That the Justice Department is pursuing Apple’s dominance in the smartphone market at the same time that the company is attempting to move away from its flagship hardware may seem odd at first.
However, a significant portion of the animosity directed towards Apple stems from its staggering expansion into services and its remarkable capacity to garner additional income from its ecosystem’s peripheral players.
Over half of Apple’s revenue still comes from sales of the iPhone.
However, the phone-related services are starting to play a bigger and bigger part in the business of the company.
The services segment’s potential is seen by some of Apple’s more optimistic analysts as the driving force behind Cupertino’s growth story and a key component of the company’s $2.66 trillion valuation.
This clarifies the company’s strategic dilemma as well.
Apple’s business practices are coming under increasing scrutiny as it relies more on generating value through retention of customers through features like App Store commissions and subscriptions.
The company’s share price has been under pressure lately, partly because of the slowing sales of iPhones in China. The antitrust lawsuit is the most recent issue adding to the pressure.
The story of tech’s growth has finally turned from phones and apps to artificial intelligence (AI), as analysts at Bank of America Global Research aptly demonstrated on Wednesday when they wrote that their recent trip to Asia marked the first in 20 years “where smartphones were barely a part of the conversation.”. “.
Services could offer a long-term financial solution to the iPhone’s declining significance.
It also serves as a challenge to regulators to look into monopoly power and gauge how strong Apple’s closed ecosystem—dubbed the “Walled Garden”—is.
For Apple, the smoothness of the iPhone experience is a reflection of the security and freshness of its offerings; it is looking to Phil Schiller, a protégé of Steve Jobs, to confirm this.
No shady developer shows up breaking the club rules and Apple refuses to lend out jackets to Riffraff, who never makes it past the App Store front desk.
Like any other club, its success is largely dependent on its members’ loyalty.
However, to the users and developers who feel wronged by the company’s policies (excessive dues for club membership!).
The walls serve as a barrier against others.
To make matters worse, the walled garden is actually keeping people inside rather than just outside.
How convenience or confinement, or trying to prove loyalty or lock-in, is interpreted, determines a lot of conflict.
Maybe a protracted legal battle will highlight the true value of Big Tech’s victory: that, years later, people are unable to distinguish between the two.
Journalist Hamza Shaban covers the markets and economy for Yahoo Finance.
On Twitter, @hshaban, you can follow Hamza.
To read the most recent technology news that will affect the stock market, click this link.
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The challenging year for Apple (AAPL) just got worse.
When one considers that Apple is attempting to move away from its flagship hardware, it may seem odd that the Justice Department is pursuing its dominance in the smartphone space. However, the majority of the animosity directed towards Apple is a result of its staggering rise in services and its remarkable capacity to extract additional revenue from its ecosystem’s periphery.
Over half of Apple’s revenue still comes from iPhone sales. However, the company’s phone-related services are becoming more and more vital to its operations. A foundation of Apple’s $2.6 trillion valuation and the narrative driving Cupertino’s growth story, according to some of the company’s more optimistic analysts, is the services segment’s promise.
This also clarifies the strategic dilemma facing the company. Apple’s business practices are under increasing scrutiny as it relies more on generating value through retention of customers through features like App Store commissions and subscriptions.
The antitrust lawsuit is the most recent issue impacting the company’s stock price, which has been declining recently, partly because of China’s slowing iPhone sales.
Bank of America Global Research analysts, who wrote on Wednesday that their recent trip to Asia was the first in 20 years “where smartphones were barely a part of the conversation,” aptly illustrated the theme that the tech industry’s growth narrative has finally shifted away from phones/apps and toward AI. “.
A long-term financial solution to the iPhone’s declining significance could be services. It also serves as a challenge to regulators to look into monopoly power and gauge how strong Apple’s closed ecosystem—dubbed the “Walled Garden”—is.
Apple is relying on Steve Jobs disciple Phil Schiller to confirm its belief that the seamlessness of the iPhone experience reflects the security of its products and the vibrancy of its offerings. Apple will not lend out jackets to any unscrupulous developers who show up breaking the club’s rules, and Riffraff never makes it past the front desk of the App Store. And just like any other club, its longevity is a testament to its membership.
However, the walls serve as a tool of exclusion for the users and developers who are displeased with the company’s policies (high club dues!). Even worse, the walled garden is actually keeping people inside rather than just outside.
A lot of the conflict is about how to interpret confinement or convenience, about trying to prove loyalty or lock-in. Maybe an extended legal battle will highlight the glory of Big Tech’s victory: that, years later, nobody can really tell the difference.
Reporter Hamza Shaban covers the markets and economy for Yahoo Finance. Observe Hamza at @hshaban on Twitter.
For the most recent information on technology that will affect the stock market, click this link.
