Electronic Arts too. Apple should acquire companies that would integrate into its music/entertainment/end-user consumer devices ecosystem. Acquisitions and investments are defensive. Good strategies are offensive and defensive. Healthcare is an example of how Apple can leverage its iWatch and iPhone to healthcare solutions, like monitoring and diagnoses. Perhaps the most important new revenue streams will be derived from applications of its hardware and software, which is different for Apple. Apple will likely offer a mix of supporting products and services to keep as many customers inside the family as possible. Smaller, cooler (and cheaper) phones? Obviously. New HomePod/speaker? Yes, but Apple’s way behind with an inferior product that needs improvement. (Is there room for another streamer with broad original content? Probably, but this initiative will require massive ongoing investments.) Self-driving vehicle software? Sure. And then there’s the App Store which is a cash cow if there ever was one, though Apple must keep looking over its shoulder regarding that 30% commission which, if reduced, would significantly cut into its profits. Apple AR/VR (eventually) versus, for example, Oculus, etc. Apple Music versus, for example, Spotify. What Apple does not want is for its customers to leave its ecosystem for alternative or, worse, superior, products or services.
REVENUE RETRIEVIN DAY SHIFT ITUNES DRIVERS
In fact, Apple’s new ecosystem is as much about services as it is about products, though it’s important not to separate the two, since they drive each other’s revenue streams. Which is why Apple needs new products as drivers of new services, and vice versa. We’ll see.Īpple is also betting on services revenue which has been growing significantly over the past few years. Smart glasses are even trickier. But it’s the kind of technology – where advanced architecture meets design elegance – where Apple could have competitive advantage. Apple rumor managers project that by 2020 it will assault the market with some of the most unique products and services the market has ever seen. While the ARKit is real, headsets are trickier, given how many are already on the market ( and with adoption rates slower than anticipated). It’s often “rumored”that Apple is betting big on augmented and virtual reality (AR/VR), as well it should. Strategy #1 – New Products, Services & Applications – In – Not Outside of – Its Ecosystem It’s also hard to follow versus lead: Apple’s iWatch is a not-so-fast-follower and the company is already late to the virtual reality (VR) and augmented realty (AR) markets.” Differentiation is tougher for Apple (and everyone) to create and sustain. Arguably, Apple only holds one competitive advantage: the iPhone – which keeps getting more expensive and is more popular in the US than around the world. But the competition in smartphones, music and tablets is fierce. “Once upon a time, Apple created whole new categories with unique products we didn’t even know we wanted – and then learned we couldn’t live without! The iPod and iPhone are the two best examples, though some would argue that iTunes makes the unique product category list as well. It knows all about the need for additional revenue streams.Īpple is famous for market disruption with new products and services. Apple would like to increase iPhone market share in a shrinking market while Microsoft is increasing its Azure market share in a growing market. (By the way, there’s vulnerability at Alphabet and Facebook with their over-reliance on ad revenue to sustain their business models, and the likely regulation of social media that could easily disturb if not disrupt their entire business models.) Apple of course knows that its future will not be defined by iPhones. When the Apple pie-chart is compared to the Microsoft revenue pie-chart, the differences are striking, especially if we look at projected growth. But the Apple revenue pie-chart shows over 60% of its revenue comes from the iPhone. Apple still pitches the most expensive phones, but there’s the obvious realization that Apple must broaden its iPhone user base, which is why there are so many iPhone varieties. There are lots of iPhones on the market today. IPhones Still Drive the Revenue Bus – But Not for Long Let’s focus on products and services and the overall revenue strategy.