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Reports describe two ways for Apple to make more money; only one is good
There were two reports in the last few days indicating different routes for Apple to make more money by boosting Services revenue.
In my view, it should absolutely do the first of these, but not the second – and it appears Phil Schiller may agree …
On Friday, Bloomberg suggested that Apple may be planning a new home security and monitoring service to sit alongside some of the new home hardware we’re expecting.
Apple is planning a privacy-centric home security camera and automation device that will use AI to monitor the surrounding environment instead of actual video footage. It will tap into a new home security and monitoring service.
A second report from the same source on Sunday said that the company is looking at ways to squeeze more revenue and profit from the App Store.
Ternus and services chief Eddy Cue want to make even more money from the App Store and figure out ways to raise margins and squeeze additional recurring revenue from the platform.
Tackling these in reverse order, I think the second approach would be a very big mistake.
Apple’s effective monopoly on the sale of iPhone apps has come under fire from regulators around the world. In most countries, if you want to sell an iPhone app, you are forced to do so through the official App Store, and that leaves you with no choice but to accept the company’s terms on a take-it-or-leave-it basis.
I understand a common view is that nobody forces anyone to buy an iPhone or make apps for it, but that is not the reality of how even the most laissez-faire forms of capitalism work: even the US has had antitrust legislation in place since 1890. When you achieve a certain level of market dominance, then constraints are imposed on how you need to behave in order to ensure you don’t abuse your position.
Trying to squeeze even more money from the App Store is very much the antithesis of skating to where the puck is headed, and Phil Schiller reportedly shares this view as Bloomberg suggests it’s one of the reasons he’s stepped down now.