“While it has only been a few weeks since I last said it, it’s worth repeating in context of Apple’s recent financial results: iPhones don’t matter any more, it’s what you do with them that counts,” Jonny Evans writes for Computerworld.
“Apple has already recognized this as a likely outcome within the digital transformation of everything. This is why it has worked so hard and so long to build a strong business around services,” Evans writes. “This model isn’t just about selling people Apple Music, iCloud and iTunes Match subscriptions, App Store sales of Apple Pay trades; it’s about connecting you to an ecosystem you love to be in and making it easy for you to stay there.”
“Apple’s overall platform ecosystem is becoming far more important than the devices used within it,” Evans writes. “Apple’s ecosystem will be the driver of future growth.”
Read more in the full article here.
MacDailyNews Take: When, if ever, will Wall Street figure it out?
Apple services now reach 124 million U.S. adults as user base expands – April 21, 2016
Apple’s services business saw massive 60% profit margins in 2015, more growth expected – April 20, 2016
Credit Suisse: Apple’s underappreciated services business could be growth engine – April 4, 2016
Apple highlights services in search of Wall Street’s love – January 26, 2016
I accept the point that Jonny is making about services, but the fact remains that those services need something to run on – typically an iPhone.
It’s still important for Apple to sell a lot of iPhones and other devices in order for the demand for those services to be high, but of course it’s very beneficial that Apple’s service profits are now so substantial.
Alan — but that’s kind of referenced there — it isn’t just an iPhone, but a TV, a watch, a Mac.. a car… a top line android phone. Sales matter but it’s not an all or nothing game any more.
No devices no profitable service.
Jonny – I did say ” iPhones and other devices”.
The important thing is for the Apple platform ( ecosystem ) to be big enough for the services to flourish. For the near to medium future, iPhones certainly matter because nothing else that Apple makes is selling in anything like those numbers, but of course things can change quite rapidly. There was a time not so long ago when we might have said the same thing about iPods.
I think the subtext there is that as the service model evolves, AAPL services will be available to other platforms. Particularly those that are fundamentally incapable of offering such services in a profitable way because: ##fragmentation.
Apple’s really going to win this one. Though I also imagine they’ll need to create some automated factories from place to place to protect themselves against an increasingly unpredictable China.
Apple is also going to have to figure out how to create simple separate focused apps out of the mess called iTunes.
I am not particularly bullish on that one, as Ive seems to have no idea how to lead software design.
But Apple’s services are the worst in the industry.
Make computers that people want to buy. Not thinner, lighter, or mini.
Make a pro machine worth investing in.
There. There’s $5k that they lost from me this year already. That’s about 9 iPhones at full retail.
Worst in the industry? My **rse.
If that were true (and it isn’t) how come no one uses anything else (much)?
Anecdotal prejudice dressed as opinion without a single non-self-referenced statistic to back it up. Why do you come here?
In order of operability:
1 Dropbox- world class
2 Amazon cloud Service 10/TB/yr. Fast and reliable except for the first sync wnhich takes less time than a Mac does indexing for Spotlight
3 Google Drive- Works fine
iCloud – overpriced, proprietary, slow, limited to Macs except through the arcain method of browser retrieval.
Apparently, you don’t
inter operate in a world full of myriad devices.
“Make computers that people want to buy.”
Yehhh, it’s unfortunate SO few people are buying Apple computers – unlike the soaring sales of Dell, Microscum, etc.
Compared to Apple, Dell’s computer sales are indeed soaring.
Dell PCs sold 1st quarter 2016: 9.1 million, -0.4% growth
Apple Macs sold 1st quarter 2016: 4 million, -12% growth.
Profit on units sold.
“… it’s about connecting you to an ecosystem you love to be in and making it easy for you to stay there.” You could have said the exact same thing back in 1988! Within the Mac ecosystem things were great. Things “just worked”. Tie the Apple (Mac back then) ecosystem into the rest of the world and things start(ed) falling apart very, very rapidly. This “within Apple’s ecosystem” versus “outside Apple’s ecosystem” is part of the reason the vast majority of the information technology world looked at people who used Apple products as a “cult”. You were either part of the cult or you were not.
The problem with the author’s premise, as others have pointed out, is you need platforms, whether they be iPhones, iPads, Macs, Apple TVs, or even Apple Watches on which Apple’s customers can run this ecosystem. Those products *MUST* be world class and cutting edge. Except in Apple’s flagship phones, Apple seems to have given up on being there (and even in some areas of those flagship phones too).
Go back about 15 years ago or so to when I attended a major computer tech conference and a senior exec from Oracle was the keynote speaker. During the short Q&A after his address he was asked about platforms on which to run things like Oracle. His response? Buy Apple’s XServes! Buy lots of XServes! He claimed nothing was more cost effective for doing things that Oracle does whether you were going to run Oracle or something else. Nothing. It somewhat shocked the audience. Would *any* Oracle exec make any kind of statement like that about Apple hardware today? Absolutely not. Even Apple’s enterprise partner, IBM, does not come even close to making a statement like that–not even in private.
Apple needs to get back in the business of developing and shipping hardware that just blows us away.
I agree with you.
one example comes to mind:
in the Education market Apple has dropped to 10+% while Chromebooks has gone up to 55% (probably more now as this was last year’s news).
So if Apple was trying to sell services to schools like iBook textbooks (not sure if it is but it’s an example) the market is vanishing.
The hardware platform is crucial.
(btw. what happened to the education market is bizarre. Why did apple mot keep it’s eye on the ball when it’s SVPs and CEO have time for charity events, social work etc ? These are not bad things except that the BUSINESS of Apple is slipping. I was thinking they could have made a variant of OX (like Apple TV OS is a variant) for schools with netbook like Macs and central servers. This variant could be used by banks, internet kiosks, other institutions etc. )
Apple still makes >90% of the profits in the smartphone industry, and iPhones don’t matter anymore? Idiot writer…
I agree with you partly and have stated similar in the past
(so i didn’t down vote you)
BUT I must point out:
that 90% profit is HARDWARE sales, so if iPhone sales are shrinking the amount of $$$ there will drop.
Services depend on marketshare (unless they move heavily into providing for Android).
as an aapl investor I really hope iPhone sales and profits will remain stellar. But Apple needs also to MAX hardware sales. Not pushing macs for example , no Mac advertising , some Macs not upgraded for years when Mac revenues exceed iPads is crazy.
WTF? I appreciate Jonny Evans’ examination of the importance of the iPhone ecosystem. But it’s off-the-wall to say that the iPhone itself doesn’t matter. The iPhone is THE DOORWAY into ALL of the iPhone ecosystem. Apple doesn’t offer all of its ecosystem to other phone providers.
And I can’t imagine why anyone knowledgeable about smartphones would want to use another maker’s phone to access Apple services. The only serious alternative at this time is an Android based phone. And Android is in a catastrophic security mess thanks specifically to what’s called FragmAndroid: The inability or unwillingness of ALL Android phone makers to run the LATEST version of Android.
Like any complex software these days, Android is consistently discovered to have security holes. Google and their open source Android group are consistently patching Android. But unless you’re using an Android phone designed by Google themselves, you’re hosed! You get to wait and pray that your smartphone manufacturer catching up with the latest Android security patches before YOUR phone gets attacked and taken over, aka PWNed. There are at least TWO catastrophic Android security holes discovered and made public every month, at this rate. April has been no exception.
Then there’s Google’s poor vetting of software provided at their Google Play store for Android phones. Trojan horses are consistently discovered at the Google Play store to this day. MILLIONS of Android phones have been either infected or PWNed by malware. Please go check out the literature yourself and don’t trust my statements! This is serious.
Apple’s iPhone ecosystem is relatively FREE of these problems (unless you ‘jailbreak’ your iPhone, in which case you’re on-your-own!). I’m glad Apple has competition from Android. But Android has a LONG way to catch up with the Apple iPhone ecosystem.
This headline should read “6+ Reasons Apple iPhone Devices…”
One need not pluralize Apple product names
Well, if Google keeps going in the way they are now, Apple won’t really have to renovate much, just tell the world that there are no viruses on iPhone and they’ll get whatever Apple gives out. Apple just has to make themselves look good in public eye, and the public will go after them, no matter what hardware they get.