13 ms·

Apple's Middle Age

78 points by lukateake 9y ago

lukateake 9y ago
[A]s a general rule, challengers pursue interoperability while incumbents strive for incompatibility. This is Strategy 101: seek to fight battles where you have the greatest advantage. Should Apple buy a wireless carrier?
- scarface74 9y ago
  No. If Apple bought a mobile carrier it would be competing with its customers. Most phones are sold through carriers - meaning the carriers are buying iPhones not the end user. Besides, Apple sells phones worldwide. What would be the benefit of just buying a carrier in the US? Netflix made a similar calculation years ago. Netflix actually created what is now the Roku, but decided to spin it off to a separate company so it could more easily make deals to have Netflix installed everywhere without being seen as a competitor. In a completely separate market, another example is that PepsiCo use to own KFC, Taco Bell, and Pizza Hut. But that made it harder for them to do deals with other fast food companies because they didn't want to make deals with a competitor.
  - username223 9y ago
    > What would be the benefit of just buying a carrier in the US? Buying a carrier would indeed be a bad move, both for competing with customers and maintaining a lot of infrastructure, but I could see Apple becoming an MVNO. Wireless companies are right down there with Comcast and the airlines in terms of customer satisfaction, so I would guess there are plenty of people willing to pay a bit more for a less hostile carrier.
    - ascagnel_ 9y ago
      Isn't that what Apple kind of did with its Virgin Mobile deal?
- emdowling 9y ago
  100% yes, Apple should own this part of the experience. Increasingly, their devices are requiring constant connectivity. The Apple Watch comes into it's own with cellular - but the experience of adding it to my carrier (EE in UK) was absolutely horrific and an absolute nightmare. A carrier should just be dumb pipes. Slowly, Apple has been eroding the value that a carrier adds (the iPhone Upgrade Program being the single biggest shot fired towards carriers). I would love to never, ever have to deal with a carrier and their scammy sales tactics ever again. What can Apple gain from being a carrier? Seamless set up of devices and international roaming. In Europe, we already have data roaming across borders and it is incredible to have a device "just work" when I step off a plane. Bringing the "it just works" mentality to the service layer makes a lot of sense for Apple now. Importantly, unlike carriers, Apple doesn't need the cell network in and of itself to make money. It just serves to push the model this article articulates so well. The biggest barrier they are going to face is the connectivity issue - they can make the best augmented reality glasses or cellular AirPods, or wireless, portable outdoor speakers, but without seamless connectivity, they won't be able to "just work". The rollout of 5G might just be the opportunity they need to execute on this.
jlebrech 9y ago
People have a soft touch for companies that are on death's door, proof in point is when a startup is closing door. it's their biggest boost in marketing they ever had. and people complain they didn't already know about it.
- simonh 9y ago
  s/touch/spot/
pi-err 9y ago
Tl,dr: “it makes sense to settle down”. Tells how much this is pure projection from the author (he’s open about it). Apple has amazing bricks to build on (Watch especially) so to not settle down. Even iPhone X shows they can still bet big with their flagship.
- gergles 9y ago
  > Even iPhone X shows they can still bet big with their flagship. Does it? The iPhone X (which is a great phone and one that I own) is a Galaxy S8 with a Face ID scanner. They didn't "bet big" on it, it was the only logical place to take their market.
  - macintux 9y ago
    They could have easily compromised their vision by including touch ID and/or a button. Samsung does this all the time: include every option, just so no one is left unhappy.
    - dingo_bat 9y ago
      They did compromise their vision, in a way much worse than including a fingerprint sensor on the back. They put in an ugly notch.
      - jrs95 9y ago
        Personally I don't think it's ugly. I think having a solid bezel across the top but not the bottom would actually look worse. And it actually makes the new gestures more intuitive: swiping down from the left of the notch does the same thing that swiping down did before, and swiping down from the right of the notch opens control center.
        dingo_bat 9y ago
        > I think having a solid bezel across the top but not the bottom would actually look worse. Doesn't need to be asymmetric. Have a look at Galaxy Note8.
everdev 9y ago
My Windows devices since 97 were consistent top of the line and rarely lasted more than 2 years before they slowed to an unbearable speed. In 2012 I switched to Mac and still use the same MacBook Pro which still runs as quick as it did 6 years ago. It was a huge investment at the time but turned out to be cheaper than the 4+ Windows machine I likely would have cycled through not to mention the boot time and performance gains.
- bryanlarsen 9y ago
  IMO, that's more to do with Intel than to do with Microsoft and Apple. Sandy Bridge, released in 2011, was the last Intel processor that was more than 10% faster than previous generations. We used to see ~25% generational speedups from Intel. Since 2011 we've only seen 5-10% speedups.
  - mjburgess 9y ago
    People talk about the downsides of this. But it does mean all the tech you buy today is going to be useable in 10ys. That's quite a win.
    - carlmr 9y ago
      Capitalism hates it though if there's no reason to sell new devices. Although I think we still have a lot of headroom in terms of memory performance that will matter just as much as the previous CPU performance increases.
      - namelost 9y ago
        The future is heterogeneous computing. Intel's chips already include a GPU, the next step will be FPGAs.
        Shikadi 9y ago
        I can see it now: "Facebook now offers faster news feed rendering for PCs equipped with Intel 10 series FPGAs!" Kidding of course, but I think the FPGA/CPU combos will be more relevant to servers than end users, at least initially. FPGA high level synthesis is miles away from being useful for consumer level application acceleration, and GPUs are much more accessible
jballanc 9y ago
Any article that speculates on Apple's future viability in the market would be remiss not to mention Apple's unprecedented cash hoard. Currently, Apple is sitting on $126B in net tangible assets. With 100,000 full-time equivalent employees, that means that Apple could pay every one of their full-time equivalent employees (which, as a reminder, includes a large number of retail employees) an average yearly salary of $100K for 12 years while making $0 in revenue and still not deplete their cash reserves! Or, to put it all in perspective, based on Wikipedia's cited estimate (https://en.wikipedia.org/wiki/International_Space_Station#Cost https://en.wikipedia.org/wiki/International_Space_Station#Co...) the International Space Station cost $150B to construct. Personally, I'm looking forward to visiting the iSS at some point in the future.
- adventured 9y ago
  That's not actually how things unfold when a company gets into trouble. Your scenario is the perfect, idealized, never-happens outcome. We have dozens of historical examples at this point, from elite, massive corporations unraveling: what they basically never do, is the strictly rational idealized scenario. What actually happens is closer to chaos loaded with self-interest and stupidity by management and the board. The board gets attacked aggressively by large investors. Existing management and the board goes into bunker war bribery mode. The board bribes shareholders, further depleting its cash position. See: IBM's most recent idiocy as their revenue melted for 23 straight quarters, while they continued to buy back stock aggressively. The cost of their staggering $100+ billion in debt climbs over time as their financial and earnings situation erodes. By the time a serious problem erupts, they'll probably have $200+ billion in debt (they'll have that in just four or five years now), continuing their existing mistake. They intentionally avoid paying off all of their debt while they can, to hold onto the cash (because hey, debt is cheap today, forget about tomorrow, tomorrow is valhalla and rainbows), which they then make the mistake of expending to bribe shareholders as the stock plunges. Because, you know, things are going to turn around any day now. Then they end up with less cash than they have debt, and down it all goes from there, in a spiral they can't pull out of. If we're talking about what happens in a bad scenario, that's more like what commonly happens in reality. That net cash position will not be preciously saved to protect employees, the employees are the first ones to go. That net cash will be used as a bribery slush fund. Their earnings haven't increased in years. They're facing a zero growth future, if only because of their immense size. The smartphone market contracted by ~9% in 2017 (-16% in China). They're facing a PC market scenario, where consumers start replacing devices a lot less often (while simultaneously smartphones face increased competition from all sorts of cheaper AI-focused devices). Their cash accumulation is far slower now than it was in the past, because it's all going to shareholder bribery. Meanwhile, they've added $50 billion in debt in about two years, with that pace continuing in the latest quarter. Their income to debt ratio has been eroding for five straight years. Consider: right now Apple is making the incredibly foolish mistake of aggressively buying back stock with their capital, while its AI efforts are an embarrasment and they get their ass kicked by Amazon. Spend $50 billion catching up in AI etc? Or buy back stock? Apple has made its choice, and it shows.
symlinkk 9y ago
The author seems to praise the vendor lock-in that Apple imposes upon its customers as being a good business move and a sign that Apple has "matured", without really offering any hard facts to back it up. I'm going to offer an opinion of my own without any facts to back it up. Vendor lock-in may be successful in the short term, but interoperability is successful in the long-term. The internet would have never took off if it wasn't for the fact that every website author had access to the same APIs as every other one. It's bullshit that I can't tell Siri to play music with Spotify instead of Apple Music. It's bullshit that I can't change my browser from Safari, and therefore can't use any Progressive Web App features like push notifications because Apple is afraid of web apps cannibalizing App Store sales. It's anti-competitive and a scummy business move. Android is weak in a lot of areas but at least they got this part right.
- scarface74 9y ago
  How much of a "longer term" view is needed than 40+ years? Apple has used this strategy since day one.
  - cmrdporcupine 9y ago
    That is not at all true. That was certainly not the philosophy on the very successful Apple II series. And it was not how Apple operated in the non-Jobs Mac years in the late 80s and early 90s. And it's not how they operated for the early part of the 2000s when Apple went on a major open source / standards binge: adopting the standard Intel/PCI architecture, using Unix as the foundation of their OS, open sourcing their kernel, using open source WebKit, etc. etc. Hell, the first version of the iPod even did it right and was basically an external USB hard drive. But there's been a major turn to the proprietary as the iPhone business has eaten Apple. They've locked that platform down in a big way, and they've failed to embrace the web and cloud in a functional way. There's less and less open standards embrace there, and more lock-in style in both hardware and software. In a way Apple has always had two hearts -- a Wozniak (the open Apple II) vs Jobs (the closed Mac), long after those two have left the company.
    - 9y ago
jasonsync 9y ago
Apple’s growth is almost entirely inwardly-focused when it comes to its user-base: higher prices, more services, and more devices I find myself increasingly stuck in an Apple 2011 - 2013 universe. For starters Apple has not yet provided a viable upgrade for my primary desktop machine: a 2011 Mac Mini (2.7GHz dual-core Intel Core i7 with 8 GB ram and SSD). The specs on the current 2018 Mac Mini lineup are considerable lower than yesteryears Mac Mini. No idea why? I'd love to upgrade to a faster Mac Mini, but there's really no options, even 6 years later. So nope. Then there's my 2013 MacBook Air (1.7GHz dual-core Intel Core i7 with 8 GB ram and SSD). This thing has been a workhorse. That said I'd love to get a similar form factor with Retina, however, the only somewhat viable upgrade option seems to be the 12" MacBook. Too small, so nope. Finally, there's my iPhone 5S (2013 as well). It's showing it's age (sluggish at times), however, I've replaced the battery and to be honest, it's still got some life left in it. Admittedly, the iPhone is the only Apple product I own that actually does have a viable upgrade path. Unfortunately, with the lack of upgrade options for my primary Apple devices, and issues I've had with iTunes and Apple TV, I'm hesitant to buy in again ... Most other Apple devices and products I own simply collect dust: Various iPods and thousands of purchased iTunes songs collecting dust - as I switched to Spotify. I switched to Spotify when iTunes + iCloud (perhaps user error, not sure) somehow deleted all of my ripped MP3s from along time ago. Generally speaking the iTunes app itself got to the point where it was unusably bloated and convoluted. Not sure why. Apple TV collecting dust. Replaced by an Android TV due to not making it easy to play all file formats. AirPort Extreme collecting dust - had multiple issues and it eventually stopped working (bricked). Finally, MacOS itself has been lacklustre the past couple of releases. I hesitate to upgrade now, due to various bugs and lack of quality control. Apps I previously purchased on the Mac App store have stopped working as well. So while Apple embarks on a new chapter in it's "middle age", it seems like the previous generation has been left to rot ... with not much in the way of upgrade options. How is this an inwardly-focused strategy?
- eastWestMath 9y ago
  I just looked on the Apple store app and you can get a Mac mini with a 3.0ghz dual core i7 and 16 gb of ram.
s14ve 9y ago
With the "features" of new macbooks, it doesn't really seem like they would like to settle down, even though it would probably make sense there...
baxtr 9y ago
I really like stratechery, but I don’t get this post. Example Instead, I think the order goes like this: Customer owns an iPhone Customer subscribes to Apple Music because it is installed by default on their iPhone As an Apple Music subscriber, customer only has one choice in smart speakers: HomePod (and to make the decision to spend more money palatable, Apple pushes sound quality), from which Apple makes a profit Well, I don’t know. Maybe it’s just: Let’s make exceptionally good products that people love
- narrowtux 9y ago
  Also that line is a little inaccurate, since there's one more (that I know of) smart speaker system that offers apple music: Sonos.
- majewsky 9y ago
  How do you decide which product to make?
  - baxtr 9y ago
    I have read somewhere, that Apple has a prioritized list of products to build, which they update yearly at their top 100 (?) leaders’ workshop. Maybe someone from Apple reading this could comment :-)
- endemic 9y ago
  Vendor lock-in is real.
oflannabhra 9y ago
The most interesting points of the article were this: 1) iPhone unit sales growth has essentially stagnated, because the overall market has reached saturation. 2) Apple has successfully managed to maintain growth in the face of 1) by increasing revenue per device (ASP). I think the question of "What does Apple do, now?" is a hugely important one. However, I disagree with the author that the only reasonable approach Apple has is to "settle down" in its middle age position. That question is important, because it implicitly asks, "What is next?" I don't see Apple deciding to not create a product that attempts to answer that question. We will have to wait and see what that product looks like (AR?), whether it is successful, and when it will come. Apple is definitely not going to rest on the iPhones success forever, though.
- oflannabhra 9y ago
  I'd add to this that Apple's current approach to AR and wearables is not one that necessitates the cannibalization of the iPhone. They are taking a constellation approach (as noted in the article), with the iPhone in the center. I think that approach is not one based in defense, but one that actually plays to their strengths: personal products with an excellent experience, vertically integrated. Because of AR's computational requirements, it will be a long time until we have an AR experience that is untethered to a mobile computing device. A vertically integrated, constellation-based system will offer a better user experience, at least initially. Intel's recent Vaunt glasses [1] could be much more powerful if Intel also controlled the entire device the glasses co-ordinated with. [1] - https://www.theverge.com/2018/2/5/16966530/intel-vaunt-smart-glasses-announced-ar-video https://www.theverge.com/2018/2/5/16966530/intel-vaunt-smart...
  - lasgsf 9y ago
    I actually think it is a deliberate cannibalization being done with here. But they are doing it slowly as not to be a shock to the system. Look at the Apple Watch...my gut you will start to see every year more and more of the functions on the iPhone move over. The beauty of this is ppl will not bark at this as the Watch becomes the yearly replacement cycle vs. the phone which will be every 5 years.
- 9y ago
Cknight70 9y ago
Seems to me that when you boil it down Apple's primary strategy now is to focus on convenience and simplicity in a purposely anti competitive way. What advantage does Apple music have over a service like Spotify besides being pre-installed? What about iMessage? What about Facetime? What about the MacBook with a single port? Apple is not worried about competition or more importantly innovation, it instead focuses on creating a walled garden that can keep its users happy. The HomePod is not trying to be innovative it is trying to keep Apple users in their ecosystem.
sounds 9y ago
As Apple moves into its middle age, the rational move is to become more like the established vertically-integrated companies. * Intel * Samsung * The British East India Company If Apple leadership decides to accept this, they will begin to act like their peers: * Recognize that the smartphone market will not grow like it has in the past. Create and then dominate standards using IP - barrier to competitors that simultaneously blocks a lot of regulatory burden. * Recognize that Apple will not be the "innovator" that it was in the past. (Apple will still innovate, but not home runs every time.) Nurture the ecosystem around their product - allow small companies to find exciting new products, then acquire them. * Recognize that their financials will need to adapt. Diversify their revenue stream beyond just one or two plays. Apple still has the baggage of its own proprietary reinventions that they try to tightly control. iCloud. Lightning port. AirPlay. MacOS. The net negative impact comes as they gradually end up falling behind nimbler companies, like Amazon. And yes, this will lead to the ultimate death of Apple as all behemoth conglomerates eventually choke on their own red tape and drown in their own largess. But Apple's days of youth are gone; no amount of dieting or exercise will bring them back. I don't actually think Apple for the next 5 years will make the dramatic changes needed to realize these ideas. But perhaps a more interesting question is: Is there any other avenue for a company who has reached middle age?
- snowwrestler 9y ago
  > Recognize that Apple will not be the "innovator" that it was in the past. (Apple will still innovate, but not home runs every time.) I don't know where Apple gets this reputation, but they have hardly hit home runs every time. I mean, does no one remember the Newton? Final Cut X? The original Apple TV? The trash can PowerMac? Does anyone think the Touch Bar is a home run? Which is good, because innovation necessarily means not hitting home runs every time, and Apple knows that. That's why they hoard so much cash, so they can afford to miss sometimes. I question whether you understand Apple's core business. They can't vertically integrate like old school conglomerates because they don't have anything to integrate. They own very few assets apart from their IP. Intel and Samsung own factories; Apple does not. The East India Company owned land and ships; Apple does not. Amazon owns warehouses and many $billions of inventory... Apple does not. From an IP perspective they are already vertically integrated, from chip design to UI to services to retail. But then you ding them for that...
deleted 9y ago
[deleted]

78 points by lukateake 9y ago

[A]s a general rule, challengers pursue interoperability while incumbents strive for incompatibility. This is Strategy 101: seek to fight battles where you have the greatest advantage. Should Apple buy a wireless carrier?

scarface74 9y ago
No. If Apple bought a mobile carrier it would be competing with its customers. Most phones are sold through carriers - meaning the carriers are buying iPhones not the end user. Besides, Apple sells phones worldwide. What would be the benefit of just buying a carrier in the US? Netflix made a similar calculation years ago. Netflix actually created what is now the Roku, but decided to spin it off to a separate company so it could more easily make deals to have Netflix installed everywhere without being seen as a competitor. In a completely separate market, another example is that PepsiCo use to own KFC, Taco Bell, and Pizza Hut. But that made it harder for them to do deals with other fast food companies because they didn't want to make deals with a competitor.
- username223 9y ago
  > What would be the benefit of just buying a carrier in the US? Buying a carrier would indeed be a bad move, both for competing with customers and maintaining a lot of infrastructure, but I could see Apple becoming an MVNO. Wireless companies are right down there with Comcast and the airlines in terms of customer satisfaction, so I would guess there are plenty of people willing to pay a bit more for a less hostile carrier.
  - ascagnel_ 9y ago
    Isn't that what Apple kind of did with its Virgin Mobile deal?
emdowling 9y ago
100% yes, Apple should own this part of the experience. Increasingly, their devices are requiring constant connectivity. The Apple Watch comes into it's own with cellular - but the experience of adding it to my carrier (EE in UK) was absolutely horrific and an absolute nightmare. A carrier should just be dumb pipes. Slowly, Apple has been eroding the value that a carrier adds (the iPhone Upgrade Program being the single biggest shot fired towards carriers). I would love to never, ever have to deal with a carrier and their scammy sales tactics ever again. What can Apple gain from being a carrier? Seamless set up of devices and international roaming. In Europe, we already have data roaming across borders and it is incredible to have a device "just work" when I step off a plane. Bringing the "it just works" mentality to the service layer makes a lot of sense for Apple now. Importantly, unlike carriers, Apple doesn't need the cell network in and of itself to make money. It just serves to push the model this article articulates so well. The biggest barrier they are going to face is the connectivity issue - they can make the best augmented reality glasses or cellular AirPods, or wireless, portable outdoor speakers, but without seamless connectivity, they won't be able to "just work". The rollout of 5G might just be the opportunity they need to execute on this.

jlebrech 9y ago

People have a soft touch for companies that are on death's door, proof in point is when a startup is closing door. it's their biggest boost in marketing they ever had. and people complain they didn't already know about it.

simonh 9y ago
s/touch/spot/

pi-err 9y ago

Tl,dr: “it makes sense to settle down”. Tells how much this is pure projection from the author (he’s open about it). Apple has amazing bricks to build on (Watch especially) so to not settle down. Even iPhone X shows they can still bet big with their flagship.

gergles 9y ago
> Even iPhone X shows they can still bet big with their flagship. Does it? The iPhone X (which is a great phone and one that I own) is a Galaxy S8 with a Face ID scanner. They didn't "bet big" on it, it was the only logical place to take their market.
- macintux 9y ago
  They could have easily compromised their vision by including touch ID and/or a button. Samsung does this all the time: include every option, just so no one is left unhappy.
  - dingo_bat 9y ago
    They did compromise their vision, in a way much worse than including a fingerprint sensor on the back. They put in an ugly notch.
    - jrs95 9y ago
      Personally I don't think it's ugly. I think having a solid bezel across the top but not the bottom would actually look worse. And it actually makes the new gestures more intuitive: swiping down from the left of the notch does the same thing that swiping down did before, and swiping down from the right of the notch opens control center.
      - dingo_bat 9y ago
        > I think having a solid bezel across the top but not the bottom would actually look worse. Doesn't need to be asymmetric. Have a look at Galaxy Note8.

everdev 9y ago

My Windows devices since 97 were consistent top of the line and rarely lasted more than 2 years before they slowed to an unbearable speed. In 2012 I switched to Mac and still use the same MacBook Pro which still runs as quick as it did 6 years ago. It was a huge investment at the time but turned out to be cheaper than the 4+ Windows machine I likely would have cycled through not to mention the boot time and performance gains.

bryanlarsen 9y ago
IMO, that's more to do with Intel than to do with Microsoft and Apple. Sandy Bridge, released in 2011, was the last Intel processor that was more than 10% faster than previous generations. We used to see ~25% generational speedups from Intel. Since 2011 we've only seen 5-10% speedups.
- mjburgess 9y ago
  People talk about the downsides of this. But it does mean all the tech you buy today is going to be useable in 10ys. That's quite a win.
  - carlmr 9y ago
    Capitalism hates it though if there's no reason to sell new devices. Although I think we still have a lot of headroom in terms of memory performance that will matter just as much as the previous CPU performance increases.
    - namelost 9y ago
      The future is heterogeneous computing. Intel's chips already include a GPU, the next step will be FPGAs.
      - Shikadi 9y ago
        I can see it now: "Facebook now offers faster news feed rendering for PCs equipped with Intel 10 series FPGAs!" Kidding of course, but I think the FPGA/CPU combos will be more relevant to servers than end users, at least initially. FPGA high level synthesis is miles away from being useful for consumer level application acceleration, and GPUs are much more accessible

jballanc 9y ago

Any article that speculates on Apple's future viability in the market would be remiss not to mention Apple's unprecedented cash hoard. Currently, Apple is sitting on $126B in net tangible assets. With 100,000 full-time equivalent employees, that means that Apple could pay every one of their full-time equivalent employees (which, as a reminder, includes a large number of retail employees) an average yearly salary of $100K for 12 years while making $0 in revenue and still not deplete their cash reserves! Or, to put it all in perspective, based on Wikipedia's cited estimate (https://en.wikipedia.org/wiki/International_Space_Station#Cost https://en.wikipedia.org/wiki/International_Space_Station#Co...) the International Space Station cost $150B to construct. Personally, I'm looking forward to visiting the iSS at some point in the future.

adventured 9y ago
That's not actually how things unfold when a company gets into trouble. Your scenario is the perfect, idealized, never-happens outcome. We have dozens of historical examples at this point, from elite, massive corporations unraveling: what they basically never do, is the strictly rational idealized scenario. What actually happens is closer to chaos loaded with self-interest and stupidity by management and the board. The board gets attacked aggressively by large investors. Existing management and the board goes into bunker war bribery mode. The board bribes shareholders, further depleting its cash position. See: IBM's most recent idiocy as their revenue melted for 23 straight quarters, while they continued to buy back stock aggressively. The cost of their staggering $100+ billion in debt climbs over time as their financial and earnings situation erodes. By the time a serious problem erupts, they'll probably have $200+ billion in debt (they'll have that in just four or five years now), continuing their existing mistake. They intentionally avoid paying off all of their debt while they can, to hold onto the cash (because hey, debt is cheap today, forget about tomorrow, tomorrow is valhalla and rainbows), which they then make the mistake of expending to bribe shareholders as the stock plunges. Because, you know, things are going to turn around any day now. Then they end up with less cash than they have debt, and down it all goes from there, in a spiral they can't pull out of. If we're talking about what happens in a bad scenario, that's more like what commonly happens in reality. That net cash position will not be preciously saved to protect employees, the employees are the first ones to go. That net cash will be used as a bribery slush fund. Their earnings haven't increased in years. They're facing a zero growth future, if only because of their immense size. The smartphone market contracted by ~9% in 2017 (-16% in China). They're facing a PC market scenario, where consumers start replacing devices a lot less often (while simultaneously smartphones face increased competition from all sorts of cheaper AI-focused devices). Their cash accumulation is far slower now than it was in the past, because it's all going to shareholder bribery. Meanwhile, they've added $50 billion in debt in about two years, with that pace continuing in the latest quarter. Their income to debt ratio has been eroding for five straight years. Consider: right now Apple is making the incredibly foolish mistake of aggressively buying back stock with their capital, while its AI efforts are an embarrasment and they get their ass kicked by Amazon. Spend $50 billion catching up in AI etc? Or buy back stock? Apple has made its choice, and it shows.

symlinkk 9y ago

The author seems to praise the vendor lock-in that Apple imposes upon its customers as being a good business move and a sign that Apple has "matured", without really offering any hard facts to back it up. I'm going to offer an opinion of my own without any facts to back it up. Vendor lock-in may be successful in the short term, but interoperability is successful in the long-term. The internet would have never took off if it wasn't for the fact that every website author had access to the same APIs as every other one. It's bullshit that I can't tell Siri to play music with Spotify instead of Apple Music. It's bullshit that I can't change my browser from Safari, and therefore can't use any Progressive Web App features like push notifications because Apple is afraid of web apps cannibalizing App Store sales. It's anti-competitive and a scummy business move. Android is weak in a lot of areas but at least they got this part right.

scarface74 9y ago
How much of a "longer term" view is needed than 40+ years? Apple has used this strategy since day one.
- cmrdporcupine 9y ago
  That is not at all true. That was certainly not the philosophy on the very successful Apple II series. And it was not how Apple operated in the non-Jobs Mac years in the late 80s and early 90s. And it's not how they operated for the early part of the 2000s when Apple went on a major open source / standards binge: adopting the standard Intel/PCI architecture, using Unix as the foundation of their OS, open sourcing their kernel, using open source WebKit, etc. etc. Hell, the first version of the iPod even did it right and was basically an external USB hard drive. But there's been a major turn to the proprietary as the iPhone business has eaten Apple. They've locked that platform down in a big way, and they've failed to embrace the web and cloud in a functional way. There's less and less open standards embrace there, and more lock-in style in both hardware and software. In a way Apple has always had two hearts -- a Wozniak (the open Apple II) vs Jobs (the closed Mac), long after those two have left the company.
  - 9y ago

jasonsync 9y ago

Apple’s growth is almost entirely inwardly-focused when it comes to its user-base: higher prices, more services, and more devices I find myself increasingly stuck in an Apple 2011 - 2013 universe. For starters Apple has not yet provided a viable upgrade for my primary desktop machine: a 2011 Mac Mini (2.7GHz dual-core Intel Core i7 with 8 GB ram and SSD). The specs on the current 2018 Mac Mini lineup are considerable lower than yesteryears Mac Mini. No idea why? I'd love to upgrade to a faster Mac Mini, but there's really no options, even 6 years later. So nope. Then there's my 2013 MacBook Air (1.7GHz dual-core Intel Core i7 with 8 GB ram and SSD). This thing has been a workhorse. That said I'd love to get a similar form factor with Retina, however, the only somewhat viable upgrade option seems to be the 12" MacBook. Too small, so nope. Finally, there's my iPhone 5S (2013 as well). It's showing it's age (sluggish at times), however, I've replaced the battery and to be honest, it's still got some life left in it. Admittedly, the iPhone is the only Apple product I own that actually does have a viable upgrade path. Unfortunately, with the lack of upgrade options for my primary Apple devices, and issues I've had with iTunes and Apple TV, I'm hesitant to buy in again ... Most other Apple devices and products I own simply collect dust: Various iPods and thousands of purchased iTunes songs collecting dust - as I switched to Spotify. I switched to Spotify when iTunes + iCloud (perhaps user error, not sure) somehow deleted all of my ripped MP3s from along time ago. Generally speaking the iTunes app itself got to the point where it was unusably bloated and convoluted. Not sure why. Apple TV collecting dust. Replaced by an Android TV due to not making it easy to play all file formats. AirPort Extreme collecting dust - had multiple issues and it eventually stopped working (bricked). Finally, MacOS itself has been lacklustre the past couple of releases. I hesitate to upgrade now, due to various bugs and lack of quality control. Apps I previously purchased on the Mac App store have stopped working as well. So while Apple embarks on a new chapter in it's "middle age", it seems like the previous generation has been left to rot ... with not much in the way of upgrade options. How is this an inwardly-focused strategy?

eastWestMath 9y ago
I just looked on the Apple store app and you can get a Mac mini with a 3.0ghz dual core i7 and 16 gb of ram.

s14ve 9y ago

With the "features" of new macbooks, it doesn't really seem like they would like to settle down, even though it would probably make sense there...

baxtr 9y ago

I really like stratechery, but I don’t get this post. Example Instead, I think the order goes like this: Customer owns an iPhone Customer subscribes to Apple Music because it is installed by default on their iPhone As an Apple Music subscriber, customer only has one choice in smart speakers: HomePod (and to make the decision to spend more money palatable, Apple pushes sound quality), from which Apple makes a profit Well, I don’t know. Maybe it’s just: Let’s make exceptionally good products that people love

narrowtux 9y ago
Also that line is a little inaccurate, since there's one more (that I know of) smart speaker system that offers apple music: Sonos.
majewsky 9y ago
How do you decide which product to make?
- baxtr 9y ago
  I have read somewhere, that Apple has a prioritized list of products to build, which they update yearly at their top 100 (?) leaders’ workshop. Maybe someone from Apple reading this could comment :-)
endemic 9y ago
Vendor lock-in is real.

oflannabhra 9y ago

The most interesting points of the article were this: 1) iPhone unit sales growth has essentially stagnated, because the overall market has reached saturation. 2) Apple has successfully managed to maintain growth in the face of 1) by increasing revenue per device (ASP). I think the question of "What does Apple do, now?" is a hugely important one. However, I disagree with the author that the only reasonable approach Apple has is to "settle down" in its middle age position. That question is important, because it implicitly asks, "What is next?" I don't see Apple deciding to not create a product that attempts to answer that question. We will have to wait and see what that product looks like (AR?), whether it is successful, and when it will come. Apple is definitely not going to rest on the iPhones success forever, though.

oflannabhra 9y ago
I'd add to this that Apple's current approach to AR and wearables is not one that necessitates the cannibalization of the iPhone. They are taking a constellation approach (as noted in the article), with the iPhone in the center. I think that approach is not one based in defense, but one that actually plays to their strengths: personal products with an excellent experience, vertically integrated. Because of AR's computational requirements, it will be a long time until we have an AR experience that is untethered to a mobile computing device. A vertically integrated, constellation-based system will offer a better user experience, at least initially. Intel's recent Vaunt glasses [1] could be much more powerful if Intel also controlled the entire device the glasses co-ordinated with. [1] - https://www.theverge.com/2018/2/5/16966530/intel-vaunt-smart-glasses-announced-ar-video https://www.theverge.com/2018/2/5/16966530/intel-vaunt-smart...
- lasgsf 9y ago
  I actually think it is a deliberate cannibalization being done with here. But they are doing it slowly as not to be a shock to the system. Look at the Apple Watch...my gut you will start to see every year more and more of the functions on the iPhone move over. The beauty of this is ppl will not bark at this as the Watch becomes the yearly replacement cycle vs. the phone which will be every 5 years.
9y ago

Cknight70 9y ago

Seems to me that when you boil it down Apple's primary strategy now is to focus on convenience and simplicity in a purposely anti competitive way. What advantage does Apple music have over a service like Spotify besides being pre-installed? What about iMessage? What about Facetime? What about the MacBook with a single port? Apple is not worried about competition or more importantly innovation, it instead focuses on creating a walled garden that can keep its users happy. The HomePod is not trying to be innovative it is trying to keep Apple users in their ecosystem.

sounds 9y ago

As Apple moves into its middle age, the rational move is to become more like the established vertically-integrated companies. * Intel * Samsung * The British East India Company If Apple leadership decides to accept this, they will begin to act like their peers: * Recognize that the smartphone market will not grow like it has in the past. Create and then dominate standards using IP - barrier to competitors that simultaneously blocks a lot of regulatory burden. * Recognize that Apple will not be the "innovator" that it was in the past. (Apple will still innovate, but not home runs every time.) Nurture the ecosystem around their product - allow small companies to find exciting new products, then acquire them. * Recognize that their financials will need to adapt. Diversify their revenue stream beyond just one or two plays. Apple still has the baggage of its own proprietary reinventions that they try to tightly control. iCloud. Lightning port. AirPlay. MacOS. The net negative impact comes as they gradually end up falling behind nimbler companies, like Amazon. And yes, this will lead to the ultimate death of Apple as all behemoth conglomerates eventually choke on their own red tape and drown in their own largess. But Apple's days of youth are gone; no amount of dieting or exercise will bring them back. I don't actually think Apple for the next 5 years will make the dramatic changes needed to realize these ideas. But perhaps a more interesting question is: Is there any other avenue for a company who has reached middle age?

snowwrestler 9y ago
> Recognize that Apple will not be the "innovator" that it was in the past. (Apple will still innovate, but not home runs every time.) I don't know where Apple gets this reputation, but they have hardly hit home runs every time. I mean, does no one remember the Newton? Final Cut X? The original Apple TV? The trash can PowerMac? Does anyone think the Touch Bar is a home run? Which is good, because innovation necessarily means not hitting home runs every time, and Apple knows that. That's why they hoard so much cash, so they can afford to miss sometimes. I question whether you understand Apple's core business. They can't vertically integrate like old school conglomerates because they don't have anything to integrate. They own very few assets apart from their IP. Intel and Samsung own factories; Apple does not. The East India Company owned land and ships; Apple does not. Amazon owns warehouses and many $billions of inventory... Apple does not. From an IP perspective they are already vertically integrated, from chip design to UI to services to retail. But then you ding them for that...

deleted 9y ago

[deleted]