Jean-Louis Gassée: On Apple’s emerging services business

Much has been written about Apple’s emerging services business. There’s this Stratechery post from Ben Thompson. And this Tech.pinions response from John Kirk.

Jean-Louis Gassée, writing for Monday Note, weighs in with this thought:

Many on Wall Street and elsewhere have started to ask if Apple is going to treat Services as a separate business with its own Profit & Loss statement. For Apple, this would be a momentous cultural shift away from its praised functional structure, one Tim Cook sees as fostering effective collaboration across groups such as operating system software, built-in apps, hardware, developer relations, and retail operations. The idea is for everyone to work together on the customer’s experience, as opposed to concentrating on an isolated goal: hardware revenue, App Store profits, or Retail numbers.

And this quote from Amazon’s Jeff Bezos, taken from John Kirk’s piece:

It’s very difficult for a publicly traded company to switch,” Bezos said. “So, if you’ve been holding a rock concert, and you want to hold a ballet, that transition is going to be difficult.

Jean-Louis then continues:

I agree. A company’s culture is extremely hard to change once, like a concrete foundation, it has set. It may actually be impossible: I can’t think of a single mature company that has managed to change its culture.

I read Apple as a personal computing company. It wins or loses through the experience it delivers to its customers. Once upon a time, revenue came mostly from its personal computers, small, medium and large. Software and services had one and only one purpose: pushing up personal computers’ volumes and margins. Hardware, software, and services coalesced into what we now call an ecosystem. Over time, as a result of the size of the installed base of Apple devices, Services became substantial, the number 2 revenue category — but, for reasons just discussed, it shouldn’t be run as a separate division.

Interesting. If nothing else, Apple is a company built on its ecosystem foundation. A company dependent on, and greater than, the sum of its parts.