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Apple Used To Be an Inventor. Now It's Mainly a Landlord. (bloomberg.com)
An anonymous reader quotes a report from Bloomberg: For years, analysts and journalists watching Apple have talked up the growing importance of services, as opposed to hardware sales, to the company's top line. But it's only now that Apple's business model truly appears to be shifting toward collecting rent from the company's ecosystem and increasingly relying on gadget sales to perpetuate this rent rather than drive growth. Apple's decision to stop reporting iPhone unit sales underscores the shift. Services have been steadily growing in importance for Apple since 2016, while the share of revenue provided by the flagship gadget, the iPhone, has gone up and down depending on the popularity of different models.
There's a lot of potential for Apple to squeeze a higher rent directly out of its captive user base. Goldman Sachs estimates that only 10 percent of Apple's user base pay for iCloud Storage; in terms of price and service quality, iCloud has been a poor competitor to services provided by Google and some smaller companies such as Dropbox, but that only means Apple can increase revenue from it exponentially if it bothered to compete more aggressively, as it does with another key service, Apple Music. Even that streaming service has relatively low penetration, though, with only about 35 million users last year. Goldman Sachs predicts that number will grow to 83 million by 2020. Goldman's proposal for Apple is to create a services bundle similar to Amazon Prime; for $30 a month or so, subscribers would get access to music, video, 200 GB of storage and phone repair. The investment bank calculates that with just 50 million subscribers, such a bundle could add $18 billion in services revenue in 2019. "Rent extraction from a user base that finds it hard to go away may sound a bit like extortion," Leonid Bershidsky writes in closing. "But it's more honest and upfront than extracting data from users in ways they often don't understand and then making money off the data, as Facebook does. That honesty is in itself a competitive advantage for Apple as it gradually reimagines itself as more of a services company."
The challenge, Bershidsky writes, "is to grow the services offering fast enough to make up for potential iPhone revenue losses; gadget prices cannot keep going up forever without hurting the top line, and in the end, a phone is just a phone. We only need it to gain access to all the nice digital stuff out there."
There's a lot of potential for Apple to squeeze a higher rent directly out of its captive user base. Goldman Sachs estimates that only 10 percent of Apple's user base pay for iCloud Storage; in terms of price and service quality, iCloud has been a poor competitor to services provided by Google and some smaller companies such as Dropbox, but that only means Apple can increase revenue from it exponentially if it bothered to compete more aggressively, as it does with another key service, Apple Music. Even that streaming service has relatively low penetration, though, with only about 35 million users last year. Goldman Sachs predicts that number will grow to 83 million by 2020. Goldman's proposal for Apple is to create a services bundle similar to Amazon Prime; for $30 a month or so, subscribers would get access to music, video, 200 GB of storage and phone repair. The investment bank calculates that with just 50 million subscribers, such a bundle could add $18 billion in services revenue in 2019. "Rent extraction from a user base that finds it hard to go away may sound a bit like extortion," Leonid Bershidsky writes in closing. "But it's more honest and upfront than extracting data from users in ways they often don't understand and then making money off the data, as Facebook does. That honesty is in itself a competitive advantage for Apple as it gradually reimagines itself as more of a services company."
The challenge, Bershidsky writes, "is to grow the services offering fast enough to make up for potential iPhone revenue losses; gadget prices cannot keep going up forever without hurting the top line, and in the end, a phone is just a phone. We only need it to gain access to all the nice digital stuff out there."
Rent seeking is a code-word for a coercive business transaction. I don't think it fits Apple's situation. The smart phone market is pretty well saturated. The only new revenue you can get is through related devices (watches? headphones?) or services.
There are plenty of competitors. If one of them can come up with something substantially better then they could easily crush everyone else in the smartphone market.
My Other Computer Is A Data General Nova III.
Apple spent less r&d in than AMD in the era where Apple was a duopoly in the smartphone and tablet market with Samsung(no chinese companies back then where so huge) than AMD spent in r&d during their bulldozer days.
Apple, aside from the firewire, hasn't invented anything. They repackage, copy-pasta ideas, from others.
https://www.youtube.com/watch?...
I hate fanboys because their fanboy-ism is based upon marketing and ads. I love fanboys who are fanboys for technical reasons.
Let the hate flow, I learnt the "foe" feature here 3 years into this account after an "anti-apple" comment.
Apple is a fashion choice, stop being fashists.
Meh, then your definition of "invent" is too strict. True, they didn't invent the home computer. But after a few tries they managed to find a formula that worked and an entire industry was born. They didn't invent the GUI - but they finally innovated a recipe that worked with the Mac and the PC world never looked the same. Then they did it again with the iPod, the iPhone, and the iPad - all categories that technically existed, but sucked. I could write any one of those off as a lucky fluke, but they've done it several times. They've failed several times, too... for instance they got too crazy with the Newton and Palm figured out the formula instead. Even the lightbulb was an iterative design and not something popped into existence by Edison.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
Then who is the true Innovators who really invented something?
We keep on saying that we are not innovating, and that companies have lost their way.
But technology has been progressing, we have been getting new things. They are not normally WOW THIS WILL Change my life. But more well this is slightly more convent, and this continues gradually. 20 years ago we had internet video, but it was normally in a 320x200 size, that if buffered would take 5 minutes to download, before it started. If you happened to happen to have such video on a CD you might be able to play it in 640x480 full screen, but it would be very choppy. Watching Ripped TV Shows on PC was poor quality.
Apple is good at taking a technology and making it for the consumer, they do not invent the technology but they implement it in a way that can be useful. Because of Apple I now have a Phone that has a resolution matching if not exceeding modern laptops, Geek Bench scores matching mid/upper tear laptops. video camera(s), GPS, Multi-touch display, counts its steps, knows its location and position..... 20 years ago this was unheard of, the thickness of such phone is thinner then some of the plastic cases.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.
This seems like nonsense to me. Apple's success has never been due to being an "inventor", and they're not currently "rent seeking". Apple is, and has been, primarily a hardware company. They sell Macs, iPads, iPhones, iPods, watches, and accessories. They sell a lot of them because they have a reputation (whether you think it's earned or not) for making high quality and widely supported products that are easy to use. That's still the case, and Apple is showing no sign of moving away from that.
Are their products inventive? I can see both sides of the debate. Most of their stuff is based off of some technology someone else invented, but on some level you could say that about all technology products. However, MP3 players weren't very popular before iPods. Smart phones weren't relatively unpopular before the iPhone. Tablets weren't selling much until the iPad. Smart phones didn't generally include virtual assistants until Apple introduced Siri. Not many people were wearing smart watches before the Apple Watch. In each case, the product class existed before Apple entered the market, but Apple seemed to introduce the first product in the class that people really wanted, and then a ton of imitating products followed.
None of those products were invented by Apple, but Apple still creates fairly innovative designs that have changed the way people use technology.
For all these reasons, the fact that profits from services will soon be/already are exceeding profits from hardware sales, they should start selling macOS as a stand-alone OS for regular PCs. Simply give a list of supported CPUs/GPUs/chipsets.
That way, it means more people using macOS, more people subscribing to Apple services, more people buying other Apple devices (phones, tablets, watches, set-top boxes, etc).
#DeleteFacebook
It's all in perceived value. I would never spend $40k on a car vs $20k on a car. The $40k car is never going to offer double the value of the $20k car for me. I suppose maybe if the $40k did all the driving while the $20k couldn't, then it would have real value.
Apple is the same thing. I can build my own computer for $1k (I've never spent that much on a system, EVER, by the way) or I could go buy from Apple and spend closer to $2k.
Regarding phone technology, I kind of laugh. It wasn't so long ago that Apple added wireless charging to their phone. I've had wireless charging on my last three phones and would never consider buying a phone that didn't have the functionality.
Very few premium products are worth the offer compared to a mid level option that's done just as well. Premium products are more social signaling.
Over my life I've noticed that every sports specialty store gravitates from selling cool hardware to having most of its retail space filled with clothing. The same pattern has been replicated in the internet age too. Geek gear stores grow, expand into new products but the mature end-state is the clothing store.
The reason I think is the product of repeat-sales* volume * margins / up-front-inventory cost is the highest on clothing so once you discover how to include clothing in your store it just takes over like cancer.
Look at REI as great example.
iphones ate apple. And services will eat iphones.
But of course the reason you go to the store and not another clothing store is specialty items that are now set decorations. REI was originally formed to import specialty hardware not made in the USA at cheaper prices than individuals could get it. It still has all the drool worthy gear and expert displays but the prices are barely competitive and when you check out most of the most of the bill is for the clothing you happened to see while you were drooling over the brass candle lantern or the ultra light titanium coke spoon.
So the thing that's truly amazing about an Apple retail store is that it's still all about the hardware. Kinda amazing they do that. it shows you where there heart is and what their connection to the consumer is. Amazon and apple can both sell you music but, for some people at least, the lure is deep love of the fit and finish of the apple crafted gadgets.
So You will know that apple has lost the thread when it starts making most of it's money selling threads. For now, that's not the case.
Now when it comes to payments, pyschology is really important. There's two ways of looking at this that I think matter a lot in intent. One intent is to lure people to pay over time so they don't notice how expensive something is. The flip side of that intent is to allow them to get something now rather than save for it. Saving has the hazard that any accumulation of money becomes a temptation rather than a planned use later. So getting people into a home or a car now gets them something that is less of a waste of money and something they need. conversely 15 easy payments for the latest ginzu knife or thigh-master is just a trick.
For me, I buy ski passes rather than ski tickets. the goal is not to save money it's to not worry about money and enjoy the skiiing. When I have a pass I don't have to ski 9 to 4 to "get my money's worth". I ski 9 to 12 till the powder is all used up then I go home and leave the hard pack for the ticket buyers to suffer on to get their day's money's worth. I probably ski fewer hours in total when I'm buying passes but I sure as heck enjoy it more. The same is true with health insurance. I found that when I had high co-pays and high-deductibles that sometimes I put off seeing the doctor when I knew that was a risk. SO I now buy higher priced plans that lower those. Economically I pay more than if I tuffed out the deductibles.. But psychologically I'm motivated by by health needs not by my marginal costs.
Some drink at the fountain of knowledge. Others just gargle.
There's an expression that says Pioneers get the arrows, settlers get the land. But there's a third layer to this. For there to be Pioneers first there had to be some new invention that let people press farther into unknown regions than they had before.
Apple is both a pioneer and a settler. Their inventive side is less to do with the techical invention but the invention of a use for it.
while people will quibble here's a list of things that apple didn't invent but did arguably pioneer and settle the us of.
Dynamic memory over static memory.
Memory mapped graphics over fixed graphics cards (ironically, in the age of NVIDIA we have reverse this, but it was what let us switch from kludged dumb terminal fixed width text to real graphics in games and fonts.)
software replacing hardware (e.g. soft sectored floppy's, fonts over character generators, software serial over UAARTS, )
small connectors and universal use of Serial ports over parallel ports and single use ports. (apple desktop bus for example)
Postscript printers. (first major adoption was apple).
The mouse and WYSIWIG. (doug englebart showed us this in the mother of all demos).
and so on.
By the way if you have never watched Englebarts Mother of all Demos it's a mind blowing experience. His team basically invented everything computers did for the next 40 years. Only recently have we gone beyond polishing the patterns his team laid out.
But it was apple that pioneered to use cases that Englbart and then Parc never did. Then they settled the land by selling integrated soltuions for those use cases at the right price that individuals could buy them/
Some drink at the fountain of knowledge. Others just gargle.
https://en.wikipedia.org/wiki/...
in 1968, The 90-minute presentation essentially demonstrated almost all the fundamental elements of modern personal computing: windows, hypertext, graphics, efficient navigation and command input, video conferencing, the computer mouse, word processing, dynamic file linking, revision control, and a collaborative real-time editor (collaborative work). it featured video conference, picture-in-a-picture, an early form of windowing, electret head set microphones, the GUI. Engelbart's presentation was the first to publicly demonstrate all of these elements in a single system
Some drink at the fountain of knowledge. Others just gargle.