How Apple Is Transforming Into a Closed Loop Product-As-A-Service Provider

How Apple has been working to transform its business into one that focuses on a circular design, starting with their focus on Products-as-a-Service.

Apple is no stranger to innovative projects. From the launch of its first iPhone back in 2007, the company has made it a point not to just maintain the status quo of how things are done in tech but to go beyond that to more exciting and ground-breaking ideas.

Today, Apple is moving ahead of the pack to transform not just their own products but the entire business model that tech companies operate under. With their recent announcement to go fully “net-zero” by 2030, Apple is committing itself to further developing its business and its products towards a fully sustainable model and calling out to other companies to do the same.

How exactly is Apple doing all this while keeping consistent with their main business at hand? Through slow and measured steps towards adopting closed-loop systems and a focus on shifting their products towards a Products-as-a-Service model (or PaaS).

What is a Closed-Loop System?

For those who may not be aware of the term, a closed-loop system essentially describes a manufacturing process that reuses material waste generated from a production process as part of another production process, as well as reusing recycled finished products in the production of new ones.

The system itself is straightforward but complex in its application to big industries like manufacturing and tech. While businesses have always found ways to cut down costs of manufacturing, doing so using the discarded outputs of that very same manufacturing process requires a forward-thinking mindset that not every company has.

To borrow an example from another company that is making the move towards sustainability, Nike has been a leader in the usage of recycled polyester in many of its products, reducing the amount of waste that ends in landfills by approximately 51 million pounds or 10-Olympic style pools worth of discarded materials.

What is a Product-as-a-Service?

The other half of Apple’s plan is the slow move towards a Product-as-a-Service model or PaaS. Again, for those who aren’t familiar with Products-as-a-Service, it’s best to view it from the perspective of how one uses the current products today. This current mode of usage relies on a transferal of ownership, such as whenever you buy a new phone from a company the ownership transfers from the brand to you.

In a Product-as-a-Service model, the company retains ownership of the product and earns revenue from a subscription model instead of direct sales. In theory, this incentivizes the company to keep improving the current iteration of products as it no longer benefits from the consistent need to keep making newer products to generate revenue. Rather, the company would benefit more from keeping users on their “product-service”, so many PaaS models bundle service packages and other benefits alongside the product usage such as improved “right-to-repair” systems that can enable easier repairs for simple phone issues.

If put in practice, this could mean that instead of having to buy a new phone every year, Apple could instead charge a lower, more manageable fee every subscription interval while enabling better services and support for the user while reducing e-waste and product obsolescence for the company.

Again, this is a relatively new concept in today’s mass-consumer-driven market, but it is slowly gaining followers, with Apple’s most recent business maneuvers signaling a change in perspective.

Apple’s Next Big Shift

As we’ve mentioned previously, Apple has made bold new promises to reach a “net-zero” carbon emission by 2030. While there are many ways to go about this, Apple has clearly set several key aspects they plan to improve on:

  • Designing their products with sustainable materials and low energy consumption.
  • Improve the usage of energy company-wide.
  • Using renewable energy for their manufacturing processes.
  • Reduction of emissions generated from facilities and supply chain.
  • Introduction of nature-based solutions that can restore ecosystems and improve other aspects of the environment.

Setting clear milestones and action items are standards for companies looking to make big changes in the way they do things. But Apple walks the talk with new innovations introduced at the start of the new decade, focusing on their push for closed-loop manufacturing and a Product-as-a-Service model moving forward.

The Push for Closed-Loop in Apple

Apple has joined the push for recycling within its own products, something tricky for tech companies that have to work with the knowledge that smartphones are mostly powered by some of the most valuable and scarce rare earth metals we have now. But this hasn’t stopped Apple from working to get at an often-untapped source as a key building block in their plans for closed-loop manufacturing: the consumer.

Apple’s trade-in program has been in the market since 2013, providing users a way to turn in older units for newer ones at cheaper costs. Back then this was a good way to salvage key parts and keep people using iPhones as there was suddenly an incentive to stick with the brand.

But Apple has since expanded the program, increasing the number of different models they can take in as well as providing better value for the gadgets you do decide to give back. They have also made it easier to execute the trade-in process as you can now choose to either drop it off at an Apple Center, your local post office, or even arrange for a courier pick-up.

What’s more is that they’ve begun the push for the automation of this process, introducing a smart robot named “Daisy” in October 2021 that can disassemble and retrieve those valuable earth metals to be reused in the manufacturing process once more. While it’s still in a relatively early stage of its rollout (there are only two Daisy facilities in the world), a full capacity Daisy unit can disassemble 1.2 million iPhone units a year or easily 2000 football fields worth of iPhones.

Moving Towards Subscription

Those with a keen sense of business may have noticed how Apple has slowly but surely made its move towards a bigger and stronger presence within the services industry. The numbers speak for themselves as Apple brought in $10.9 Billion in revenue for 2019 from their services alone. It’s this strong focus on what is perceived to be the future of the industry that has Apple positioning itself well while tailoring its audience towards accepting this new form of consumption.

But Apple won’t be doing this all suddenly. The last thing the public would want is a sudden shift in company behavior that would push them away from what they’re familiar with. So Apple has been making their shift to subscription models in subtle yet observable ways, such as their recent launch of the AppleOne plan, a subscription service that combines all of Apple’s signature products such as Apple TV+, iCloud, Apple Music, and more.

Recent news has also seen an uptick in Apple TV+ subscriptions, indicating that Apple’s long call on the public’s acceptance of varied subscription methods is slowly paying off.

More Sustainability Milestones Apple Accomplished So Far

Apple isn’t just all planning and pilot projects as many of their current promises are based on the many successes they’ve had in regard to transitioning their company towards a greener and more circular economy-focused business strategy.

Recycled Materials in New Products

In line with what we’ve mentioned about Daisy and Apple’s push for more recycled and sustainable materials within their production methods, many of their current product iterations already contain recycled materials that drastically improve each item’s carbon footprint.

For example, the Apple Watch, which before was seen as disposable by many watch enthusiasts, has found a position as the truly recyclable accessory that Apple can be proud of. The Apple Watch Series 7 reportedly uses 100% recycled materials for both the aluminum casing around the watch and the rare earth metals that make up the magnets within.

Another example would be the most recent iPhone 13 which uses the same recycled production method for the gold lining found in its logic circuit board as well as for many other parts found within it. It’s estimated that Apple was able to save on 2.6 million tonnes of mined rock for earth metal just by recycling. That’s 170,000 school buses worth of rare-earth metals saved from being dumped in a landfill.

Greener Silicon Chips

Apple has recently made the move to start producing its M1 CPU silicon chips in collaboration with the Sustainable Semiconductor Technologies and Systems (SSTS) group. Spurred on with the recent supply chain issues regarding the lack of silicon chips to meet the demand of the current tech-fueled economy, Apple’s move not only gets back control of this key production aspect but aims to do it in a greener and more sustainable way.

Partnering up with the SSTS group means that while Apple will begin manufacturing its own M1 chips, they will endeavor to use the frameworks that SSTS has in place to better guide not only the sourcing of the materials but the manufacturing and development of the chips in the first place.

Final Words

Apple may be on its way to a greener future but there remains a lot of legwork that needs to be done in order to influence not only their own internal practices but their fans at large to adopting these more sustainable and circular economy-focused principles of consumerism.

While the steps they may be taking are slow, they ultimately make up an incremental step-by-step process in order to better acclimate the industry towards what a truly efficient and forward-thinking company like Apple can do. From E-waste reduction to a push for sustainable materials, it’s definitely an interesting time to keep an eye out on Apple to see what they will do next.

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