Mike MilliganFounder and CEO, 1.oak Financial · Founder and CEO, 1.oak Financial

The transformation of iconic companies (GM, 3M, Apple model) into AI businesses.

22 Jul 2026 · 1 min

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In this segment, Mike Milligan explains how Apple’s business model shift from hardware to high‑margin services dramatically raises its overall gross margin—from roughly 42% to 46%—because hardware runs at about a 37% gross margin while services exceed 73%. This margin uplift transforms Apple’s valuation without needing to sell more iPhones; instead, the company extracts more revenue from the same devices via software and services. Milligan draws a direct parallel to General Motors, noting that GM’s OnStar and Super Cruise subscriptions represent recurring, higher‑margin revenue attached to cars already sold, mirroring Apple’s service‑centric financial transformation.

Chapters

And here's the part that matters for a financial planner and a financial plan. Apple's hardware business runs at about a 37% gross margin. Apple's services business runs at over 73%, nearly double. So as services becomes a bigger share of the mix, Apple's total company gross margin climbed from about 42% to 46%. That's a big chip— jump. That is the kind of financial transformation that changes the whole valuation of a company. Apple is not selling more iPhones. Apple is selling more software and services to the same iPhone. Sound familiar? That is exactly what GM is telling us now. OnStar and Super Cruise are recurring subscription-based higher margin revenue attached to a car that is already sold. This is GM's service chapter.