The Secret Behind Apple’s Next Breakout

I would bet few investors really understand what’s behind the success of technology behemoth, Apple, Inc. (Nasdaq: AAPL).

The rags-to-riches story of Steve Jobs and Steve Wozniak building the first Apple computer in a garage is widely known. And of course, its products like the iPod, iPhone and Macbook are undeniably popular.

#-ad_banner-#But today I want to share with you the secret that’s led Apple to become the world’s largest company by market capitalization and helped its share price sky rocket more than 12,600% since 2001.

Despite what most people think, it’s not the company’s revolutionary products that drive its success…

The key to understanding Apple’s success can be seen in a simple pattern. Once you identify this pattern, the catalyst to future growth for Apple — and the way investors can make money from the company today — will be apparent.

After Apple sold the first iPod in October 2001, it was not received well by critics, consumers and investors.

Just look at this chart showing Apple’s share price in the 18 months following the iPod launch:

Not what you’d expect, right? Apple shares lost 29% of their value after introducing one of the most revolutionary products in its storied history.

But in April 2003, Apple would dramatically change not only the music industry, but how we purchased music. It introduced the iTunes Store, offering 200,000 songs for $0.99 each.

No longer would we have to rip music electronically from our favorite CD, manually type in the song title and artist and then load it to our iPod. We could simply purchase our favorite songs and seamlessly put them on our iPod.

In the third quarter of 2003, Apple sold 336,000 iPods, up 140% from the same quarter a year before. Two years later, Apple sold nearly 6.5 million iPods in the third quarter alone — 20 times more than in the third quarter of 2003.

This was the first step of a repeating pattern that has taken Apple from a $4.8 billion market capitalization in 2003 to its current $730 billion market cap.

You see, it isn’t Apple’s hardware that drives growth. The hardware is merely the vehicle, and the engine is the software.

The strategy is quite simple:

1. Identify a complacent industry with a huge target market and unlimited upside.

2. Create a product that people can’t live without and deliver a software application to seamlessly sync with that product.

3. Make win-win partnerships with key players that are already in the established industry.

The research team and I have been quietly outlining their method for the past few months, and we’ve discovered that Apple is repeating its signature three-step pattern again with its brand-new software, Apple Pay.

Apple Pay enables consumers to buy goods with a simple tap of their phone, making cash and credit cards obsolete. And with the right partnerships, Apple could turn this into an $11 trillion market opportunity.

Now that I’ve revealed the company’s strategy, you’ll understand why we have been pounding the table on Apple Pay.

The iPhone 6 is skyrocketing Apple’s profits in the same way the iPod did more than ten years ago. And because of Apple Pay, this time it could lead to more revenue than the iPod, iPhone and iPad combined. But it’s not only Apple’s bottom line that will benefit… it will also pad the pockets of Apple’s key suppliers.

In my premium advisory, Game-Changing Stocks, I correctly predicted in 2012 that Apple would introduce a mobile payment feature in the iPhone. But more importantly, I pointed out that the triple-digit gains would lie with the smaller companies partnering up with Apple.

I’ve detailed these firms in a report called “The Top 5 Apple Suppliers To Buy Now.” Three of these five firms are already up more than 250%, and as Apple continues to sell more gadgets, we expect these stocks to rise further. Click here to access this new report, including names and ticker symbols.