Something is changing in Apple. We do not know if it is a voluntary revolution or forced by the evolution of technology and depressing sales figures. But there is no turning back. After a decade, Apple is ceasing to be an iPhone-centric company. It is a strange word that we just invented, so it deserves an explanation. Since Apple introduced the iPhone in 2007, all of the company’s business and technological development has revolved around it. But that is over. Apple’s iPhone of the future is not the iPhone, but the new services associated with the iPhone. It seems the same, but it is not.
The significant change has begun in the Apple Company. The shadow of Steve Jobs is less and less influential. Apple stops reflecting on the iPhone and looks back to new horizons.
You used to buy an iPhone for what it could do. But now there are Android phones that do the same, even better, for half the price. Apple knows that it cannot compete in hardware and costs with the dynamic Asian companies. And the sales figures confirm it. He will continue to want you to buy an iPhone, but not for the hardware or its functions, but its services.
It is not a simple decision, as it seems, the iPhone is much more than a piece of hardware. It is a symbol. The iPhone is Steve Jobs. In every presentation of a new iPhone, there is always a memory for him. His spirit floats in the environment. But this will change. In keynotes, although the smartphone continues to have prominence, it now shares it with the associated services.
The march of Jony Ive, the designer of the iPhone, iPod, and Mac, after 30 years in the company, may only be a coincidence. But it is premonitory. The iPhone will change forever.
Future of the iPhone
In a way, Apple’s new philosophy will be similar to the one Amazon maintains with its Amazon Prime account. The fee may seem a bit expensive for free shipping only (unless you buy very often). Still, Amazon has added several excellent services around it: Amazon Prime Video, Prime Music, Prime Reading, photo storage. It is the whole set of services that makes Amazon Prime almost irresistible, not free shipping.
Maybe the current iPhone does not excite you, but it is its services that will make it attractive. In the future, Apple will want you to buy the iPhone, not because of its design or its functions, but because it will be the key to a large number of new services that are released. We will discover them.
Table of Contents
- The iPhone no longer dazzles
- Sales go down, and revenue is maintained
- Apple’s new services
- Alliances to reach the whole world
- Diversify and conquer
The iPhone no longer dazzles
Although there were already mobile phones for two decades, it can say that Steve Jobs and Apple invented the smartphone, adding to the mobile the functions of the computer and the touch screen. With more powerful hardware, a versatile and specialized operating system, and the support of millions of apps, Apple revolutionized telephony. The iPhone dazzled by its power, functions, and because it did things that nobody else could do.
During the first years, iPhone sales broke records with each new model. But little by little Android mobiles have been gaining ground, even surpassing the iPhone in some things, at a lower price. Smartphones are already cheap and quality products and do not need to be renewed every year. The economic crisis has also not helped Apple, which has continued to raise iPhone prices as purchasing power has fallen almost everywhere in the world.
As we see in this table that shows us the mobiles sold by the leading stores until the second quarter of 2019, iPhone sales have fallen 13% for Apple, losing more than 1% of market share to stand at 10, 9%, very far from 23.2% of Samsung, and even 17.7% of Huawei. Xiaomi is already on its heels, with 9.7% of market share:
In Europe, things are even worse. Sales have fallen by 17% in one year and have lost a 3% market share, remaining at 14.1%, light-years from Samsung’s overwhelming 40.6% market share. On the contrary, Xiaomi has grown 48% in sales, and threatens Apple’s third position:
There is a solution to the problem. If the iPhone hardware no longer sells mobile phones. Then the software and associated content will. Sales go down. And revenue is maintainedApple presented last June the financial results for the third fiscal quarter of 2019 (which do not correspond to the annual four-month periods).
Until June 2019, it had entered 196,134 million dollars, slightly below the 202,695 million of June 2018. The revenues from the sale of hardware (iPhone, iPad, etc.) have fallen by about 9,000 million dollars, but in exchange, the services have increased by 3.5 billion dollars. They cannot compensate, and they also help wearable’s (Apple Watch and Air pods) and home devices such as Apple Home Pod, which have experienced spectacular growth in 2019.
Apple’s new services
Apple’s current services, such as Apple Music, Apple Pay, etc., are getting good results, as we have seen. But to compensate for the drop in iPhone sales, you need to add a few more. And it has already got to work.
With the presentation of the iPhone 11 on September 10, Apple announced the premiere of the new services unveiled long ago. Let’s go over them.
Apple TV +
Apple’s big bet for this year is Apple TV +, its streaming platform that aims to compete with Netflix and Disney +.
The Apple Company has spent $ 6 billion to shoot exclusive series and movies, the key today to win subscribers. It will back by heavyweights from the film and television industry, such as Steven Spielberg, Sofia Coppola, J.J. Abrams, Oprah Winfrey, Jennifer Aniston, Jason Momoa or Steve Carell, among other stars.
Apple News +
The iPhone, iPad, and App Store are, in part, responsible for the near disappearance of the press written on paper. Apple wants to support magazines and newspapers with Apple News, a new subscription service that offers, for $ 9.99 a month, more than 300 magazines and newspapers to read.
Apple’s third subscription service is called Apple Arcade. The company of the bitten apple has advanced a few days to its premiere, and whoever wants it can already register. The launch has reached 150 countries, where the price is 4.99 euros per month. According to the Financial Times, the games that will appear in the Apple Arcade will be exclusive to mobiles, and they will not appear on Android. Although they will release on consoles like PS4 or Nintendo Switch, to maintain this exclusivity, Apple is paying “several million dollars per game.” It also pays an additional extra if the exclusivity is total, that is, it does not appear on consoles either.
These games will also not be sold individually on the App Store.
Although it reported that there would be around 100 games, for the moment, the launch will have a catalog of 53 titles. To be able to enjoy them, you must be a user of iOS 13 or iOS 13.1 beta, and you can try the service for free for a month. The investment in branding the Apple Arcade estimated at $ 500 million.
After how well Apple Pay has worked, mobile payment, which already generates sufficient income for the company, Apple is about to launch Apple Card, its credit card with additional security measures and anonymity, discounts on purchases and in the App Store, and other advantages. But for now, only in the United States.
Last January, Apple also reached an agreement with its great rival, Samsung, to bring iTunes and AirPlay2 to Samsung’s Smart TVs. iTunes is now available on Samsung TVs to buy or rent movies and series and play them on the TV itself, without the need for an Apple device.
You can also stream content sent from the iPhone to the iPad, without the need for an Apple TV. As we can see, Apple has launched a series of agreements to make its services work beyond its hardware, and those alliances will continue to grow in the coming years.
Diversify, and conquerApple’s third strategic pillar is diversification. Launch the maximum possible number of hardware products very different from each other, to minimize risks. If one fails, the rest will cover its low sales.
Apple has been applying this strategy for some time, and it has also been successful. Its range of wearables, led by the Apple Watch and the AirPods, has sold very well, and as we have seen, it already represents 10% of revenues.
Augmented Reality is a technology that will gain significant importance in education, medicine, and industry in the coming decades. Apple released ARKit in 2017 to bring augmented Reality to iPhone apps, and since then, it has rumored that it was working on augmented reality glasses.
The truth is that the latest leaks talk about the project has suffered a break and that it can cancel. But either through hardware or just software, Apple is not going to miss the train of this technology.
Apple’s Autonomous car
Virtually all technology companies, from Google to Samsung or Huawei, are involved in some autonomous car project. Although Apple has not officially confirmed it, numerous sources claim that Apple also has its own Titan Project. I do not forget that it is also present in many vehicles through CarPlay.
The last thing that is known is that Apple could have reorganized the entire project, laying off 200 people. He has put the head of Tesla engines in charge so that he can place some order.
The autonomous car will play a vital role in the coming decades, and not only at the level of sales but also of service, through rental. It is a market that will generate a lot of money, and Apple does not want to miss it. The way forward is already drawn. The iPhone will cease to be the center of gravity of the Apple Company, to become the key to access the new services, which will not link to it. We can access them from other platforms.
The Apple of the 21st century is beginning to take shape. What would Steve Jobs think of this change in strategy? Knowing his entrepreneurial character that was always looking for new ways to surprise the world, surely projects such as augmented Reality or the autonomous car would have loved.