Strength in numbers: Apple’s best weapon still packs much untapped power; more affordable iPhones and iPads would unleash it

“Apple’s annual ritual of touting the prodigious growth of its App Store brought forth some breathtaking numbers: $20 billion paid out to developers just last year, 40% growth in 2016, 2.2 million apps available,” Mark Rogowsky writes for Forbes.

“Sales have about tripled over the past three years. And if 2017’s growth keeps pace, the App Store will do more business this year than Oracle — the world’s second-largest software company,” Rogowsky writes. “But for all the success Apple has had selling apps on behalf of a myriad of developers, it seems as though its just scratching the surface of what might be possible.”

“Take for example subscription services, which became available in all 25 App Store categories last fall. When iPhone, iPad, or Apple TV customers sign up for a service through the store, Apple not only gets paid once, but on an ongoing basis,” Rogowsky writes. “Look for this segment to expand substantially in the next several years as app developers embrace software-as-a-service models akin to how modern software is sold to businesses. Subscription services incidentally grew 74% last year, reaching $2.7 billion.”

“Against that backdrop, it becomes reasonable to argue that Apple should do whatever it takes to get a bigger slice of the smartphone and tablet pies, pushing for share gains on iOS,” Rogowsky writes. “The more Apple can grow the App Store overall, the more it has a recurring revenue business that, while related to continued sales of high-margin iPhones, doesn’t boom and bust precisely along with them.”

Read more in the full article here.

MacDailyNews Take: Rogowsky’s argument for Apple to offer more affordable iPhones and iPads — taking the margin hit upfront for recurring revenue over time — is strong.

iPads are too expensive relative to the perceived competition and Apple has obviously done a piss-poor job of marketing the iPad family (read: clearly explaining to the hoi polloi why they want an iPad over an Amazon or other Android tablet).

Sticker price is the biggest reason why iPad sales struggle to return to growth (the next biggest reason is that iPads’ useful lives last so damn long, they’re not rapidly replaced).

We would have purchased iPads for family members this year if they had been updated as they should have been for the holiday season and if the prices were a bit more palatable. Yes, we know what an iPad offers. Yes, we know they’re worth the money Apple’s asking for today; even being last year’s models. But, Apple should really do the math and consider making certain hardware more affordable in exchange for the backend revenue and increased mindshare and market share that will deliver.

For the same reason – mindshare – Apple should make their own Apple displays, even to the point of taking a loss of each and every one, so that other companies’ logos on frankly ugly products that do not match Apple design sensibilities are not in users’ faces all day long. That’s not a difficult concept to grasp; even an inveterate beancounter might be able to get it.

SEE ALSO:
Apple’s App Store earned $8.6 billion last year – January 5, 2017

15 Comments

  1. I own two iPads – a 12.9 and a 9.7 pro. My family is well aware what iPads can do. However, they all purchased Amazon Fire tablets – and they love them.

    They are not Apple haters either – everyone of them owns an iPhone and at least one Mac.

    Amazon Fire tablets are a better fit for how they use a tablet and the price they are willing to pay.

    Please Wake Up Apple!

    1. I’m curious what iPhone owners do an an iPad when all their favourite apps are not there. Does it just become a web browsing platform or what? I wouldn’t consider running a different OS on phone and tablet.

  2. I have bought 3 iPad 2s and 1 original iPad for kids. They all were loved and the 2s are still going (some cracked) and all have super thick cases making them huge and heavy.

    I have also bought three Amazon Kids Fire tablets new for less than a used iPad 2, with one year free kids software and free 2 year replacement.

    I will never buy another iPad for a child.
    They may be a better product, but Apple has lost the kids market. They could EASILY make a store and access sites just for kids instead of the half-ass parental controls.

    Thanks Apple!!

    1. Kids with tablets? GTFO! Parents giving tablets to pre-teen?!?

      Leave kids to earth.

      Apple has no interest in selling top tech to kids…
      Because you know, education first…

      Lame

    1. Nobody said “cheap.” When your products have inaccessible prices relative to the competition, you either have to successfully educate the public why your products are worth the price (Apple has failed here with iPad) or lower the prices in order to compete/restore growth. Apple has priced itself out of the mainstream tablet market with iPad pricing. They’d make more on the back-end in services revenue if they dropped prices and got their products into more people’s hands.

      1. Stay with your sub/product bro.

        They are already making the biggest services revenues all tech combine by far…

        And FYI, Apple is no mainstream. People brought Apple there.

        I am sure you never experience a side by side bench on usability between an iPad and a Android tablet product. There is a world of difference. Get a higher degree in order to afford… Ho wait! You’re learning on a Android tablet… Too bad…

    1. Apple does need to drop prices if it wants to remain in the computer market. If it just wants to sell jewelry to affluent consumers, then it’s doing a fine job losing customers. The tipping point has arrived

  3. Agreed! Apple used to drop prices as technology improved. They used to focus on delighting the consumer. Now, they focus on how they can eke out more profit for the company. It’s not as if this profit has really rewarded shareholders as of late, either. Its stock has been sideways and down for about a year.

  4. I can’t remember the last time is saw an ad on TV or billboard for an iPad. Sure it’s been over a year since it was updated so you may say no ads were needed. But it’s still being sold so you’d think they’d still advertise it. It’s as if it’s totally fallen by the wayside.

    This should be fixed asap.

    1. I agree, however I think the Mac needs much more focus. Apple now seems to be unable to do more than one additional thing besides the annual iPhone refresh, and the biggest profit market opportunity after the iPhone is the Mac. iPads are crippled by a lousy operating system, so unless Apple contines to ignore its user requests for Mac updates, they will never sell as well as Macs do.

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