Catching up on my reading list, found these two interesting pieces on Apple Services:
Jean-Louis Gassée, in a Monday Note titled Misunderstanding Apple Services, on the wave of headlines touting Apple Services as a standalone company:
If Apple Services were a standalone company, its $27.8B in revenue would just squeak past Facebook’s $27.6 (although I’m not sure we’re comparing the same four quarters).
And:
Remove “Apple” from “Apple Services”…would this stand-alone “Services” company enjoy the same success were it to service Android phones or Windows PCs?
Apple Services is an important member of the supporting cast that pushes the volume and margins for the main act: Apple Personal Computers. These come in three sizes, small (iPhone), medium (iPad), and large (Mac). If rumors of the addition of a cellular modem true, we may even see the Watch, today an iPhone accessory, added to the cast as the newest and smallest performer.
Everything else that Apple offers has one raison d’être: Fueling the company’s main hardware act without which Apple is nothing.
It’s the ecosystem. Apple Services serves the ecosystem.
The second post is from Ben Thompson, titled Apple and the Oak Tree:
Apple’s attempt at services lock-in is steadily increasing: HomePod supports only Apple Music and Siri, CarPlay supports only Siri and Apple Maps, iOS still doesn’t let one change default applications. None of these decisions are based on delivering a superior experience, the key to Apple’s differentiation with a hardware-based business model; all are based on securing an ongoing relationship with the company that can be monetized over time.
Again, this all makes sense, particularly for the bottom line: every bit of lock-in makes Apple’s business stronger. Stronger, that is like an oak tree.
Ben goes on to relate the fable of the oak tree and the reed. The oak tree represents strength, the reed flexibility. The analogy here is that Apple Services are becoming more locked in. That lock-in brings financial strength, but moves away from flexibility. And the lack of flexibility was the oak’s downfall.
Interesting reads, both.