Apple had another great quarter, and with its arresting success comes a possible new threat from a possibly new business direction. No, I’m not talking about Apple dominating the smartphone or tablet space—it will almost surely suffer the same longer-term fate in these spaces that it suffered in the PC space. Apple is a trend-setter, a cream-skimmer in the device market. As the market commoditizes, as all valuable spaces do, Apple loses share to price leaders. No, the problem isn’t in the appliances, it’s in services.
Apple has been looking at a revamp of its “cloud” or service position. The basic model that Apple has long applied has been to sell Apple users device-related services (MobileMe, iWork, iTunes, etc) and to use this add-on model to further raise revenue and (especially) profit. It’s not at all distant from the old call-forwarding feature model of the RBOCs where you make your money on the add-ons. To protect this space, Apple recently changed its policy to ban applications that accepted recurring subscription payments, which now have to go through Apple’s store.
Apple is also raising a related and possibly even more difficult question, which is whether consumerism is now so dominating technology development and deployment that the business IT processes are also-rans in terms of focus, revenue and planning. If most of IT is the consumer, then IT is a series of classical boom-bust cycles. For any Big Idea, there’s a quick surge of revenue and profit followed immediately by a combination of commoditization and competition that kills the opportunity in a short period (about 20% of the total period of a market of this sort presents “opportunity”).