Category Archives: Messaging

Android, Apple, Beats, iMessage, iTunes, Messaging, Music, Windows

Expanding Apple services on non-Apple devices

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A few months back, I wrote this piece which talked among other things about why Apple doesn’t make most of its services available on third-party devices. The basic argument can be summed up in this quote from that piece:

When the whole rationale for Apple’s software is to add value to its hardware products, the idea of providing cross-platform software or services becomes inimical. To the extent that Apple software or services are available on non-Apple devices, they cease to provide meaningful differentiation for Apple products.

However, Apple has continued to make some services available on third party devices, and I see potential for more of this in future. I definitely don’t see Apple abandoning the strategy I outlined in that post, but I do see potential for them to broaden the range of what they provide on non-Apple devices, so in this piece I’m going to argue the other side of that earlier piece.

The iPhone and Mac installed bases

The key to all this is to understand the difference between the iPhone and Mac installed bases. The iPhone is now in every way Apple’s lead product – it accounts for half to two thirds of total revenue in any given quarter and the lion’s share of profits. And it’s also the Apple product with by far the largest installed base. Let’s look at the numbers quickly:

  • iPhone: around 450 million users
  • iPad: around 200 million users
  • Mac: around 80 million users.

We’ve leave the iPad to one side and focus on the iPhone and Mac. What this leaves us with is a world where there’s only very partial overlap between iPhone users and Mac users, with the vast majority of iPhone users likely owning or using Windows PCs rather than Macs, if they use a PC at all:

Mac iPhone and Windows basesApple has done a great deal over the past couple of years to better serve Mac + iPhone users (including those who also have iPads), including various iCloud features, and the Handoff and Continuity concepts and their associated feature sets announced at last year’s WWDC. All this makes owning more than one Apple device better than owning just one, because the devices you have work better together. The Apple Watch extends this even further, and deepens the attractiveness of an all-Apple ecosystem.

300 million Windows + iPhone users

However, there are still several hundred million iPhone users who don’t own or use Macs on a daily basis, many of whom do use Windows PCs, either by choice or because work, cost constraints, or other reasons require them to. This Windows + iPhone group is actually substantially bigger than the Mac + iPhone group Apple has spent so much time serving, probably around three hundred million or more:
Windows plus iPhone diagramIn an ideal world, Apple would have these Windows + iPhone users become Mac + iPhone users over time, but that isn’t a realistic scenario for a variety of reasons, especially in the short term. So, how does Apple serve these users?

iTunes on Windows and beyond

Well, the answer began with the launch of iTunes on Windows in 2003, two years after the original launch on the Mac, in an attempt to create a market for the iPod larger than the base of Mac users. With the launch of the iPhone, Apple piggybacked off this iTunes installed base as a way to make that product, too, Windows compatible. Since that time, Apple has introduced a few other pieces of installable software for Windows PCs, but much of its effort in supporting Windows users recently has been in the form of web apps rather than native software:Apple software on WindowsiCloud Drive is the only new product Apple has introduced for Windows recently, and it builds on earlier versions of the iCloud product for Windows, which enables some of the extensions and add-ons shown in the middle column in the table above too. But Apple has now made a fairly wide range of products and services available on the web, at iCloud.com, as shown in that third column. These serve the Windows+iPhone reasonably well for some use cases, though I can’t imagine as a Windows user wanting to use the web versions of the iWork suite as my main productivity apps.

What’s missing?

At this point, it’s worth asking what else Apple needs to do to make its products available on third party devices, and whether it’s likely to do so. Here’s a short list of potential next steps:

  • A web version of Maps
  • iTunes on Android devices
  • The Apple music subscription service on Android
  • Messages on Windows and/or Android
  • The iLife apps on Windows and/or Android
  • iBooks on Windows and Android.

There may be one or two other gaps, but I think that about covers it. Which of these seem most likely at this point? The diagram below shows my estimate of the likelihood of each of these things happening:3rd party apps next stepsIf Apple hadn’t acquired Beats in order to build a subscription music service, I would have put the likelihood of Apple’s music service landing on Android much lower than I have, but since Tim Cook has already signaled that Beats will remain on Android, it seems a fairly sure bet that the successor will be there too. I don’t quite understand the strategic rationale here – almost anything on Android seems to fly in the face of Steve Jobs’ quote in the Walter Isaacson book:

We put iTunes on Windows in order to sell more iPods. But I don’t see an advantage of putting our music app on Android, except to make Android users happy. And I don’t want to make Android users happy.

The only real explanation I can see (beyond maintaining the status quo ante with Beats) is that Apple is competing head-on here against existing subscription music services, all of which are available cross-platform, so this is a concession to reality. But it still feels odd.

Maps on the web seem very likely to me – Google’s web maps were a fantastic hook for Android when it arrived, because it allowed people to make a seamless transition from the product they used on the web for planning, figuring out a route and so on to the one they used on their smartphone for actually navigating from A to B. The fact that Apple doesn’t have a Maps option for anyone using a Windows PC means that those users are far more likely to use other mapping services both on the web and on their phones, or to have disconnected experiences on those two devices. Apple has posted job listings several times (including one that was noticed today) indicating that it might be looking to bring its Maps app to the web, and this seems eminently believable. I’m only putting this slightly lower than the subscription service on Android because that seems largely a foregone conclusion, whereas Apple seems to have been toying with the idea of a web maps app for some time without pulling the trigger.

Essentially everything else I listed seems significantly less likely to happen, although if the music subscription service lands on Android it might make sense to make the full iTunes experience available on Android too. iBooks makes little sense as a cross-platform product – people don’t read many books on their PCs in comparison to tablets and smartphones, while porting iLife would be a huge effort and significantly undercut one of the differentiators of the Mac. Messages was actually the specific focus of the earlier post I referred to at the outset of this one, and I outlined there the reasons I can’t see that happening. It feels like the archetypical example of Apple’s own-devices-only strategy, and it’s also uniquely mobile-first among all these products.

We’ll know more next week

I’m writing this the week before WWDC, where I expect that at the very least we’ll see the music subscription service launch and know whether it will indeed land on Android in either its full or a watered down form. But we’ll likely also get more clues about how Apple sees the opportunity beyond its own devices, and whether the current set of products and services for the Windows + iPhone crowd represents the outer limits of how far Apple is willing to go to keep them happy.

Apple, Big picture, Developer events, iMessage, Messaging, Whole company analysis, WWDC, WWDC 2014

What “winning” means for Apple

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I posted a tweet yesterday that seemed to hit a nerve with people, and so I thought I’d expand on my thinking a bit here. What I actually posted was two related tweets, though it was the second that seemed to resonate – the first was merely context:

There were at least two articles that prompted my tweet, but the main one was this one from Ellis Hamburger at the Verge. Both took a tack that I felt fundamentally misunderstood what Apple does and how it does it, but there was one particular section of piece on the Verge that sums up the mentality here very well, so I’ll use that as the jumping off point:

But today, communications are a commodity, and it’s hard (if not impossible) to survive in the long-run as an app that only works on one platform. A dozen messaging apps are sweeping the globe, and all of them work whether you have an iPhone, Android, Mac, or PC. Apple’s Messages app, and the iMessage platform therein, only work if your friends and family use Apple products. In the United States, where iPhone market share is highest of almost any country, iMessage’s thin ice is harder to perceive. The United States is one of the only countries where no one messaging app reigns king, but elsewhere markets are dominated by one messaging app or another, all of which have similar features and work on all platforms.

A single-platform messaging app cannot win. Despite its tasteful new feature additions, however derivative they may be, Apple is playing on borrowed time. If Apple is determined to stay single-platform, it’s going to take more than new features to save its messaging ambitions.

To suggest that Apple is trying to “win” in the messaging wars is equivalent to suggesting that iTunes was an attempt to “win” in the music-playing software wars. Neither is the case. The first thing to understand about Apple is that it’s motivated first and foremost by creating the best possible experience on Apple devices. This imperative drove Steve Jobs to the extent that he made poor business decisions early on in his time at Apple, ultimately leading to his ouster. He was so fixated with this objective that he lost sight of others and ultimately of what it would take to keep Apple in business as a public company, a lesson he learned the hard way and ultimately brought back to Apple when he returned. But that has always been the fundamental motivation for Apple’s senior leaders above all else.

That motivation leads to one of the other defining characteristics of Apple as a company: the tight integration of hardware, software and services. Apple has never been about creating cross-platform services. To those of you who may wish to point out that Apple has long had iTunes on Windows, I direct you to this quote from Walter Isaacson’s 2011 book on Steve Jobs:

We put iTunes on Windows in order to sell more iPods. But I don’t see an advantage of putting our music app on Android, except to make Android users happy. And I don’t want to make Android users happy.

Apple’s only significant cross-platform move was still a move to make Apple devices more compelling – the simple fact is that an iPod was not a standalone device, and it needed iTunes to be at all useful. Given the Mac’s very low share of the global PC market, releasing iTunes for Windows was an obvious strategic imperative. But it was done with one objective in mind – making the iPod a compelling device for a larger number of users, and yes, selling more iPods as a result.

What both the pieces I linked to above ignore is that everything Apple does is part of an ecosystem, and that’s exactly why people buy its products. Ever since the iPod and iTunes launched, Apple has been in the business of connecting its devices together in a way that adds value to each of them. The iPod added value to the Mac by providing a portable music player for your iTunes music, and iTunes on the Mac added value to the iPod by providing the conduit through which you obtained music to put on your device. When Apple released iTunes, it wasn’t competing in the music-playing software market anymore than iMessage is Apple’s attempt to compete in the messaging market. Both products were software Apple developed to add more value to its hardware products, and should not be seen as products in their own right.

When the whole rationale for Apple’s software is to add value to its hardware products, the idea of providing cross-platform software or services becomes inimical. To the extent that Apple software or services are available on non-Apple devices, they cease to provide meaningful differentiation for Apple products. By contrast, making Apple-exclusive software and services available on various different Apple hardware products adds significant value, and providing tighter integration between those devices through software and services adds even more. Hence the focus on these things at WWDC on Monday. To suggest that Apple needs to make its Messages product (or any other product) cross-platform in order to succeed is to get things exactly backwards – Apple doesn’t make hardware to be successful in messaging; it makes a messaging product to be successful in hardware.

This makes its Beats acquisition particularly interesting, since the Beats music streaming service is cross-platform today. But I suspect that the product we eventually see from Apple which integrates Beats’ streaming and curation technology will go back to being Apple-only. If there’s any strategic rationale to Apple spending so much money to stay at the forefront of the music business, it’s to make the iPhone the best device for music, and not to create a broad-based music subscription service.

All of this is part of a broader trend in the consumer technology space, which is that the most successful companies are competing in a different way, by combining hardware, software, content, communications (and in some cases connectivity) in integrated ways which create compelling end-to-end experiences for consumers. I see the same flawed logic among people criticizing Amazon’s entry to the smartphone market on the basis that no-one makes money in smartphones. If Amazon is entering the smartphone market, it’s not to make money on smartphones, but to drive buyers to spend more money with Amazon as a whole, across digital content and e-commerce. Amazon and Apple each have a core business that makes the bulk of their money, and their entry into adjacent spaces is intended to reinforce the core business, often at break-even or even negative margins. Google is the archetype of this model, providing many services for free, all of them funded by advertising and especially search advertising. It provides those services not out of the kindness of its heart but in order to increase the appeal of the Google ecosystem and to gather data that helps with its other businesses.

Apple isn’t fighting the messaging war. To the extent it’s fighting a war at all, it’s fighting an ecosystem war, and so far it’s winning. Is Apple’s tightly-integrated model the only way to be successful in the consumer technology market? Not at all, though it certainly seems to be the way to generate the best margins. There’s always going to be room and demand for other models too, and both Microsoft and Google have benefited greatly in market share terms from taking a less integrated approach. But to imply that Apple’s approach is ultimately doomed is to ignore what’s made it so successful over the past several decades, and the model it needs to continue to pursue to remain successful.