points and nearly 1500 extra associates.

Read: Postmates Business Model – How Postmates Makes Money

Individual & Professional Customer Segments

The company divides its customers into two groups: 1. Individual consumers and 2. Professionals

1. Individual consumers

Individual consumers are further divided into Do-It-Yourself (DIY) and Do-It-For-Me (DIFM) customers. With the changing customer’s behavior, the company also updated its strategies. It introduced in-store mobile technology to help customers with home improvement projects. It also offers meaningful workshops, tutorials to educate its customers and build a strong relationship.

Home Depot offers some additional services such as installation for DIFM customers.

2. Professionals

Home improvement service providers such as contractors, repairmen, remodelers, small business owners, tradesmen, etc come under the professional customers of Home Depot.

The company provides multiple programs such as dedicated staff, delivery, credit programs, bulk pricing, loyalty programs etc., to professional customers.

Read: Visa Business Model – How Visa Makes Money

Home Depot grows its customer base (both DIY, DIFM, and professional customers) by helping them finance their projects. It offers private label credit products through third-party credit providers which in FY14, it recorded 1.4 billion transactions.

Product Revenues

Home Depot has over 2,295 stores across North America and also it sells a huge collection of products online on its website. Moreover, it introduced a few services such as Buy Online, Pick-up-In-Store, Buy Online, Deliver-From-Store, Buy Online, Ship-to-Store, and Return In Store. These services are helping the company to boost its customer experience; they promote convenience to shop the same high-quality from anywhere.

Read: eBay Business Model – How eBay Makes Money

How Home Depot Makes Money?

So, as you can see the segments of the Home Depot business model, it is pretty clear that the company serves its customers in every way possible to keep them as well as its leading position in the market.

Okay, now let’s analyze how Home Depot makes money.

The satisfied Do-It-Yourself and Do-It-For-Me customers and professional customers make the company generate huge profits. With a very wide assortment of products from all home improvement categories and related services, the company boosts customer engagement to 238% in 2020. Moreover, as per its recent Q3, FY 2020 report, the company’s digital sales growth rose to 80% YOY, and online orders through fulfilled stores rose to 60%. In the same way, the company has seen double digit growth with DIY and professional customers. Thus it made a total of $33.5 billion in revenue in sales. The best part is Home Depot sales soar 23% during the pandemic as people that stuck at home involved in home improvement.

The company also makes money from transactions, deliveries, and services. Apart from these, Home Depot boosts its revenue and profits through its acquisitions. For instance, in its most profitable acquisition, Interline bought a significant revenue to the company. Not just that, it made Home Depot acquire 5% of the MRO market.

Home Depot Acquisitions

• Home Depot acquired Bowater Home Center in October 1984 to enter the Dallas market, the acquisition led to debts. It recovered the losses through stock offerings though.
• In 1999, the company acquired Apex Supply, a whole distributor of HVAC, plumbing, industrial pipe, and fittings. It was rebranded as The Home Depot Supply in 2004.
• It acquired Del Norte and entered the Mexican market in 2002.
• The company acquired Hughes Supply, the largest home retailer in the US in 2006 for $3.2 billion.
• In July 2015, this largest home improvement retailer bought Interline Brands for $1.6 billion.
• Later in 2017, the company acquired the online presence of The Company Store from Hanover Direct.

Bottom Line

As you can see Home Depot’s key resources are its enormous range of products, distribution and storage, infrastructure, suppliers, supply chain, online channel, customer relationships, partners, and finally its brand reputation. Most importantly, the company is keeping its position as the largest retailer and a leader in the home improvement and retail industry by coming up with new ways to serve its customers. Hence, we can conclude its business strategies are so powerful that it became a powerful retailer in its industry.

How do you communicate with others who are far away from you? You have only two options, you either call them or send them a message. These are the only two ways that enable you to communicate with others very quickly. But this is possible only today because technology has developed so much. A couple of decades ago all of this was not possible. The most advanced technology to communicate with others back then was cell phones. You could either call people or send them an SMS. But these tasks were not as easy and affordable as they are today. If you remember you had to recharge your phone every time you ran out of balance. Every time you make a call or send an SMS a certain amount was deducted. It didn’t cost much if you make a phone call locally or nationally. But the problem was when you had to call someone who was living in another country. 

This was a big deal as international calls were very costly. Not only calls but SMS was also the same. All of this has changed when social media platforms arrived. When social media platforms burst into the picture people found a new way to communicate with each other. They could connect with each other through the internet and communicate through messages. However, this was not as efficient as it sounds. Not everyone has a good internet connection back then. Above all, you needed a computer to use these social networking sites and they were not as user friendly as the ones that are present right now. This has started to change after the arrival of Facebook. It not only allowed people to communicate with each other but also helped to keep tabs on people who are living far away. But it has so many features that made it more complicated. 

People needed a medium that was strictly meant for communication. This was very important as smartphone technology was picking up and people were relying more on their cell phones for using the internet. That’s when a game-changing application called Whatsapp was launched. People loved this application because it was very and its main feature was sending messages to anyone through the internet. It is very simple and user-friendly. That’s why it became popular in a very short time. Today it is one of the most used social media platforms across the world. But even today not many people know who owns it. This article is completely about that. But before learning about the owners let’s know a little bit about the application itself. 

History of WhatsApp

WhatsApp is an American application that allows people to send text messages and voice messages. Not only that but it also allows the users to make video calls and voice calls. WhatsApp was founded by Jan Koum and Brian Acton in the year 2009. Both Jan Koum and Brian Acton worked for Yahoo before setting up their own company. They got this idea after they bought an iPhone. They saw the Appstore and realized the potential the App industry had. After that, they found an iPhone developer and made the initial version of WhatsApp. But things did not go as they planned. The initial versions of the application kept crashing. During this time Jan Koum wanted to drop the idea and wanted to focus on something else. However, Brian Acton was able to convince him to wait for some time. After this iPhone included a push notifications feature. This was a blessing for Whatsapp as they changed it so that people could see notifications if someone made changes to their status. 

Due to these changes, WhatsApp Messenger has seen an increase in the number of users. Their user base reached 250,000. The application was seeing success on the iPhone so Jan Koum hired one of his friends to create a version for Blackberry devices. After two months the version was ready. Many people know WhatsApp as a free application but back then it changed the service to a paid one to cover costs. WhatsApp also included the feature of sending photos on the iPhone version of the application. By this time it became one of the most used applications by iPhone users in the US. 

Because of this success, it had received an investment from Sequoia capital. Sequoia capital bought 15% of the company’s equity for $8 million. This has boosted the company and they had more than 200 million users by 2013. Seeing this Sequoia Capital invested an additional $50 million into the company. This made the valuation of the company reach $1.5 billion. By the end of that year, WhatsApp has more than 400 million people using it every month.

Who owns WhatsApp?

Now that you have learned about the company let’s take a look at who owns it. 

Facebook

Yes, Facebook is a company that owns WhatsApp. After the tremendous growth, the company was valued at $1.5 billion after the financing round by Sequoia Capital. In 2014 the social media giant has announced that it was acquiring WhatsApp Messenger for $19 billion. At that time it was the largest acquisition in history for a company that is backed by a venture capital firm. Sequoia Capital received $3.5 billion which a lot compared to its initial investment. Facebook $4 billion in cash and other 12 billion in Facebook shares. Both the founders got their shares.  After the acquisition people had difficulty in using them at the beginning which led many people to switch to other messaging platforms like Telegram. But things got back to normal after some time. Facebook added additional features like posting stories. Today you can not only send messages or photos but you can also send locations, documents, and videos. Not only that but it is also free to use.

Conclusion

This is the business model of WhatsApp Messenger. It is one of the most used messaging applications in the world. The simple design of WhatsApp is what makes it appealing to its users. Even its usage has decreased a little bit in the west it is still very popular and widely used in the eastern market. To know more about the company you can read the business model of WhatsApp. You can also learn more about other individuals or institutions that own top companies. Click here if you want to know who owns Snapchat.