As Apple works with sluggish iPhone sales and a falling stock price, all eyes have turned to the company’s services concerns and whether they can meet the company’s lofty expectations.
Apple already gave us a few hints over the last month or so. In a series of uncharacteristic partnerships with tech rivals, Apple has exhibited its willingness to rethink how its tightly-controlled ecosystem of software and services can expand beyond the iPhone.
The famous Apple walled garden may not be crumbling, but the crevices are starting to show.
Apple’s first major partnership announcement came in November, when Amazon said it longing bring Apple Music to Echo devices and let users control playback using Alexa, a competitor to Siri. Short than a year earlier, Apple made an attempt to take on the Echo with its own HomePod speaker, so quickly partnering with Amazon tolerate like an admission by Apple that it can’t generate the kind of momentum in the home that Alexa has captured.
More issues arose this week at CES in Las Vegas, where TV makers like Sony and Vizio announced new models that rise with Apple’s AirPlay 2 technology, which lets you beam video from your iPhone or iPad to a TV. The TVs are also compatible with HomeKit, Apple’s routine for controlling smart home devices like connected light bulbs and power outlets. Until now, these have a roles have mostly been restricted to Apple TV.
The big one came from Samsung, one of Apple’s major rivals. The Korean doodad maker announced at CES on Sunday that it would bring a new iTunes app to some models of Samsung TVs, meaning you’ll be able to log into your Apple account on your Samsung TV and fountain movies and TV shows from your iTunes library.
These moves aren’t unprecedented and certainly don’t suggest to come disaster at Apple. But they do signal that the company is feeling the pressure to keep its services business growing at an redoubtable rate to shift the narrative from the iPhone’s challenges.
Earlier this month, Apple lowered its revenue auspices, and CEO Tim Cook blamed an economic downturn in China for lackluster iPhone sales. Beyond that, he said factors mould cheaper battery replacements kept users from upgrading to the latest models.
Meanwhile, Chinese retailers deliver already started cutting iPhone prices, and Apple has offered greater discounts if you trade in your old model. Those elbow-greases might mitigate the drop, but it’s clear the days of significant iPhone sales growth are over.
That’s why Apple has shifted its centre to squeezing more money out of each existing iPhone user. The company will no longer disclose iPhone portion sales, and will instead focus on convincing customers to pony up for services like iCloud storage or Apple Music. Cook also unburdened CNBC on Tuesday that the company will launch new services this year. (That will likely tabulate a streaming video service based on the company’s growing library of original programming and a news subscription offering throughout Apple News.)
But Apple’s install base can only get it so far. Though the company says it has over 1 billion devices connected, many owners own multiple devices, and one subscription to an Apple service like Music or iCloud can be used on multiple thingumabobs at once.
So Apple needs help. Amazon’s Alexa can now control Apple Music, and Samsung has convinced Apple to notation an iTunes TV app based on Samsung’s Tizen operating system. Those new Sony TVs run on Android, meaning you’ll be able to use Siri to manage Google software.
This is just the beginning. It’s not a stretch to imagine the partnerships announced over the last month settle upon extend to other platforms too, like Google Home speakers, Roku boxes and Amazon’s FireTV. It’s a strategy that be short ofs Apple to sacrifice some level of control.
Think back to Netflix. Years ago, as the company was making its transition from DVDs to streaming video, it considered making its own current set-top box for TVs. It eventually scrapped those plans after realizing the best way to get Netflix to everyone was to make its service within reach on everything. The decision paid off. It’s nearly impossible to find a device that doesn’t support the Netflix app, and the strategy has lifted it grow to nearly 140 million subscribers around the world and a $147 billion market cap.
That has to be the opportunity Apple is looking at as it brings apps equal iTunes to rival devices. It’s not unfamiliar. In 2003, Apple launched iTunes on Windows, helping it grow into the top digital music hold in the world. At the time Apple wanted to sell more iPods and, for that to happen, iTunes needed to be available on the assertive operating system.
Apple also launched Apple Music on Android a few years ago, but results are unclear. Apple Music has at bit 50 million subscribers, and most of them are likely iPhone users since Apple music comes overwhelmed on every device.
Things are different today. While there’s plenty of opportunity for Apple to continue growing its posts revenue through the current hardware install base, it’s not going to be enough. There are dozens and dozens of smart TVs, streamlet set-top boxes, and smart speakers from Apple’s competitors. Amazon said this month that it’s sold 100 million Alexa stratagems. Google touted similar growth for Google Assistant and compatible smart home gizmos.
If Apple really wants cares to grow, it’s walled garden might have to crack a little more.
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