Company / division: Services
Apple’s App Store Gets a Makeover – Bloomberg (Mar 21, 2017)
The headline makes it sound like there are changes coming to the App Store, but this story is really about all the changes that have already happened on the App Store since Phil Schiller took it over from Eddy Cue a little over a year ago. One of the notable things in the story is the impact that better analytics have had, and how that’s made it easier for more dynamic developers to update their apps more frequently in response to user behavior. More generally, though, the article suggests that big strides have been made in the way the App Store runs from a developer perspective, which is a story that hasn’t been told much. It’s been subtle, and if you’re just a user you might not be aware of most of these changes, but better experiences for developers make for better end user experiences too. I know there are still lots of developers, especially Mac-centric developers, who have complaints they feel have gone unheeded, but Apple has at least made some progress in fixing big pain points on the iOS side.
Apple Debuts Clips, a New Way to Create Videos on iOS (Mar 21, 2017)
Alongside the iPad announcement it made this morning, Apple made three other announcements, of which this is the most interesting (the other two concern a PRODUCT(RED) iPhone and new languages for Swift Playgrounds). Clips looks like a hybrid of Snapchat and iMovie, with lots of new filters, stickers and other effects and an easy editor for creating a montage of video clips and photos, but apparently without any kind of social component. This is a funny sort of inbetweener software product from Apple, which doesn’t have an explicit social network and whose creative tools around editing photos and videos are far less used among young people than those which come with the social networks they use. I don’t necessarily see that changing with this product, though there are some clever-looking features like auto-generating titles. The proof will be in the pudding, though – the app comes out in April, though I’m guessing it may appear in developer betas before then, giving us a chance to try it out. It’s interesting to see Apple experimenting to try to fill a gap here, but I’m not convinced it’s got it right just yet.
Six months in, iMessage App Store growth slows as developers lose interest – TechCrunch (Mar 17, 2017)
I think there are at least a couple of ways to read this data set, one of them not so good for Apple and one of them more neutral. The first is the one this article favors, which is to say that the slowing growth in iMessage apps is down to lack of user engagement with them, and I think that’s entirely reasonable. I downloaded one or two in the first day or two after they became available, thought they were fun, and have never either used them or downloaded more sense, and I would guess I’m not atypical. But I’m probably also not the target market for most of these little apps, which were always likely to be more popular among younger people and probably geographies other than the US, so I’m loath to extrapolate too much from my own experience. The other way to read this data is that iMessage apps are so ridiculously simple to create that anyone who wanted to create one did so very quickly after the tools became available, in marked contrast to Apple Watch or Apple TV apps, which required quite a bit of development time to create. And so now we’re seeing a low maintenance rate of growth from those who came to the market later or are making second or third apps. The Sensor Tower data itself doesn’t help identify which of these is the right explanation, and in reality I expect it’s a bit of both. The far more interesting data set would be revenue from these apps and how that’s changing over time.
This isn’t the first time we’ve seen a claim like this – Apple has been hinting at dropping apps that haven’t made the switch to 64-bit from the App Store for quite some time. While it’s good to get some sense of how many apps might be affected – Sensor Tower says 8% or 187,000 apps – what’s missing from this analysis is whether any of those apps are actually ones people care about or use today. My guess is that there are very few apps in the App Store which haven’t been updated in years and still see significant usage – I can only think of one app I use today which would fall into this category, and that’s because it’s been superseded by a new version which dropped some features I use. So even though the number here sounds dramatic, my guess is that dropping these apps in iOS 11 – if that is indeed what’s going to happen – will have minimal negative impact on users, and potentially remove some dead wood from the App Store in the process.
Apple’s Siri learns Shanghainese as voice assistants race to cover languages – Reuters (Mar 9, 2017)
One of the things that’s often missed by US writers covering Amazon’s Alexa and its competitors is how limited it still is in language and geographic terms. It only speaks English and German and the Echo range is only available in a handful of countries. Siri, meanwhile, just got its 21st country and 36th language, which reflects a long-time strength of Apple’s: broad global support. Apple News is a notable exception, which is only available in a few countries and one language, but almost all of Apple’s other products are available in a very long list of countries and territories, often longer than for other competing services. The article here is also interesting for the insights it provides into how each company goes about the process of localization, which is quite a bit more involved than you might surmise.
There’s not much in this report to suggest that Apple is actually interested in buying a studio, and indeed Imagine strongly refuted reports to that effect recently after those reports surfaced. Reports that Apple wants to acquire TV shows, on the other hand, are a lot more plausible – it’s already bought or commissioned a couple for Apple Music, and I could see it doing more of this, especially if it’s finally getting serious about building its own subscription TV service. The comments in here about the confusion over who’s leading the negotiations are a bit more worrying – if they’re true. Eddy Cue obviously does oversee the overall effort here as head of Apple’s content business, but he might well delegate some of the actual negotiations to other team members, and Jimmy Iovine in particular is known to have good relationships in the content industry. Recent reports about the change of leadership over Apple TV hardware suggested that Pete Distad was going to be taking the lead on these negotiations, and his name isn’t even mentioned, so there do seem to be a lot of people involved here. Hopefully Apple is clearer on this than some of those it’s approached seem to be.
via Business Insider
Apple Debuts Planet of the Apps Trailer – Recode (Feb 14, 2017)
Apple debuted the trailers for its Planet of the Apps and Carpool Karaoke shows at the Code Media conference last night. These are two of Apple’s first bits of original video content, both of which will debut as part of Apple Music. Carpool Karaoke still features James Corden on some episodes, but not all, which will detract at least somewhat from the original format, which is compelling in large part because of him. Planet of the Apps is a Shark Tank-style reality / competition show focused on apps. This clearly plays to Apple’s strengths, and gives potential competitors a big draw in the form of featured placement on the App Store. This isn’t my kind of thing – I’ve never been a big fan of reality shows – but Shark Tank is very popular, and Apple’s show mirrors its format pretty closely, so it should do well among the same people that like that show. In addition to music exclusives, these bits of video content are another unique feature of Apple Music, which should help set it apart versus the competition. But to my mind, it’s more interesting to see this as an ongoing push by Apple into original content, which for now may live in Apple Music but certainly has the potential to become the foundation of an Apple subscription video service in future, which could be a much bigger deal.
Making More Outside The Mac App Store – Rogue Amoeba (Feb 10, 2017)
Some interesting data points here from Rogue Amoeba, one of the medium-sized Mac app developers which has recently pulled the last of its apps from the official Mac App Store, and has seen roughly similar unit sales and slightly higher total revenues as a result. Although the iOS App Store continues to be the only way to get apps onto an iPhone or iPad, that’s not the case with the Mac, and frustrations over sandboxing, limited business model options, and the lack of formal upgrade mechanisms among other things have driven a number of prominent developers to eschew the MAS for direct sales. It continues to be fascinating how Apple’s approach to the Mac App Store has been so much less successful, in part due to the longstanding existence of alternatives, but in part also due to Apple’s inflexibility and lack of support for key developer requests. For all Apple’s strength and success with developers broadly, its Mac developer story is a lot less compelling.
via Rogue Amoeba
Apple Pay most popular mobile payment service among US retailers, survey finds – NFC World (Feb 7, 2017)
This survey suggests that Apple Pay is the most popular mobile payment service among 500 top retailers surveyed by Boston Retail Partners (BRP). It beat out PayPal (which I’ve never seen at retail other than at Home Depot, but appears to be largely used by smaller entities rather than big chains), and a variety of other card network-, bank, or store-specific alternatives like Chase Pay, MasterCard PayPass, and Visa Checkout, as well as Android Pay, which was accepted by 24% versus Apple Pay’s 36%. That’s good progress for Apple Pay, but still makes it a minority option even among these larger retailers, which tallies with my own experience of trying to find places to use it – where I live, two of the nearby grocery stores take it, but our closest and default store doesn’t, Subway and one or two other fast food places take it, but most don’t, and several other places (including CVS) have NFC-enabled terminals but block Apple Pay. The progress is good, but until Apple Pay is available more often than not, I suspect many people will just never bother trying – there’s too much embarrassment around a failed payment for most people to endure the trial and error process it often entails.
Apple now offers Final Cut, Logic, and other pro apps for $199 through education bundle – 9to5Mac (Feb 4, 2017)
Apple has always been strong in the education market – a much higher percentage of schools than homes use Macs as their primary computers, and hardware discounts have been part of that strategy for a long time. But recently Google has made significant inroads in education with a combination of Google Apps and Chromebooks, and of course a big part of the appeal is that the software is free or very cheap. By contrast, both Apple’s hardware (whether iPads or Macs) is expensive, even with discounts, and its pro creative software runs to several hundred dollars each for the core apps. This new bundle addresses that by bringing the price down quite a bit (given that the bar a customer has to clear to qualify for the bundle is pretty low, it can’t be priced too aggressively or it’ll undercut sales much more broadly), making it more affordable for schools. Many schools, of course, won’t require anything beyond iMovie or GarageBand for movie and audio editing respectively, but for those teaching higher-order creative tasks, this will help bring down the costs of those programs.
Apple Reports December 2016 Quarter Results – Apple (Jan 31, 2017)
This was an important quarter for Apple – it had predicted a return to growth, and it delivered on that promise, though the growth was helped by the extra week in the quarter due to Apple’s quirky reporting calendar. The highlights were iPhone, Mac, and Services growth, with the latter being by far Apple’s most consistent and fastest growing segment. The lowlights were the iPad, Other Products, and Greater China, all of which were down. Both total revenues and iPhone shipments (which are closely tied) have been within a remarkably narrow range the last three years in the December quarter, suggesting at least something about supply constraints and natural limits. The Mac had its best revenue quarter ever, helped hugely by the new MacBook Pros, which are more expensive than the average Mac Apple sells and boosted ASP a lot. Services was mostly driven by the App Store as usual, but music (Apple Music and iTunes combined) grew for the third straight quarter, and iCloud and AppleCare also helped. Apple Watch had a record unit and revenue quarter too, apparently, though we have to guess at the actual numbers. I’d guess it was marginal growth year on year, for around $2.1 billion in revenue and 6 million units. iPad dropped significantly both in unit shipments and revenue (and ASP), though some of that was down to channel depletion, and the large iPad Pro had launched a year ago, boosting that quarter. Overall, a pretty decent quarter for Apple, but no strong growth here yet (especially when you strip out the extra week). Foreign currency isn’t helping either unit sales or reported revenues or profits, and arguably roughly offset that extra week in several regions.
Interesting to see this move go ahead in the wake of the recent EU Ireland tax action. Ireland is obviously a big base for Apple in Europe, and this is mostly about moving the legal home of the iTunes business in Europe, rather than a big physical move. But it’s intriguing to see Apple double down on its presence – legal and physical – in Ireland with all the uncertainty over its tax status there. Apple is, of course, fighting the EU’s ruling with the help of the Irish government, but there’s obviously still a decent chance that things don’t go Apple’s way here.
Apple Pay on the Rise – TXN (Jan 23, 2017)
The headline here is a positive one about Apple Pay, whose adoption does seem to be on the rise, as this data from consumer spending analytics app TXN suggests. However, it’s also worth noting that the actual penetration of Apple Pay within the set of retailers in the data is still very low – no retailer has higher than 4% of their total credit card transactions going through Apple Pay, and that includes those that have iOS apps where it is by far the easiest way to pay (assuming you have Apple Pay set up in the first place). Apple Pay continues to be a fantastic technology where it works, but it still works in relatively few places, and as such most users haven’t been able to develop the habit of trying to use it everywhere. Even where it seems it might work (e.g. my local CVS) it often fails, which causes embarrassment and a barrier to trying again next time. We’re still waiting for the big tipping point for mobile payments like Apple Pay to go truly mainstream – for now it’s mostly still a niche technology.
One of the criticisms of Apple which has become loudest lately is that it is increasingly ignoring the professional creatives who use Macs to do their work, and I’ve seen this not just in relation to Apple’s Mac lineup but also a supposed neglect of Apple’s pro apps. However, at the MacBook Pro launch event a couple of months ago, Apple provided a big update to Final Cut Pro, which I’m told by video pros is a big deal, and now we’re seeing a big update to another of Apple’s big creative apps, Logic Pro. While I think some of the Mac criticism is reasonable (though I still think we’ll see an update on the desktops soon), this stuff about the pro apps clearly isn’t true – Apple is still investing in a big way here.
App downloads up 15 percent in 2016, revenue up 40 percent thanks to China – TechCrunch (Jan 17, 2017)
Two things are worth noting about all the data presented here: firstly, apps are still growing massively, putting the lie to the idea that native mobile apps are somehow dead, to be replaced by some combination of better web apps, bots, or something else. The number of apps being downloaded is growing rapidly each year rather than stagnating or slowing down. The second point is that there continues to be a massive disparity between usage and spending when it comes to Android and iOS. See the first and fourth charts in this article – the first shows massively more Android apps downloaded than iOS apps, while the fourth shows double the spending on those iOS apps relative to Android. It continues to be far more profitable for developers to make apps for iOS, even with a smaller user base and far fewer apps downloaded. That, in turn, seems likely to reinforce the pattern that the vasty majority of big new apps get launched on iOS first, and Android second (if ever). That continues to be one of Apple’s big ecosystem advantages.
Apple has been investing in video content for a while now, with the unusual strategy of pushing most of it to subscribers through a music service, rather than a dedicated video service. On the one hand, it’s a way to set Apple Music apart, and to the extent that there’s been something of a music theme to some of this video content, that makes sense too. But I still think this investment is really laying the groundwork for an eventual subscription video service from Apple, using the Music investments as cover. At this point, Apple has to get into the video subscription business if it’s to protect its ecosystem around content, much as it belatedly got into streaming music. The exact shape of that service – whether Hulu-, Netflix-, or DirecTV Now-like, is still unclear. I suspect it’ll launch by the end of this year, however, and this kind of original, exclusive content is increasingly essential for differentiation regardless of which of these models it pursues.
This has always struck me as one of the more implausible legal challenges to Apple, and it fended off the first round through a technicality. Now, however, a higher court has overruled the technical objection and the case can proceed on its merits. I would still think it was a long shot that Apple could be successfully sued for monopolizing app storefronts for its own devices, but you never know. One more Apple lawsuit to keep an eye on.
Is Amazon late to the mobile voice assistant game? – iMore (Jan 11, 2017)
This is satire and opinion, but it’s very relevant to two prevailing narratives – that Apple is behind in AI and that Amazon is ahead in voice. Rene’s piece here does a good job of framing the discussion, and the two essays on this site which I just linked to take a similar stance: Amazon is very good at what it does with Echo, but it does a very limited number of things, and for today still does them mostly in the home. Siri has two orders of magnitude more users, but also gives users a variety of other ways to interact with their device. Any analysis that doesn’t take into account those factors when comparing the two is insufficient.
App Store Shatters Records on New Year’s Day – Apple (Jan 5, 2017)
These new numbers from Apple reinforce the sense that Service revenues, driven largely by the App Store, continue to be the company’s most consistent growth driver. Payments to developers were up 40% on 2015, for a total of $20 billion, while subscription billings alone were up 74% to $2.7 billion, or almost 10% of the total. That 40% year on year growth rate is fairly consistent over the past year or two, as the rise of IAP accelerated growth above levels in 2012-2013. All of this also reinforces Apple’s argument to Wall Street that Services will grow even as device sales falter.
This is the cost of doing business in China – a cost other companies have decided they’re not willing to bear. Apple has already had to shut down elements of iTunes in China, and now this. It’s not a great look for Apple in China, but this kind of thing is likely to continue to be a thorn in Apple’s side as it seeks to do business there. Striking a balance between avoiding censorship and doing just enough to stay in business there is tricky, and likely to offend quite a few people in the process.