Few days ago, I noted that for Apple to find success as it pivots to services, away from hardware, it would need to open its closed ecosystem. My thesis was based on the fact that services thrive on volume, and Apple needs to improve its marginal cost on serving users. The construct of network effect does not just make products better, through the positive continuum of virtuoso circle, it also improves competitiveness through cost-service efficiency.
Apple would be fine but it needs to understand that services win on volume, and it is time it adjusts strategy to grow user base with cheaper devices. If not, the revenue will be dropping from here.
Interestingly, the company has indeed started that, opening up its ecosystem via partnerships with Amazon and Samsung. Simply, you can now access some of Apple’s services in non-Apple hardware. The era of proprietary hardware running on exclusive software is over since iTunes now can run on Samsung device and Apple Music blazes on Amazon Echo.
Apple is famous for its “walled garden” approach to software, for the most part limiting its software and services to customers who buy its hardware. To maintain its services momentum, Apple is loosening up its restrictions on who can use them. Apple announced in November that Apple Music would become available on Amazon’s Echo speakers. And Sunday, Samsung said it will put an iTunes app on its smart TVs.
Apple has opened a new era – the Services Era. Yes, we are in the post-iPhone era, in Apple World, since the tech juggernaut announced that the number of iPhone sold would not be reported. Simply, going forward, iPhone is nothing but a revenue contributor, and should not be treated differently.
My prediction is that within five years, Apple Pay, Apple Music, iTunes, and iCloud will work in any decent device in the world. Yes, your Samsung and Tecno devices will qualify. Apple has been normalized because as the African proverb says “when the general public cooks for you, you cannot finish the food, but when you cook for the general public, it would never be enough”. You cannot have all mobile device manufactures in one platform, against one single manufacturer called Apple, and yet expect Apple to survive for long!
As expected, Apple has opened its walled-garden, and in coming weeks some of your Samsung and Amazon devices will run iTunes or Apple Music. As I have noted in the past, Apple business model of packaging proprietary hardware on exclusive software would work until the hardware reaches finite improvement maturity.
Today, I predict that within five years, Apple Pay, Apple Music, iTunes will run in any Tecno, Samsung or decent device in the world. Apple has ended the iPhone era, internally (not reporting number sold, nothing special anymore), beginning the Services era; those services must be hardware-agnostic if Apple must thrive.
And do not count out the possibility of $300 Apple uPhone (u for “universe”, lol) to help on that service volume; I suggested that last Aug.
The gate to the garden is now open…it can only get wider, from here.