Apple: Generating $1.2 billion with Zero Sales

In 2016, Apple introduced a new product that would revolutionise how people listen to music: the AirPods. Sleek, compact, and wireless, they offered users the ability to listen to their favourite tunes without dealing with tangled cords or plugged-in devices. With their minimalist design and ease of use, AirPods quickly became a fashion statement. Seeing someone with the signature white buds in their ears signalled that they were not only embracing cutting-edge tech but also flaunting their status. Owning AirPods became a marker of sophistication. 

The product line grew into a massive business in its own right, bringing in an astounding $19 billion in revenue. Apple had managed to create a desirable product, turning what was once a basic accessory into a must-have lifestyle item. But the story didn’t end there. 

In 2020, Apple took a bold step that seemed counterintuitive at first: they stopped including a free pair of wired EarPods with every new iPhone. Since the launch of the iPhone in 2007, customers had come to expect that each new device would come with a set of headphones and a charging adapter. But Apple saw an opportunity. They weren’t just cutting back on costs by removing the free wired headphones from the package; they were opening the door for more people to buy AirPods instead. 

At first glance, the move seemed like a minor change. However, it resulted in a substantial financial benefit. By eliminating the cost of producing and including free headphones, Apple saved an estimated $1.2 billion annually. This shift didn’t just reduce production costs; it encouraged more customers to invest in wireless accessories, especially AirPods, further driving sales. 

The decision was a masterstroke. Apple had already established AirPods as a premium product, and their popularity was skyrocketing. So, when they stopped giving away wired headphones for free, it wasn’t seen as a loss by many customers. Instead, it was viewed as a nudge toward upgrading to the sleeker, more advanced AirPods. The demand for wireless audio solutions was on the rise, and Apple capitalised on that perfectly. 

What makes this strategy so remarkable is how Apple leveraged product removal to boost its bottom line without negatively impacting customer loyalty. In fact, by taking something away, Apple didn’t lose—it gained. It created a new behavioural shift among its users, encouraging them to upgrade and spend more, all while reducing its costs. 

Generating $19 billion in revenue from AirPods was impressive. But what’s even more remarkable is how Apple saved $1.2 billion annually by simply doing less—removing something people had come to expect and, in turn, encouraging them to buy into a better, more expensive alternative. This is innovation, not just in technology, but also in business strategy.