Apple’s Biggest New Product Under Tim Cook? Your Privacy (Premium)

Apple became the world's first trillion-dollar company because of the quality of its hardware. But its next major leap forward will most likely be the result of the relationships that Apple's customers have with the company.

We can see this, in part, through Apple's services business, which I observed a year ago was "the firm’s next big product after the iPhone." More recently, Apple Watch has seen some success because Apple pivoted from the device's original mission as a luxury accessory and belatedly focused on health and fitness monitoring.

In some ways, that pivot is reminiscent of Apple's earlier reset on iPhone; after sales went nowhere in the wake of that device's 2007 launch, Apple lowered prices repeatedly and, as important, rejected its original plans to keep the iPhone a locked box: In 2008, Apple opened up the App Store, assuring success for the then-nascent platform.

Today, it's clear that Apple Watch, like iPad, will never supplant the iPhone as Apple's biggest business. But that's sort of beside the point. Customers need an iPhone before they can buy an Apple Watch. And in that sense, the Watch more closely resembles Apple's services business than it does the iPhone or iPad. That is, it exists to feed off of the trust and loyalty that iPhone users feel for the company. It's a virtuous cycle.

The iPhone, of course, is boring. But that, too, is beside the point: Apple has only issued four major iPhone designs over the device's 11-year lifetime, but that fact is part of the appeal: No one using an iPhone 6 in 2018 will feel embarrassed that their phone looks out of date. And those who do upgrade to newer models will benefit from years of refinement to the hardware and software.

Too, while Apple continues to deliver stellar financial results, and continues to sell an ungodly number of iPhones, the firm's position in the smartphone market continues to fall. In the U.S. Apple holds roughly 50 percent of the smartphone market, but worldwide that number is just 11.5 percent. And it's falling.

The thinking here is that Apple is vulnerable because the iPhone is such a huge percentage of its profits and revenues. In the most recent quarter, the iPhone accounted for 56 percent of Apple's revenues. But if you add in its services business, which exists almost solely to serve iPhone customers, the figure jumps to 74 percent. Apple is, in many ways, iPhone Inc.

And as Apple falls further and further down the smartphone charts, companies from China are the biggest beneficiaries. In the most recent quarter, Huawei overtook Apple to become the number two smartphone maker by volume worldwide. And two other China-based handset makers, Xiaomi and OPPO, could surpass Apple as soon as the coming year.

And you know what? None of this matters.

Apple has two primary advantages over its competitors. And they should seem familiar to long-time industry observers, as they are the same advantages that Apple had when Mac v. PC w...

Gain unlimited access to Premium articles.

With technology shaping our everyday lives, how could we not dig deeper?

Thurrott Premium delivers an honest and thorough perspective about the technologies we use and rely on everyday. Discover deeper content as a Premium member.

Tagged with

Share post

Please check our Community Guidelines before commenting

Windows Intelligence In Your Inbox

Sign up for our new free newsletter to get three time-saving tips each Friday

"*" indicates required fields

This field is for validation purposes and should be left unchanged.

Thurrott © 2024 Thurrott LLC