iPhone sales are falling, and Apple’s app fees might be next

“As iPhone sales slip, Apple has been positioning its booming digital-services business as its new profit engine,” Michael Liedtke writes for The Associated Press. “But there could be a snag in that plan.”

“A brewing backlash against the rich commissions Apple earns from all purchases and subscriptions made via iPhone apps could undercut the app store, which generates about a third of the company’s services revenue,” Liedtke writes. “Late last year, Netflix rebelled against Apple’s fees, which can range from 15 percent to 30 percent. Analysts fear other companies may follow. And attorneys representing consumers in a pending Supreme Court case charge that Apple is an unfair monopolist in the market for iPhone apps. An adverse decision in that case could open a legal door that might eventually force Apple to cut its generous commissions.”

“Besides the app fees, Apple’s services division includes revenue from its Apple Music streaming service, iCloud storage, Apple Care, Apple Pay and ad commissions that Google pays to be the iPhone’s built-in search engine,” Liedtke writes. “Apple is also expected to roll out its own streaming-video service this spring, although few details are available.”

Read more in the full article here.

MacDailyNews Take: As we wrote late last month:

Apple built this ecosystem. There were astronomical costs and risk involved with creating, growing, and maintaining all of these products, services, and infrastructure. Apple deserves to charge fees that the market will support. If they charge too much, they will lose business and adjust said fees accordingly. Those who can sign up subscribers outside of the App Store, for example, like Amazon and Netflix, are not prohibited by Apple from doing so.

SEE ALSO:
When Apple runs the hub, who pays? – February 27, 2019

13 Comments

  1. Apple most certainly did not build the entire ecosystem. All the content providers, including Apps, are part of the ecosystem (or not).

    Last week I purchased a newspaper subscription directly from the website. What entitles Apple to a cut? With Apps there’s no such freedom.

        1. Listen dumdum, you should just do everyone a favor and go Android. Then you can go fuqqq yourself up your a–hole with Tim’s help.

          Got it, fuqqqqqwhit? Good. Aplpecyncis are just the dumdumest of people.

  2. Free market economies allow higher prices on newer and more complex products & services.

    As time continues, the real inflation adjusted prices of items fall for multiple reasons including new manufacturing technology and newer competitors. That is what happened with automobiles. It hasn’t happened yet with “smart phones.”

    As much as I like Apple’s products, I am not a blind follower in that I don’t need the features of a $1000 iPhone. The day will come when Apple makes a $400-500 iPhone, or I will probably switch.

    There is no practical way a person can have 100 extra apps on their phones and possibly keep up in using them all, unless you have nothing better to do.

    People are either selective and productive in their work or they are splattered all over the place in tech use and hold their Starbucks job.

      1. Android is available to you….

        Indeed it is, and that’s really the point:

        Now granted, we can downvote this observation because switching to Android represents an unpalatable step backwards in product quality…

        …but the reality is that regardless of which Apple product we’re talking about, there’s a practical limit for just how much “Apple Tax” consumers are willing to pay before they switch to less expensive substitutes.

        Indeed, within the science of economics, this is literally why in addition to the Consumer Price Index (CPI), there’s also the “Chained CPI” (C-CPI).

        As per Wiki, the C-CPI “…is based on the idea that in an inflationary environment, consumers will choose less-expensive substitutes. This reduces the rate of cost of living increases through the reduction of the quality of consumed goods.”

    1. You used to never see iPhones offered at discount, but you do now. Not quite to the BOGO land of Android, but it is obvious that the smartphone market has matured and there is little headroom for Apple to grow the pie.

  3. somewhat unrelated, but:
    not all of Apple’s prices make sense, I think.
    For instance, the prices for their USB dongles should be lower, at least when ordered together with a Mac that has nothing but USB-C. That may even make people buy more dongles at Apple, instead of making them feel pressured to buy dongles separately elsewhere, with all the annoyance involved.

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