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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.