Apple’s ‘One More Thing’ Is Bigger Than What You Imagine

In Apple Event — Nov. 10, Apple introduced new Macs all powered by Apple’s M1 ARM SoC. You can read more on the news. Most of them are consumer focus. Some “tech” enthusiasts even extrapolate implications further, e.g. Intel has to be very worrying. But, it’s not even the whole story. Apple’s end game is to unify iOS, iPadOS & macOS app ecosystems to a bigger & sustainable empire for its long-term prosperity.

www.apple.com/mac/m1

🗡The Dagger at the End of Apple’s Map🗺️

Why is a unified app empire critical to Apple’s long-term prosperity? To answer that, we need to look into its business to connect the dots. Sure, technology, e.g. new M1 SoC is a critical breakthrough & will bring many mid-term changes. Many to be unpacked, but for another day. For a bigger picture, it is a means not the end. Today, let’s focus on why in terms of “show me the money” from a bird’s-eye view. 3 simple angles: revenue, growth & new needs.

In Apple’s own words: in 2019 iPhone revenue -15%. Whereas services revenue +19% to $11b, an all-time high. Furthermore, its service margin(64%) is 2X to its product’s(32%) according to Trefis.com.

www.statista.com/statistics/382260/segments-share-revenue-of-apple
trefis.com: Why-Are-Apple-s-Service-Margins-Trending-Steadily-Higher?

Apple services only run on Apple devices. Until a CEO changes that, Apple device Active Installed Base caps the Total Addressable Market of its services. Even Apple still manages to add 100M each year since 2018. Even it’s a big number for many businesses, but +7% annually is just good, not great.

Don’t get me wrong, iPhone is still huge, and Apple can milk the Cash Crow for a long time. But as one wise saying: it’s not just about how big you are, but more importantly how fast you grow. Apple is now the №4 smartphone OEM, shipped 41.6 M iPhones in 3Q20, -10.6% year over year. Still the tier one, but for how long?

Source: Apple Report 2020Q1, 2019Q1 & 2018Q1

Sure, the table UX for productivity is still less appealing than notebook/desktop overall. Nor anyone figures out how to get the best of both form factors yet. Nevertheless, Apple is trying hard & leading, e.g. introducing iPadOS in 2019. Just check out which device professional digital artists and executives are using increasingly. iPad is a gradually good substitute to a notebook for more core use cases while expanding new use cases & interaction models. Remember: Innovation often happens at the edge.

Furthermore in Q3 2020, Apple ships 13.9M iPad as the №1 OEM with 29% tablet market share. Whereas, it ships 6.9M Mac as the №4 OEM with 9% PC market share. Professional app developers, most them want to reach as many users as possible. It’s natural to prioritize iPad above Mac to reach more users. So, how about unifying both for app developers? Apple does just that since 2019. Mac Catalyst — “There’s never been a better time to turn your iPad app into a powerful Mac app”. Only one caveat: assuming app developers can really afford to invest to do one more app. Last time I heard, most top(common) app developers only focus on 3 apps: iOS, Android & Web.

Apple: the-new-ipados-powers-unique-experiences-designed-for-ipad

To Rule Them All

In its own words: Apple provides great Services & UX seamless across 4 SW platforms: iOS, macOS, watchOS & tvOS. BTW, someone forgets to update the statement to include iPadOS. 🤔 So, what could possibly beat that to build the long-term economic moat?

Source: Apple CFO: 2019 iPhone installed base = 900 million

How about a unified app ecosystem? “M1 brings more apps to Mac than ever.” Macs can run iPhone and iPad apps now. The best thing is almost costing users & app developers nothing. Furthermore, Universal App makes the x86 to ARM architecture transition easier for app developers. Sure, it’s still very hard for such transition & UX may not be perfect from day one. Nevertheless, I’m impressed Apple dares to try it again. It may just get it because the timing is right this round.

www.apple.com/mac/m1: “a greater range of apps than ever before — the biggest collection ever for Mac”

More than 2 thousand years ago, Qin Shi Huang, China’s first emperor changed the course of history forever by standardizing the carriage track (e.g. App Store)& the written language (e.g. SDK) among the other 6 kingdoms he conquered. Apple is a very few company that can really pull this off across mobile, tablet & notebook/desktop. When it does… 🎰

Qin’s wars of unification

Jing Ke tried to assassinate the King of Qin by a dagger scrolled within a map. Revealing the dagger scrolled in a map became an expression as one’s true intent is finally revealed. Check out Hero (2002 film), which has interesting spins on the story.

Revealing the dagger scrolled with in a map

The opinions stated here are my own, not those of my company. Furthermore, considering them are thought experiments & open to debate, because the reality is complicated with many more moving parts.

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Sam Lin

A Taiwanese lives in Silicon Valley since 2014 & has random opinions on some stuff. The opinions shared here are my own, not those of companies I work for.