I'm very worried that as services revenue becomes important, the aggressive rent-seeking behaviour from Apple will only increase and they'll start damaging user experience even more.
Heck, iOS 14 booted with an Ad notification and in settings to buy their subscription services.
It feels, to me, that a duopoly is worse for the consumer than a monopoly. Monopolies behave better due to fear of regulation, but in a duopoly's justify their own bad behaviour based on the their counter-party.
Both duopolies and monopolies can benefit from regulatory capture, and need not always fear regulation, especially if they can have undue influence on regulators.
It blows my mind that the top search result for an app is often an ad for a different app. You know that gazillions of unsophisticated users are downloading the wrong app as a result and having a worse experience. (It's easy to do as a sophisticated user if you're not paying attention!)
Apple directly selling out UX for $ is certainly not an optimistic sign.
I do wonder at a much broader level if there's some way to structure society to bring the motivation & focus that young companies give us w/o the inevitable slide to evil that capitalism and investors demand.
> the aggressive rent-seeking behaviour from Apple
Can you clarify what you mean here? I associate the term "rent-seeking" with efforts to manipulate public policies in a way that advantages the company specifically over other competitors.
You seem to be talking about an ecosystem "lock-in" approach, which is something different than "rent-seeking".
At least some of their services have competition - netflix, spotify are both bigger (I believe?) than Apple's competition.
It could drop quickly for Spotify if Apple decides to ban them from the app store like they did Fortnite, which will in part depend on Spotify trying to get around the App Store fees like Epic did.
And things could change drastically if the lawsuits currently springing up against Apple's fees and monopolies end up successful.
But then, it'll likely mean "Apple makes less profit" than "Apple is destroyed". Remember, Apple has nearly $200 billion in cash, as well as a 20% profit margin. They pump a lot of money into R&D (nearly $20 billion a year, still climbing every year). Basically they're very secure, financially speaking.
> iOS 14 booted with an Ad notification and in settings to buy their subscription services.
I really hate Apple's spammy advertising; it seriously damages the user experience (not to mention Apple's reputation and brand) for no good reason.
Obviously spammy and obnoxious advertising works to some extent or companies wouldn't do it - but user goodwill takes years to build up and probably shouldn't be sacrificed on the altar of short-term monetization.
If Apple's services are actually good, then users shouldn't need to be spammed with obnoxious alerts and preinstalled adware. It should simply be an optional (and opt-in) add-on that's included in the box like a "free" code for a year of service if you want - and I think they do that already for Apple TV+ and Apple Arcade. If it's worth it, people will renew. Word of mouth and regular non-spammy advertising should do the rest.
"Apple is moving to services" is hardly a ground-breaking take. The problem for Apple isn't that their device sales are down, it's that their pivot to services based revenue is not going well.
Apple have taken their absolute dominance in selling music and moved to middle of the pack in music streaming squeezed between Spotify and Youtube.
They're late to TV streaming and somehow, despite being incredibly closely linked to Disney have failed to tie up a deal.
Apple's Siri is distinctly second tier, losing them both for Apple Music, but also potential shopping via smart assistant.
iCloud comes across as Apple nickle and dime-ing their customers, insisting you need to back up your phone but providing laughable amounts of storage for free - and then becoming nagware.
Then you have Apple One - Apple's bundle. Which offers a whole selection truly terrible deals. Did you know you can pay $15 per month for enough iCloud storage to still not be able to back up your iPhone. For $20 a month your whole family can share less storage space than each of you probably needs individually. Double that price with practically no other benefits just to be able to actually use iCloud for a macbook. What do you think when you think Apple? iPads, iPhones, Macbooks. So obviously, their headline bundle includes literally none of those products even as an option. Oh and AppleCare - the only thing people actually do subscribe to... not included either.
Not forgetting the handful of absolutely forgetable bundled products, Apple Arcade, Apple News+ and Apple Fitness+ (which doesn't exist). Filling your bundle full of rubbish that no one uses isn't a good strategic move. If you had a bundle of 20 things it would be fine, but a bundle of 6 things, 2 of which should be bundled with hardware, 2 of which are mediocre, is just not compelling.
Finally you've got the Appstore. Apple is getting absolutely hammered on their 30% fee. At this point it looks almost certain that they'll either change their fee structure or face regulatory action.
So yes, fine, we can talk about Apple's move from products to services. But if we're going to do that we need to do it in the context of "Apple is failing to move from products to services". There is no clear path for Apple on the services side. If Apple is a services company why isn't FaceTime adding $100Bn of market cap to Apple's value as a competitor to Zoom?
You're complaining mostly about Apple charging too much for not enough.
But since people are signing up for these things in droves, Apple is making $$$$, which means Apple's strategy is succeeding.
Apple's services strategy pays off when it makes a lot of profit, not when when you feel like you're getting amazing deals on everything. Apple's never been a budget-product company, it's always been high-end.
I'm not complaining about them charging too much for not enough, I'm complaining about their products being bad. That's quite a distinction. Apple Music isn't as good as Spotify, Apple TV+ isn't as good as (Amazon Prime Video|Disney+|Netflix), Apple's bundle isn't as good as Amazon Prime. Siri isn't as good as Alexa or Google Assistant. Apple Arcade can't compete with.. well... the Appstore.
Apple is having success at pushing people who already have iPhones to buy services in the same way that Microsoft as realy good at getting people to use Internet Explorer. But Apple's success at pushing people into services revenue isn't a long term indication of strength.
All of these are subjective statements. I much prefer Apple Music to Spotify, and I don't think people really care that much about Google Assistant - iPhones still sell well at much higher prices than android phones.
They funnel their revenue to the record labels, not profits. Evidently, Spotify’s product doesn’t command a premium in the market compared to the alternatives.
They clearly have gotten people to sign up, they are 2nd in the market and only 12% behind Spotify. That's against an incumbent with a free tier that Apple doesn't have.
I also wonder too what Apple's marketshare is on iPhones - I'm sure it is a higher percent.
But their products being bad doesn't matter - they'll make sure to cripple all the competition so the only usable service products are Apple products. They've already started embedding agressive marketing pitches into their OSes so the competition will always be a step behind.
That's enough - their products don't really have to be the best. They'll win by competition not being able to surpass them due to restrictions.
My first hand experience shows that corporations aren't always rational. Especially if they're big - it's really easy to get a discrepancy between what smaller unit/team managers want (push their own team product) vs. what's benefical for the whole corporation in the long run.
This is how you get a lot of seemingly dumb corporate decisions.
Yes, it's very common to get inertia where the teams scramble to justify spent time and managers refuse to admit that the product isn't good. It's amazing what you can prove by choosing the corect set of metrics.
It's always been worth it, too, when it comes to hardware (this is debatable, but obviously they're successful). The problem with their services is that they are NOT worth it. They aren't high end. Their services aren't the best. They're middle of the pack (music, movies, TV) or trailing (cloud, search, productivity software, AI). So all their finely-tuned marketing/operations machinery geared to sell "the best" don't work for their services.
Apple is slowly disappearing from my family's hardware portfolio, and recent software changes are accelerating it. Back in 2005 or so I converted my entire CD collection to digital, and managed it happily using Itunes. Somehow in the transition from itunes to Apple Music, Apple refused to recognize any of the tracks I created from my own, legally purchased media.
My wife currently has no way to listen to any of the music we legally own, using her iphone. So guess whose next phone is going to be Android, with an SD card containing 1TB of music we own? The other advantages of iphone are not important to me, and the apps she uses are available on the playstore. For bonus points I can buy her a pretty decent Android phone for a few hundred bucks, instead of a new device costing well over a thousand.
I understand Apple wants to push everyone to monthly paid services. As a customer, I DO NOT want yet another $10/month expenses - I've got a lot of those already. I just want to listen to music I already own.
Has syncing music from iTunes to your iPhone stopped working? It's the first-class way to listen to "the music [you] legally own" on an iPhone, and comes with no ongoing service fees.
> My wife currently has no way to listen to any of the music we legally own, using her iphone.
There are so many ways to do this I can't even list them here.
You can store songs locally on your iPhone, or upload them to a cloud-based service if you've got a full terabyte of them.
But the idea that an iPhone can't play your music files simply isn't true. Also you can buy a pretty decent iPhone for a few hundred bucks too, that will last longer than your Android one. The only iPhone "well over a thousand" is the high-end flagship model.
The problem is that a lot of "the target audience" usually intelligent and prosperous people who used to drop serious cache on apple stuff have stopped buying and are grumbling.
Additionally there's no new game-changing products filling the void.
When apple force switched to music they screwed up all people with local music. Some just threw up their hands and switched, the others muddled through and some recovered, some didn't.
Even the Apple I was relatively expensive relative to both competitors and its own BoM.
The advantage has always been that the company attempts to make computing appliances for users who want to do something besides “compute.”
Sure people infatuated with computing as a thing in itself have also always been welcome, but (unlike its contemporaries) those weren’t the only people welcome.
I don’t think you’re judging Apple One too fairly. If the $15 tier has too little storage for you, you can quadruple it for $5 more. If you share with your family, the $30 plan certainly has enough storage, and is only a few dollars more expensive per person. Note also $30 is not double the price of the $20 tier.
I think the general reception of Apple One has been pretty good.
> At this point it looks almost certain that they'll either change their fee structure or face regulatory action.
I want this to be true, but honestly I wouldn’t hold my breath.
I saw this iCloud pushing in-person at an Apple store a few months ago:
Someone had brought in their iPhone and it needed to be wiped for repair. The rep was pushing iCloud under threat of losing their data. It seemed like such a scam. I can only imagine what it feels like to be tech-illiterate and told you must buy a subscription or we'll wipe your family photos.
A 'premium' phone like an iPhone should really have a free backup for at least the data size of the phone. At the very least you should be able to get iCloud free for when your phone is in for repair.
The iCloud story particularly annoys me, because I got nagged for filling my storage so I upgraded to a pay tier. Then it immediately filled up and it started nagging me again. It's such an un-Apple experience. If I don't have the storage don't bug me about it. If you think it's that important, include it in the cost of the phone.
While I think the sentiment is nice here, I don't think anyone would ever accept the liability of that kind of service. How long do you save people's data after their "free iCloud" is over and their device has been returned?
On the flip side, while I agree with you on the free tier for data size, I feel like that would be unsustainable. It would raise the price of the phones even higher than they already are. It would be nice if the tiers were restructured so that the bottom tier fully covered the storage capacity and I would love something more than 2TB for the max.
I mean, they own the stack. They could make a high speed machine purely built for storing encrypted device backups while a device is in repair, once the ticketing system says the device has been returned to the customer (or once the backup is restored to a device), the machine could erase it. 2TB should be enough to hold a Apple Store’s daily repair backlog, and of course let the customer accept or deny this service when their device is dropped off.
I’d say it’s not economically feasible, but they built an entire robot for fixing iPhone screens, it probably is economically feasible unless you really value the iCloud backup revenue that geniuses get in store.
That wasn't really what I was referring to. I meant the customer that comes back after their repaired iPhone gets dunked in water and they don't have a backup anymore and now it becomes Apple's "fault" that they didn't keep this customer's backup. There's way too many variables for that to be feasible when it's better to just promote that customers do their own backups and/or sell their service to automate it for them.
Apple's services move isn't a gorund-breaking take and the writing has been on the wall for at least 2 years. Addressing some of your points:
> Apple have taken their absolute dominance in selling music and moved to middle of the pack in music streaming squeezed between Spotify and Youtube.
That is true, but Apple is estimated to have almost ~70M subscribers and Spotify has ~290M. Not sure how many of Apple's are paying but that's a lot of people who find Apple's service at least "good enough" which means less revenue for Spotify and competing services. If apple decides to provide a platform for music creation and direct publishing to Apple Music, that creates more lock-in.
> They're late to TV streaming and somehow, despite being incredibly closely linked to Disney have failed to tie up a deal.
Apple being late is a pretty frequent occurrence but execution is what can set them apart here. I doubt Apple will invest the billions it takes to make good entertainment but time will tell. They succeeded (in the USA) with maps and the Apple Watch so far.
> Apple's Siri is distinctly second tier, losing them both for Apple Music, but also potential shopping via smart assistant.
No question there - Siri is still a mediocre product but it is also accessible across their devices. Assistant is better but only if you have an Android phone or the Google app. If you want to buy a smart speaker, you have to _device_ which service you want versus "If Apple makes this speaker, I know it has Siri and works with my devices".
> iCloud
Yep that's a joke and bad deal. Storage is quite cheap so I don't get why Apple won't expand the options.
Apple One is a rough start but I expect them to refine it and slowly add options to improve the offering. Fitness+ could be huge if they pair it with the socioeconomic class of people who go to spin/yoga/pilates/crossfit classes and view fitness as a badge.
They can create a social network effect like Strava and build partnerships with Peloton, Flywheel, etc. (I'm not the right demographic so this is a guess). Apple could partner with hospitals for health data sharing with doctors and maybe get insurance companies on board for discounts.
> Finally you've got the Appstore. Apple is getting absolutely hammered on their 30% fee. At this point it looks almost certain that they'll either change their fee structure or face regulatory action.
+1
> If Apple is a services company why isn't FaceTime adding $100Bn of market cap to Apple's value as a competitor to Zoom?
Because Apple sucks at making services for a world that's not Apple-focused which is what you need to survive in enterprise. I'm okay with Apple dominating cross-platform video calling ...
Overall, I think the ease of a customer using their Apple ID/Device for _everything_ is hard to overstate and is Apple's long term play.
Hardcore Apple fanboy here: I am afraid you are right about most offerings that simply are not (financially nor content wise) attractive.
For films: Netflix all the way. Do not even get me started on the #@%^$# signup process for Apple TV
iCloud: I needed, do not see an easy alternative :(
Apple one: yeah, no thanks.
Appstore: I needed and it is fine for my needs.
Apple Music: Like it, works great for my needs and works fine with Shazam. Do not try to play anything they suggest however. From play lists to "specially for you" it does not even come close to what I want to listen to. Playlist management overall is terrible too.
Apple Car Play: NEEDS A WIRE, in 2020! I got a wireless charging thingy in the car (Audi 2019), and keyless entry, but I need a cable to use Car Play: disappointing to say the least.
Your other examples: did not know they existed, no need for them.
So basically I am using the same old Apple services since day one and see no need at all to switch to anything existing. If they would allow me to host my email from my private domain however...
Love the "live long" updates, the interface and the styling of the devices and the (perceived) privacy enough to stick in this ecosystem.
And it has been wireless since 2016. In OP's case, it's completely Audi's fault.
Meanwhile Android Auto got wireless in 2018 only for Google and Samsung and is just now getting around to being wireless in 2020, but only with phones running Android 11 and still only in 36 countries.
The Apple One bundle is definitely not worth it to me. But Apple News+ on its own isn't too bad of a deal; I'm a subscriber.
Had a previous $4/month subscription to WSJ, but cancelled it and switch to News+; which gives me access to a few other paywall news services without having to pay separately for those.
Note: I am in the US, so maybe the deal is worse in other countries.
You some good points and I agree that their move to services could be better but I think saying they are "failing" is a bit strong. I'd argue their bundle is just getting started.
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To address your points:
> Apple have taken their absolute dominance in selling music and moved to middle of the pack in music streaming squeezed between Spotify and Youtube.
This is your point I agree with most, Apple music just isn't as good and its shocking they lost so much ground.
> Apple's Siri is distinctly second tier, losing them both for Apple Music, but also potential shopping via smart assistant.
Siri just isn't good but honestly how many people use voice assistants for more than changing songs or checking the weather?
> Cloud comes across as Apple nickle and dime-ing their customers, insisting you need to back up your phone but providing laughable amounts of storage for free - and then becoming nagware
Agreed it is laughable but I would argue people concerned with backing up all their devices are in the minority of Apple customers. It wouldn't be why most people pay $15 a month.
> Finally you've got the Appstore. Apple is getting absolutely hammered on their 30% fee. At this point it looks almost certain that they'll either change their fee structure or face regulatory action.
I don't really see how this is relevant to the mediocre services Apple offers except it is an unfair advantage they have on other SaaS competitors. I suspect it may be one of the reasons they haven't already decided to swallow SaaS competitors like Spotify, so they can say the app store is competitive and not disturb the golden goose that is the 30% fee.
> If Apple is a services company why isn't FaceTime adding $100Bn of market cap to Apple's value as a competitor to Zoom?
I don't think market caps, especially with the past years stock market, tell us much about the effectiveness of services. However, Apple's current market cap is 2 trillion, 20 times the cap of Zoom. To add to this, Zooms P/E ratio is 530 compared to Apples P/E of 36 which indicates Zoom is wildly overvalued. Even if it was a useful comparison Apple is in a different league.
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I think Apple's biggest problem is the lack of one killer service to offer as part of their bundle. If they offered mediocre Apple music, Apple fitness and Apple arcade but Apple TV was on par with Netflix most people would use the mediocre services to save on the gaining number of other SaaS products modern consumers pay for.
Apple has the money and talent to create one killer service, they just haven't been running a lot of their services long enough to be killers - (with the exception of music). I think it's just a matter of time until Apple create a killer service and people getting sick of paying for multiple SaaS products.
> Not forgetting the handful of absolutely forgetable bundled products, Apple Arcade, Apple News+
What's forgettable about Apple News+? Its got a ton of magazines. If you read just a handful a month it beats the newsstand price.
It also includes WSJ. On iOS and iPhone (but annoyingly not MacOS) that means when someone submits a WSJ link here on HN and you click it and hit the paywall, you can simply hit the "share" button in Safari and pick "News" from the sharing options to go to the story in the News app.
Td;lr - Apple Services was designed as margin manipulator. Sorry I couldn't get the post any shorter.
Agree on the quality of Apple Services. All of these problems and questions requires first looking into Apple Services Revenue.
Both App Store Revenue and Google Placement are nearly 100% margin. Popular belief is that Apple only makes 20% margin on App Store because that is what they took as cuts. In reality App Store Apple only book their 30% / 15% cut as revenue, and nothing else from Gross Margin Stand point other than payment processing. Google Search Engine placement deals are also ~100% margin. Both of these Revenue has been growing, and they are literally, pure profits.
And a reminder, Apple report Gross Margin of its Services Revenue as 60-70% over the past few years. ( I remember they only start giving out this numbers in 2016 / 2017 )
Apple foresee that problem fairly early on. You cant tell the world we have services revenue of 9x% Gross Profit. They need something, something to help dilute down those margin. And First enter Apple Music ( 2015, although the acquisition of Beats happened in 2014 ).
Music Streaming Services are basically a thin margin Business. 75% of your monthly subscription are payment to Labels, regardless of how many minutes your customer listens to and how many customers you have. For Apple, they pay a little higher than ~75% which is what Spotify pays, and gets a good PR with paying more to help out artist. They then end up with a Gross 20% Margin Services, or even less as they could also afford to give out more free trails and student discounts. I would not be surprised if it was running at at lost in the early days.
Then there is iCloud. Remember when iCloud used to cost more than Google? That make sense because Google and Microsoft have their own DC for storage and gets better unit cost. While Apple, tends to ( and AFAIK continue to ) use GCP, Azure and AWS for their iCloud Storage. In 2015 they announced their new pricing and stay competitive with Google. And has been pushing its users to iCloud Backup. iCloud also has a clear Unit Cost and are low margin business, this also helps Apple to dilute its Services Revenue Margin.
And you get the idea, it is the same with Apple News+ ( Cost per Article Read ). Basically Apple could afford to offer services to its customers running at very low margin or at cost.
So What about Apple TV+ and Apple Arcade? They have zero on going cost, Apple pays TV / Movie up front, along with Games inside the Arcade. This is a large up front investment, which ( on the surface ) goes well with Apple Cash pile sitting there doing nothing. With Apple TV+, Apple could afford to give you a year worth of free services. It doesn't cost them anything as they are already paid down. ( I believe there will be a small percentage of Arcade paying to studios as on going maintenance, so you dont see Apple giving out Apple Arcade for free like Apple TV+, only three months trial )
If Apple could get enough customers to pay for Apple TV+, as long as it reach above their initial / ongoing investment, they would have profits, aka Netflix. But that is not what Apple is doing here. It was part of the Apple One plan.
Apple could not simply bundle iCloud and Apple Music together and give you discount on the bundling. There are no margin left to lower price. But if you throw in Apple TV+ and Apple Arcade, all of a sudden the bundle offer more value ( on the surface ). As they could afford to lower price. In the Apple One Individual bundle, Apple is essentially offering Apple TV+ and Apple Arcade at half the price.
In 2018 / 2019, Apple also put $10 per iPhone / iPad / Apple TV / Apple Watch sold towards Services as their OS and Maps and Siri usage cost. All of a sudden Apple can now start putting lots of things into Services segment as cost.
Which leads to IAP. You need both All Margin Business to grow as well as Thin Margin. That is why you start seeing Apple's aggressive push into IAP in the past 2...
Despite our relentless effort to make our webpages and apps heavier and bulkier and slower for no reason, people are not buying new phones? I m at a loss here what else can we do. Perhaps install cryptominers
Apple has also been steadily increasing the prices of new iPhones. I don't know if this is enough for them to make up the difference on lower sales, but it's surely a factor in how many people buy iphones.
I also really don't really understand the attitude that this is a problem. Apple could half their current sales numbers and still have a massively profitable business that most people could only dream of. As long as that lower rate was sustained then there isn't really a problem for the company.
Counterpoint, I’m a die-hard 10-year Android user and I bought an SE when the new one came put because it was reasonably priced. Still considering going back to Android since I miss various things like the back button, but the promising hardware at a reasonable price got me. I’m now using my phone for mobile payments, something I was never comfortable with on Android.
They have more expensive high end options but they've also expanded lower priced devices as well. Even ignoring the SE the new iPhone 12 Mini is a flagship device at a $699 price point thats very difficult for Android manufacturers to compete with -- despite the fact that Apple has much higher margins on its devices than they do.
The phone is $729 in reality, because you either purchase it for $729 unlocked or for $699 on a plan and then fork over $30 to your phone provider as an "upgrade fee".
iPhone might have a higher upfront costs, but the user will most likely save more by buying an iPhone than a similarly or even a bit cheaper high end Android phone, due to the longer lifetime of an iPhone.
> but the user will most likely save more by buying an iPhone than a similarly or even a bit cheaper high end Android phone
I highly doubt this. A flagship iPhone costs $1000+. I would consider the Pixel 4a to be a "bit cheaper high end Android phone". You can buy a stack of 3 Pixel 4a phones for $1050. Are you confident 1 iPhone can outlast 3 Pixels? If you go to mid range Android you can get stacks of 4-6 phones. You could get 4 Moto G Power for $1000. My $250 Nexus 5X has lasted me 4+ years now, so a stack of 4 of them could last me 16+ years before hardware failure. In reality though, Android/app updates make my phone more and more sluggish over time and so I'm forced to upgrade every ~3 years to get a snappy experience again.
Extremely, because I've owned several pixels and iPhones of various models. As an example I got my partner an iPhone SE in 2016 and it's still working perfectly, it even still looks good. Not only is it still getting updates, it runs the latest iOS. The original pixel came out the same year and cost hundreds more, less support, and my experience has has been disappointing in regards of hardware quality.
Just look at the used market and compare Pixels and iPhones released at the same time and about the same price. iPhones sell for about 2x vs google phones.
Still using my iPhone SE from 2016, though I have replaced the battery twice ($29 through Apple's "sorry for slowing your devices down" discount, $29 personally via iFixit) since.
Agreed that iPhones can last a great deal longer while staying relatively current on the software front these days. However, if you know that the Pixel a-series is going to stay at the $350-400 price point, you could buy two $350 a-series Pixels 3 years apart and potentially get more value/longevity than an iPhone at the $700 price point.
Of course, you could also buy a 2020 iPhone SE at $399 that'll last you 5-6 years, so if you just stick with the cheapest iPhone you'll likely save money over the a-series.
1) People use their phones long after their official support window.
2) The price of Android phones most people around me buy are 50€-200€, well under most iPhones. Also consider that iPhones are more expensive outside the US, where more people buy Androids.
I watch people buy those phones. They have a terrible experience. Charging ports fail. The phone breaks easily. Given the amount of time they spend on their phones they seem like a HUGE hassle.
> Then there’s an ever-growing suite of services that Apple conveniently puts in front of iPhone holders.
I wonder just how popular many of those services would be if Apple competed with them on a level playing field instead of leveraging their control of the hardware and operating system to advantage their own services.
Disagree. They have sucked up TSMC's low nm bandwidth. They are becoming the Intel of ARM, and it wouldn't surprise me if they become a hyperscaler as a service.
AAPL is not a company anymore, it's a store of value like Bitcoin. Except it's centralized and relies on countless intermediaries.
It doesn't matter how many phones they sell. The only thing that counts is how much of all newly printed fiat currencies their stock can capture from investors and if the next generation will agree to continue the ponzi.
This is basically the most optimistic outlook to have, but I think there's a real case to be made for this:
With ARM Macs we could also potentially see 5G connected laptops which could be purchased 0 down through a cell carrier + the potential for iPad to be running containerized Mac apps within a couple years, making them a viable computer at less than $500 that offers a vastly superior experience to anything else at that price point.
Imo this could lead to significant market share gains and its not impossible that Apple could end up with > 50% market share across all device categories in the U.S. within a decade, with all of those devices being profitable AND pushing you to use their services.
Cheaper because it’s something that’s done on a daily basis in the mobile industry. Not technically difficult but Apple’s entire stack aside from laptop/desktop is ARM. That means everything from drivers to silicon integration is “done” for ARM. You’ve still maybe got system integration differences you need to spend engineering cycles on since it’s a different form factor but everywhere else you’re sharing costs.
It could be that was the entire goal with Intel's 5G efforts (that failed). The licensing of the 5G chip is probably what's driving this - and that's on Qualcomm.
I got a Chromebook for a relative to replace their anemic Windows netbook and it was a large improvement day to day, requiring less support. I use Windows personally, but I have no idea how the low technical knowledge parts of society have managed to survive.
It depends, usually a chromebook because all they do is email, facebook, web browse, zoom. It is someone that actually uses a computer it's one of the user friendlier versions of linux. Worst case is Win10
App store regulation would be industry-wide. They've been targeted by Epic and others, but I'm assuming that's because the number of devices and market share make them the first target.
It would be interesting to propose alternatives that support running unsigned or alternatively signed binaries. For example, if a Windows user is tricked into running malware, how do they address the issue with Microsoft? Are there ways consumers can get a live person to connect to their PC and walk them through fixing the issue? Or is that an additional fee? If we tell all device manufacturers, including game console vendors, to add a software switch that allows us to install our own binaries or point to any repo we want, we should expect vendors to provide basically the same experience.
Their Apple TV+,or whatever its called, the competitor to Netflix, is underwhelming.
In India, it costs about 2 USD a month. It has tied up with various regional media houses to cater their content,but the catch is you have to pay them additional monthly charges, to access them through Apples service.
Their originals are quite few. For a company that has so deep pockets, one would have expected atleast a few months worth of shows to watch while their catalog is refreshed. Disappointing.
Apple Music, while good, is just one of the competitors. Amazon Prime music and Spotify and a few others, are equally good. Music content, in a world where streaming is fast becoming the norm, will eventually spread to all services. So eventually Apple Music becomes a commodity, competing only on price. Something Apple never does. And content exclusivity aint gonna work with the biggest names. Lady Gaga sure as hell wont agree to stream her songs exclusively on Apple.
The only strength is a large base and integration with existing services, but in that case too, the profit margins are not as great as hardware.
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[ 7.0 ms ] story [ 233 ms ] threadHeck, iOS 14 booted with an Ad notification and in settings to buy their subscription services.
Apple directly selling out UX for $ is certainly not an optimistic sign.
I do wonder at a much broader level if there's some way to structure society to bring the motivation & focus that young companies give us w/o the inevitable slide to evil that capitalism and investors demand.
Can you clarify what you mean here? I associate the term "rent-seeking" with efforts to manipulate public policies in a way that advantages the company specifically over other competitors.
You seem to be talking about an ecosystem "lock-in" approach, which is something different than "rent-seeking".
> rent-seeking means seeking to increase one's share of existing wealth without creating new wealth
I think the distinction is probably phrased as seeking to increase one’s share of wealth without providing a commensurate amount of value in return.
It could drop quickly for Spotify if Apple decides to ban them from the app store like they did Fortnite, which will in part depend on Spotify trying to get around the App Store fees like Epic did.
And things could change drastically if the lawsuits currently springing up against Apple's fees and monopolies end up successful.
But then, it'll likely mean "Apple makes less profit" than "Apple is destroyed". Remember, Apple has nearly $200 billion in cash, as well as a 20% profit margin. They pump a lot of money into R&D (nearly $20 billion a year, still climbing every year). Basically they're very secure, financially speaking.
Lets come up with valid examples to compare/contrast.
I really hate Apple's spammy advertising; it seriously damages the user experience (not to mention Apple's reputation and brand) for no good reason.
Obviously spammy and obnoxious advertising works to some extent or companies wouldn't do it - but user goodwill takes years to build up and probably shouldn't be sacrificed on the altar of short-term monetization.
If Apple's services are actually good, then users shouldn't need to be spammed with obnoxious alerts and preinstalled adware. It should simply be an optional (and opt-in) add-on that's included in the box like a "free" code for a year of service if you want - and I think they do that already for Apple TV+ and Apple Arcade. If it's worth it, people will renew. Word of mouth and regular non-spammy advertising should do the rest.
Apple have taken their absolute dominance in selling music and moved to middle of the pack in music streaming squeezed between Spotify and Youtube.
They're late to TV streaming and somehow, despite being incredibly closely linked to Disney have failed to tie up a deal.
Apple's Siri is distinctly second tier, losing them both for Apple Music, but also potential shopping via smart assistant.
iCloud comes across as Apple nickle and dime-ing their customers, insisting you need to back up your phone but providing laughable amounts of storage for free - and then becoming nagware.
Then you have Apple One - Apple's bundle. Which offers a whole selection truly terrible deals. Did you know you can pay $15 per month for enough iCloud storage to still not be able to back up your iPhone. For $20 a month your whole family can share less storage space than each of you probably needs individually. Double that price with practically no other benefits just to be able to actually use iCloud for a macbook. What do you think when you think Apple? iPads, iPhones, Macbooks. So obviously, their headline bundle includes literally none of those products even as an option. Oh and AppleCare - the only thing people actually do subscribe to... not included either.
Not forgetting the handful of absolutely forgetable bundled products, Apple Arcade, Apple News+ and Apple Fitness+ (which doesn't exist). Filling your bundle full of rubbish that no one uses isn't a good strategic move. If you had a bundle of 20 things it would be fine, but a bundle of 6 things, 2 of which should be bundled with hardware, 2 of which are mediocre, is just not compelling.
Finally you've got the Appstore. Apple is getting absolutely hammered on their 30% fee. At this point it looks almost certain that they'll either change their fee structure or face regulatory action.
So yes, fine, we can talk about Apple's move from products to services. But if we're going to do that we need to do it in the context of "Apple is failing to move from products to services". There is no clear path for Apple on the services side. If Apple is a services company why isn't FaceTime adding $100Bn of market cap to Apple's value as a competitor to Zoom?
You're complaining mostly about Apple charging too much for not enough.
But since people are signing up for these things in droves, Apple is making $$$$, which means Apple's strategy is succeeding.
Apple's services strategy pays off when it makes a lot of profit, not when when you feel like you're getting amazing deals on everything. Apple's never been a budget-product company, it's always been high-end.
Apple is having success at pushing people who already have iPhones to buy services in the same way that Microsoft as realy good at getting people to use Internet Explorer. But Apple's success at pushing people into services revenue isn't a long term indication of strength.
Spotify will always dominate marketshare - it has a free tier.
It has nothing to do with free tier. Spotify is dominating even if you only count paying subscribers.
If anything, there are more even-handed relationships between wrist and label than there ever was.
https://www.midiaresearch.com/blog/music-subscriber-market-s....
In contrast, people go out of their way to find and download Spotify.
Somewhat off topic, but who's idea was it to kill their iconic iTunes branding for the generic "Apple Music"?
I also wonder too what Apple's marketshare is on iPhones - I'm sure it is a higher percent.
You might as well include ripping CDs if that's your criteria.
That's enough - their products don't really have to be the best. They'll win by competition not being able to surpass them due to restrictions.
You mean they will risk killing their core products so they get to anti-competitive benefits on other markets?
I believe you are correct, but that's risky on more than one way and isn't good for their long term bottom line.
This is how you get a lot of seemingly dumb corporate decisions.
You mean they might do that although the team's product isn't any good?
Good for the team, career wise, but not the company?
> prove by choosing the corect set of metrics
That means bad managers "proving" that their product is good, or good managers/execs showing that the product doesn't work so well?
It's always been worth it, too, when it comes to hardware (this is debatable, but obviously they're successful). The problem with their services is that they are NOT worth it. They aren't high end. Their services aren't the best. They're middle of the pack (music, movies, TV) or trailing (cloud, search, productivity software, AI). So all their finely-tuned marketing/operations machinery geared to sell "the best" don't work for their services.
My wife currently has no way to listen to any of the music we legally own, using her iphone. So guess whose next phone is going to be Android, with an SD card containing 1TB of music we own? The other advantages of iphone are not important to me, and the apps she uses are available on the playstore. For bonus points I can buy her a pretty decent Android phone for a few hundred bucks, instead of a new device costing well over a thousand.
I understand Apple wants to push everyone to monthly paid services. As a customer, I DO NOT want yet another $10/month expenses - I've got a lot of those already. I just want to listen to music I already own.
There are so many ways to do this I can't even list them here.
You can store songs locally on your iPhone, or upload them to a cloud-based service if you've got a full terabyte of them.
But the idea that an iPhone can't play your music files simply isn't true. Also you can buy a pretty decent iPhone for a few hundred bucks too, that will last longer than your Android one. The only iPhone "well over a thousand" is the high-end flagship model.
Nobody really cares, especially not Apple.
Additionally there's no new game-changing products filling the void.
> converted my entire CD collection to digital, and managed it happily using Itunes
The Apple II would like to politely disagree.
The advantage has always been that the company attempts to make computing appliances for users who want to do something besides “compute.”
Sure people infatuated with computing as a thing in itself have also always been welcome, but (unlike its contemporaries) those weren’t the only people welcome.
Introductory price US$1,298 (equivalent to $5,476 in 2019)
I think the general reception of Apple One has been pretty good.
> At this point it looks almost certain that they'll either change their fee structure or face regulatory action.
I want this to be true, but honestly I wouldn’t hold my breath.
Someone had brought in their iPhone and it needed to be wiped for repair. The rep was pushing iCloud under threat of losing their data. It seemed like such a scam. I can only imagine what it feels like to be tech-illiterate and told you must buy a subscription or we'll wipe your family photos.
A 'premium' phone like an iPhone should really have a free backup for at least the data size of the phone. At the very least you should be able to get iCloud free for when your phone is in for repair.
On the flip side, while I agree with you on the free tier for data size, I feel like that would be unsustainable. It would raise the price of the phones even higher than they already are. It would be nice if the tiers were restructured so that the bottom tier fully covered the storage capacity and I would love something more than 2TB for the max.
I’d say it’s not economically feasible, but they built an entire robot for fixing iPhone screens, it probably is economically feasible unless you really value the iCloud backup revenue that geniuses get in store.
> Apple have taken their absolute dominance in selling music and moved to middle of the pack in music streaming squeezed between Spotify and Youtube.
That is true, but Apple is estimated to have almost ~70M subscribers and Spotify has ~290M. Not sure how many of Apple's are paying but that's a lot of people who find Apple's service at least "good enough" which means less revenue for Spotify and competing services. If apple decides to provide a platform for music creation and direct publishing to Apple Music, that creates more lock-in.
> They're late to TV streaming and somehow, despite being incredibly closely linked to Disney have failed to tie up a deal.
Apple being late is a pretty frequent occurrence but execution is what can set them apart here. I doubt Apple will invest the billions it takes to make good entertainment but time will tell. They succeeded (in the USA) with maps and the Apple Watch so far.
> Apple's Siri is distinctly second tier, losing them both for Apple Music, but also potential shopping via smart assistant.
No question there - Siri is still a mediocre product but it is also accessible across their devices. Assistant is better but only if you have an Android phone or the Google app. If you want to buy a smart speaker, you have to _device_ which service you want versus "If Apple makes this speaker, I know it has Siri and works with my devices".
> iCloud
Yep that's a joke and bad deal. Storage is quite cheap so I don't get why Apple won't expand the options.
Apple One is a rough start but I expect them to refine it and slowly add options to improve the offering. Fitness+ could be huge if they pair it with the socioeconomic class of people who go to spin/yoga/pilates/crossfit classes and view fitness as a badge.
They can create a social network effect like Strava and build partnerships with Peloton, Flywheel, etc. (I'm not the right demographic so this is a guess). Apple could partner with hospitals for health data sharing with doctors and maybe get insurance companies on board for discounts.
> Finally you've got the Appstore. Apple is getting absolutely hammered on their 30% fee. At this point it looks almost certain that they'll either change their fee structure or face regulatory action.
+1
> If Apple is a services company why isn't FaceTime adding $100Bn of market cap to Apple's value as a competitor to Zoom?
Because Apple sucks at making services for a world that's not Apple-focused which is what you need to survive in enterprise. I'm okay with Apple dominating cross-platform video calling ...
Overall, I think the ease of a customer using their Apple ID/Device for _everything_ is hard to overstate and is Apple's long term play.
For films: Netflix all the way. Do not even get me started on the #@%^$# signup process for Apple TV
iCloud: I needed, do not see an easy alternative :(
Apple one: yeah, no thanks.
Appstore: I needed and it is fine for my needs.
Apple Music: Like it, works great for my needs and works fine with Shazam. Do not try to play anything they suggest however. From play lists to "specially for you" it does not even come close to what I want to listen to. Playlist management overall is terrible too.
Apple Car Play: NEEDS A WIRE, in 2020! I got a wireless charging thingy in the car (Audi 2019), and keyless entry, but I need a cable to use Car Play: disappointing to say the least.
Your other examples: did not know they existed, no need for them.
So basically I am using the same old Apple services since day one and see no need at all to switch to anything existing. If they would allow me to host my email from my private domain however...
Love the "live long" updates, the interface and the styling of the devices and the (perceived) privacy enough to stick in this ecosystem.
FWIW, iOS has supported wireless CarPlay for a while. It's up to car manufacturers to implement it. Vehicles that support it are listed here: https://www.cars.com/articles/wireless-apple-carplay-and-and...
Meanwhile Android Auto got wireless in 2018 only for Google and Samsung and is just now getting around to being wireless in 2020, but only with phones running Android 11 and still only in 36 countries.
Apple Fitness+ will be the same with only 6 supported countries.
Had a previous $4/month subscription to WSJ, but cancelled it and switch to News+; which gives me access to a few other paywall news services without having to pay separately for those.
Note: I am in the US, so maybe the deal is worse in other countries.
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To address your points:
> Apple have taken their absolute dominance in selling music and moved to middle of the pack in music streaming squeezed between Spotify and Youtube.
This is your point I agree with most, Apple music just isn't as good and its shocking they lost so much ground.
> Apple's Siri is distinctly second tier, losing them both for Apple Music, but also potential shopping via smart assistant.
Siri just isn't good but honestly how many people use voice assistants for more than changing songs or checking the weather?
> Cloud comes across as Apple nickle and dime-ing their customers, insisting you need to back up your phone but providing laughable amounts of storage for free - and then becoming nagware
Agreed it is laughable but I would argue people concerned with backing up all their devices are in the minority of Apple customers. It wouldn't be why most people pay $15 a month.
> Finally you've got the Appstore. Apple is getting absolutely hammered on their 30% fee. At this point it looks almost certain that they'll either change their fee structure or face regulatory action.
I don't really see how this is relevant to the mediocre services Apple offers except it is an unfair advantage they have on other SaaS competitors. I suspect it may be one of the reasons they haven't already decided to swallow SaaS competitors like Spotify, so they can say the app store is competitive and not disturb the golden goose that is the 30% fee.
> If Apple is a services company why isn't FaceTime adding $100Bn of market cap to Apple's value as a competitor to Zoom?
I don't think market caps, especially with the past years stock market, tell us much about the effectiveness of services. However, Apple's current market cap is 2 trillion, 20 times the cap of Zoom. To add to this, Zooms P/E ratio is 530 compared to Apples P/E of 36 which indicates Zoom is wildly overvalued. Even if it was a useful comparison Apple is in a different league.
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I think Apple's biggest problem is the lack of one killer service to offer as part of their bundle. If they offered mediocre Apple music, Apple fitness and Apple arcade but Apple TV was on par with Netflix most people would use the mediocre services to save on the gaining number of other SaaS products modern consumers pay for.
Apple has the money and talent to create one killer service, they just haven't been running a lot of their services long enough to be killers - (with the exception of music). I think it's just a matter of time until Apple create a killer service and people getting sick of paying for multiple SaaS products.
What's forgettable about Apple News+? Its got a ton of magazines. If you read just a handful a month it beats the newsstand price.
It also includes WSJ. On iOS and iPhone (but annoyingly not MacOS) that means when someone submits a WSJ link here on HN and you click it and hit the paywall, you can simply hit the "share" button in Safari and pick "News" from the sharing options to go to the story in the News app.
Agree on the quality of Apple Services. All of these problems and questions requires first looking into Apple Services Revenue.
Both App Store Revenue and Google Placement are nearly 100% margin. Popular belief is that Apple only makes 20% margin on App Store because that is what they took as cuts. In reality App Store Apple only book their 30% / 15% cut as revenue, and nothing else from Gross Margin Stand point other than payment processing. Google Search Engine placement deals are also ~100% margin. Both of these Revenue has been growing, and they are literally, pure profits.
And a reminder, Apple report Gross Margin of its Services Revenue as 60-70% over the past few years. ( I remember they only start giving out this numbers in 2016 / 2017 )
Apple foresee that problem fairly early on. You cant tell the world we have services revenue of 9x% Gross Profit. They need something, something to help dilute down those margin. And First enter Apple Music ( 2015, although the acquisition of Beats happened in 2014 ).
Music Streaming Services are basically a thin margin Business. 75% of your monthly subscription are payment to Labels, regardless of how many minutes your customer listens to and how many customers you have. For Apple, they pay a little higher than ~75% which is what Spotify pays, and gets a good PR with paying more to help out artist. They then end up with a Gross 20% Margin Services, or even less as they could also afford to give out more free trails and student discounts. I would not be surprised if it was running at at lost in the early days.
Then there is iCloud. Remember when iCloud used to cost more than Google? That make sense because Google and Microsoft have their own DC for storage and gets better unit cost. While Apple, tends to ( and AFAIK continue to ) use GCP, Azure and AWS for their iCloud Storage. In 2015 they announced their new pricing and stay competitive with Google. And has been pushing its users to iCloud Backup. iCloud also has a clear Unit Cost and are low margin business, this also helps Apple to dilute its Services Revenue Margin.
And you get the idea, it is the same with Apple News+ ( Cost per Article Read ). Basically Apple could afford to offer services to its customers running at very low margin or at cost.
So What about Apple TV+ and Apple Arcade? They have zero on going cost, Apple pays TV / Movie up front, along with Games inside the Arcade. This is a large up front investment, which ( on the surface ) goes well with Apple Cash pile sitting there doing nothing. With Apple TV+, Apple could afford to give you a year worth of free services. It doesn't cost them anything as they are already paid down. ( I believe there will be a small percentage of Arcade paying to studios as on going maintenance, so you dont see Apple giving out Apple Arcade for free like Apple TV+, only three months trial )
If Apple could get enough customers to pay for Apple TV+, as long as it reach above their initial / ongoing investment, they would have profits, aka Netflix. But that is not what Apple is doing here. It was part of the Apple One plan.
Apple could not simply bundle iCloud and Apple Music together and give you discount on the bundling. There are no margin left to lower price. But if you throw in Apple TV+ and Apple Arcade, all of a sudden the bundle offer more value ( on the surface ). As they could afford to lower price. In the Apple One Individual bundle, Apple is essentially offering Apple TV+ and Apple Arcade at half the price.
In 2018 / 2019, Apple also put $10 per iPhone / iPad / Apple TV / Apple Watch sold towards Services as their OS and Maps and Siri usage cost. All of a sudden Apple can now start putting lots of things into Services segment as cost.
Which leads to IAP. You need both All Margin Business to grow as well as Thin Margin. That is why you start seeing Apple's aggressive push into IAP in the past 2...
You deduced that from the "record breaking quarter breaking all estimations" part?
I also really don't really understand the attitude that this is a problem. Apple could half their current sales numbers and still have a massively profitable business that most people could only dream of. As long as that lower rate was sustained then there isn't really a problem for the company.
I highly doubt this. A flagship iPhone costs $1000+. I would consider the Pixel 4a to be a "bit cheaper high end Android phone". You can buy a stack of 3 Pixel 4a phones for $1050. Are you confident 1 iPhone can outlast 3 Pixels? If you go to mid range Android you can get stacks of 4-6 phones. You could get 4 Moto G Power for $1000. My $250 Nexus 5X has lasted me 4+ years now, so a stack of 4 of them could last me 16+ years before hardware failure. In reality though, Android/app updates make my phone more and more sluggish over time and so I'm forced to upgrade every ~3 years to get a snappy experience again.
Extremely, because I've owned several pixels and iPhones of various models. As an example I got my partner an iPhone SE in 2016 and it's still working perfectly, it even still looks good. Not only is it still getting updates, it runs the latest iOS. The original pixel came out the same year and cost hundreds more, less support, and my experience has has been disappointing in regards of hardware quality.
Just look at the used market and compare Pixels and iPhones released at the same time and about the same price. iPhones sell for about 2x vs google phones.
Agreed that iPhones can last a great deal longer while staying relatively current on the software front these days. However, if you know that the Pixel a-series is going to stay at the $350-400 price point, you could buy two $350 a-series Pixels 3 years apart and potentially get more value/longevity than an iPhone at the $700 price point.
Of course, you could also buy a 2020 iPhone SE at $399 that'll last you 5-6 years, so if you just stick with the cheapest iPhone you'll likely save money over the a-series.
1) People use their phones long after their official support window.
2) The price of Android phones most people around me buy are 50€-200€, well under most iPhones. Also consider that iPhones are more expensive outside the US, where more people buy Androids.
Apple should make a blockchain and partner with old banks to swipe the new trend.
I wonder just how popular many of those services would be if Apple competed with them on a level playing field instead of leveraging their control of the hardware and operating system to advantage their own services.
It doesn't matter how many phones they sell. The only thing that counts is how much of all newly printed fiat currencies their stock can capture from investors and if the next generation will agree to continue the ponzi.
With ARM Macs we could also potentially see 5G connected laptops which could be purchased 0 down through a cell carrier + the potential for iPad to be running containerized Mac apps within a couple years, making them a viable computer at less than $500 that offers a vastly superior experience to anything else at that price point.
Imo this could lead to significant market share gains and its not impossible that Apple could end up with > 50% market share across all device categories in the U.S. within a decade, with all of those devices being profitable AND pushing you to use their services.
It would be interesting to propose alternatives that support running unsigned or alternatively signed binaries. For example, if a Windows user is tricked into running malware, how do they address the issue with Microsoft? Are there ways consumers can get a live person to connect to their PC and walk them through fixing the issue? Or is that an additional fee? If we tell all device manufacturers, including game console vendors, to add a software switch that allows us to install our own binaries or point to any repo we want, we should expect vendors to provide basically the same experience.
I use a 1+ year old iPhone XR, and it is more than enough for me. It is my first iPhone, and I am 100% satisfied with it.
As long as consumers have iPhones (no matter which ones) Apple will make money on services.
In India, it costs about 2 USD a month. It has tied up with various regional media houses to cater their content,but the catch is you have to pay them additional monthly charges, to access them through Apples service.
Their originals are quite few. For a company that has so deep pockets, one would have expected atleast a few months worth of shows to watch while their catalog is refreshed. Disappointing.
Apple Music, while good, is just one of the competitors. Amazon Prime music and Spotify and a few others, are equally good. Music content, in a world where streaming is fast becoming the norm, will eventually spread to all services. So eventually Apple Music becomes a commodity, competing only on price. Something Apple never does. And content exclusivity aint gonna work with the biggest names. Lady Gaga sure as hell wont agree to stream her songs exclusively on Apple.
The only strength is a large base and integration with existing services, but in that case too, the profit margins are not as great as hardware.