Narrative: Apple is Doomed
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Narrative: Apple is Doomed (Dec 27, 2016)
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Apple Delays Carpool Karaoke Launch (Apr 25, 2017)
KGI Reports High-End 2017 iPhone Production May Be Delayed (Apr 24, 2017)
Backchannel has a piece out this week which argues that the iPhone’s declining market share in China is due to the poor competitiveness of its services, notably Apple Music and Apple Pay. The piece is well worth reading, but it offers few real answers. It states that Apple fails to compete effectively with its music and payment services in China, but then also says that the music and payments markets in China have been sewn up by strong local competitors, with music rights in particular subject to exclusives from Chinese services. As such, it’s really not clear what Apple could have done differently in these categories. At the end of the day, Apple’s lack of competitiveness in services in China is a symptom of a much broader issue, which is that Apple doesn’t bend much to local custom when it comes to pricing or service structure (see also India). It does localize content stores, and indeed is one of the strongest players in that respect globally, but China is such a massive market, has so many homegrown competitors, and is run by a government which is not afraid to disadvantage foreign interlopers, that it’s hard to see how Apple could compete effectively there on services. As such, I think it’s smart to compete more on its devices, its growing retail presence, and its non-content software and services. But that does mean that the ecosystem Apple has built elsewhere is missing some of the appeal it has elsewhere.
But all that is to ignore the central premise of the argument being made here, that it’s this services weakness that’s at the root of the recent decline in iPhone market share in China. I think that’s debatable at best, and it’s worth remembering that that decline isn’t about ownership but sales, and Apple went through a massive cycle earlier off the back of the iPhone 6 in China, and then came down to earth over the ensuing year, so that change in market share is reflective of cyclical rather than permanent trends, with some signs of recovery recently with the iPhone 7. So overall this piece feels like it makes some interesting points, some of them legitimate with regard to Apple’s services competitiveness in China, but overdoes the narrative about its impact.
Google recently got out of the satellite mapping business by selling its Skybox / Terra Bella unit to Planet Labs. That unit had mostly been working on mapping imagery, and Google clearly decided it didn’t need to do that work itself to benefit from the results, and effectively outsourced it. Now two executives from that former team have ended up at Apple, under former Dropcam exec Greg Duffy. Given that Apple has nothing whatsoever to do with satellites today, that raises some interesting questions. While it’s true that Google, Facebook, and others have invested in satellite and other new methods for getting connectivity to remote places, Apple has far less incentive to do so, because its users are typically the kind of well-connected people that can afford premium smartphones and computers, not those in remote emerging markets. And to pursue such a play in a market like the US makes little sense either given how satellite broadband has struggled to compete with wired and wireless services because of limited throughput and high latency (just ask DISH). What makes more sense is some kind of mapping play for better imagery, although even there the same logic that led Google to dump its unit would apply to Apple too. These are certainly intriguing additions to the Apple employee rolls, but I’m not yet convinced that either broadband access or mapping are the explanation here.
Apple Makes Big Environmental Push for Earth Day (Apr 20, 2017)
Bloomberg Confirms Existing Reports about Next iPhone (Apr 18, 2017)
Bloomberg has a report out today which basically just confirms all the existing reporting on the iPhone. Given that the Samsung Galaxy S8 goes on sale this week, this may be coming off the back of leaks from Apple itself, though the byline includes at least one reporter in Asia, suggesting there are supply chain sources too. There’s really nothing new here – the new iPhone is to come in three variants, with the high-end one getting an edge to edge OLED screen, with the glass but not the screen itself curved, and two other models similar to the existing sizes. At this point, this isn’t a surprise, but it’s good for Apple to have this news out there in the week the S8 goes on sale, because it’s been working on this shift to much smaller bezels for some time but has been beaten to the punch by several Android vendors, and needs to ensure that iPhone buyers are aware something similar is coming this fall. The big questions, which go unanswered in this piece, are about pricing and design differences between the new top-tier iPhone and the others. I continue to expect just another $100 or so price difference between the Plus model and the premium model rather than the $1000 iPhone many seem to think we’re going to get. But I’m curious to what extent the design of the two regular models evolves and how similar or different it is from the new high-end one.