Last week, Apple finally released the Apple Watch. This product, whose arrival has been eagerly anticipated by legions of enamored fans for months, expanded the company’s scope beyond just computers and phones. Many investors are concerned that Apple’s progress has plateaued; as of late, the new products bear only minor improvements in size and memory capability, instead of the groundbreaking innovations that once defined the company. The ubiquitous hype highlights the major role that Apple plays in the world market and reestablished its reputation as a behemoth.

Apple has exploded in popularity in the last decade, most notably because of the genius of Steve Jobs. At 41 years old, the company rakes in greater profits than many other established competitors. Its valuation metrics are unprecedented: it has the largest market capitalization-calculated as share price times number of shares outstanding-at nearly $720 billion. To put that in perspective, the second highest is Google’s, at a “mere” $376 billion. The market capitalization reflects how much shareholders value the company; the higher it is, the better.

One cannot base the health of a company solely on its market capitalization, a figure that is prone to fluctuations since share prices are arbitrary. It is important to look at ratios, which standardize the numbers and allow for comparison against other firms, such as the price to earnings ratio, which is calculated as the market value per share divided by earnings per share.  For investors, Apple’s growth margins are especially exciting. How much did the company grow, in terms of sales and profits, over the past year? The past decade? That Apple now dominates a market in which it was, up until recently, an insignificant player underscores the potential  for increased exponential growth in the future.

In addition to dominating quantitatively, Apple dominates qualitatively. The company has strong brand recognition: go anywhere, and people will recognize the half eaten fruit logo. Consumers know Apple and they want Apple. Thus, the name itself is valuable. In accounting, when organizing the company’s financial statements, this is marked down as goodwill. Goodwill is considered an intangible asset because it is something non-physical that the company owns. It is important to note, though, that it is only realized when the company is sold.

With such a recognizable brand, Apple is in an advantageous position when it comes to pricing its products. Though the laws of economics dictate that Apple should be forced to reduce its prices because of market competition,  the company is notorious for its steep prices. The Apple Watch starts at $349 and reaches an exorbitant $10,000. When I initially heard this, I thought this pricing strategy was flawed because the prices were was too high. While charging consumers’ maximum willingness to spend is economically wise because it would maximize profits, such a move is nonetheless exploitative in nature and might isolate loyal customers in the long run.

I realized that I did not consider an important factor that reflects the unique nature of Apple. Its products are not regular goods, whose quantity demanded declines as price rises. Rather, Apple products are Veblen goods, whose demand increases as price increases. There is inelastic demand for such goods, as people are not sensitive to price changes. Indeed, consumers are willing to pay more for Apple because the high price adds to the allure.

While this rarely occurs, Apple is a rare breed. Who else would release product without a test market? And yet, Apple did exactly this in 2012, when it released Apple Maps. Basic marketing dictates that a firm must run a product on a small scale in order to gauge feedback, and only afterwards release the product. Apple did the opposite, it was so intent on churning out more products. For them, the time spent on a test market translated into lost potential profits since they were guaranteed to sell in the Apple crazed market.

Apple manages to further maximize its profits by minimizing its costs as much as possible. One of the main (and legal!) ways it does so is through offshoring. More extreme than outsourcing, which simply involves hiring external labor, the process of offshoring entails having some part of the business process be completed in another country. With its headquarters in Cupertino, California, Apple manufactures its products in China. There, the wages for labor are much lower than those in America. Because of the few regulations in China for labor conditions, Apple exploits its workers by forcing them to work long hours in squalid conditions. As does often happen in business, the need for the people’s welfare is directly at odds with the ultimate goal of maximizing profits. Apple continues to offshore because of the savings as well as the fact that people continue to lust after Apple products, with little regard for the suffering of the Chinese laborers in the process.

It is easy to subconsciously ignore how every other person on the bus is on their iPhone or on their Macbook in Rosenthal Library, especially given the ubiquity of such occurrences. This is the Holy Grail of market dominance: subtly integrating, and ultimately cementing, their brand into modern day culture. With the Apple Watch as a milestone in innovation, Apple is poised to be one of the most influential firms in the long run.