Apple’s pivot to services: What it means for telcos

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With iPhone sales apparently peaking, Apple is looking to double its revenue from services over the next four years to approximately US$50 billion, taking it deeper into adjacent markets, such as entertainment, financial services and communications. However, Apple trails behind Google in developing artificial intelligence and needs to extend the reach of its services to capture more behavioural data. If Apple decides to decouple more of its key services from its hardware, that would have major ramifications for Google, Amazon, Facebook and many of the world’s leading telcos.

Description

Format: PDF filePages: 36 pagesCharts: 13Author: David PringlePublication Date: June 2017

Table of Contents

  • Executive Summary
  • Introduction
  • Apple’s evolving strategy
  • Playing catch-up in artificial intelligence
  • What does Apple earn from services?
  • What are Apple’s key services?
  • Communications – Apple iMessage and FaceTime
  • Commerce – Apple Pay and Apple Wallet
  • Content – iTunes, Apple Music, Apple TV
  • Software – the App Store, Apple Maps
  • Artificial intelligence and the role of Siri
  • Tools for developers
  • Conclusions and implications for rivals
  • Implications for rivals

Table of Figure

  • Figure 1: Installed base of smartphones by operating system
  • Figure 2: Apple’s artificial intelligence, as manifest in Siri, isn’t that smart
  • Figure 3: Apple’s services business is comparable in size to Facebook
  • Figure 4: The services business is Apple’s main growth engine
  • Figure 5: The strength of Apple’s online commerce ecosystem
  • Figure 6: iMessage is becoming a direct competitor to Instagram & WhatsApp
  • Figure 7: Various apps allow consumers to make payments via Apple Pay
  • Figure 8: Apple Pay is available in a limited number of markets
  • Figure 9: Unlike most Apple services, Apple Music is “available everywhere”
  • Figure 10: Apple’s App Store generates far more revenue than Google Play
  • Figure 11: Apple Maps’ navigation trailed well behind Google Maps in June 2016
  • Figure 12: SWOT analysis of Apple in the services sector

Technologies and industry terms referenced include: AI, APIs, artificial intelligence, artificial intelligence (AI), big data, business models, communications, content, digital commerce, digital services, entertainment, location based services, Machine Learning, Mergers and acquisitions, Messaging, mobile advertising, mobile commerce, mobile marketing, mobile payments, Personal Data, Strategy, telco strategy, Telecoms