Benedict Evans: Apple is the $2T elephant in the room

From Evans’ “A decade of the Tim Cook machine” posted Tuesday to subscribers of Benedict’s Newsletter:

Looking back over the enthusiasms, arguments and panics around tech in the past few years, I sometimes think that Apple is the $2tn elephant in the corner, mostly silent and serenely indifferent to the news cycle. It doesn’t worry about the “metaverse”, content moderation or hacked elections, and newspaper companies haven’t worked out how to shake it down. It just ships.

Every year, with metronomic precision, it delivers another new set of hardware and software, and another set of technology building blocks that fit into a decade-long strategic plan. Never mind Apple in the 1990s — Microsoft in the 1990s could never manage this. Every year a whole new phone arrives, exactly on schedule, keeping or leading the pace for the entire industry, and then ships in the hundreds of millions of units, machined out of aluminum and stainless steel, at a 40 per cent gross margin. This is very hard…

Apple’s scale comes with a business model that sets it aside from many of the more difficult choices in tech. If you don’t have a search engine or a social network and messed up your attempt at an ad business, it’s easier to say you won’t try to work out what people are interested in. You’re also free to treat privacy as merely an engineering challenge, much like security or performance, and to sell it as a feature. That’s not to say that Apple isn’t sincere when it says that “privacy is a fundamental human right” — indeed, Tim Cook, despite his public persona as a bland supply-chain engineer whose secret pleasure is an extra energy bar, has used Apple’s voice for social causes far more than Steve Jobs ever did. But if you’ve spent a decade making Apple the privacy company, that makes it easier to sell a credit card, or (one day) a pair of glasses with built-in AI-powered cameras. Privacy is another building block.

Apple’s sometimes rather pious public stance on privacy can raise hackles in parts of Silicon Valley, especially when those privacy features are not available to its Chinese customers (a choice it did have to make). But the fight in most minds this autumn is the App Store, where Apple insists on a 30 per cent fee for many kinds of content, and on controlling what apps you can install. There are two sides to this, both strong, but it seems clear that Apple will lose the 30 per cent, in some form… There’s a lawsuit here as well, from the US Department of Justice, but combined, that $25bn just happens to match Netflix’s entire business. Apple is a big company, and the legal challenges, so far, can look small.

My take: Evans is always insightful, but his insights don’t always cohere. At least for me.

5 Comments

  1. Fred Stein said:
    Agree, PED. Usually Benedict is great. This time his insights just aren’t insightful.

    He misses what I consider the main point, safety.

    The vast majority of Apple’s 1B users are not capable of ensuring their own safety in an always connected world.

    Safety also applies to App developers. Apple gives them a massive demographic on a sliver platter of trust, trust that the payment processor won’t leak their personal info, trust that the Apps are safe for kids and adults too, trust that copycat Apps will be blocked. Apple also give developers 250,000 APIs that leverage the best CPU/GPU/NN chips + cameras + displays. That’s a lot of value for 30%.

    6
    September 28, 2021
  2. Gregg Thurman said:
    but his insights don’t always cohere. At least for me.

    He misses what I consider the main point

    The main point, the ONLY point, that should be considered on whether Apple is doing the right thing, is that from its leading position it continues to attract new customers willing to pay more than twice the average of competing products.

    The buying public has considered the alternatives and rejected the arguments against Apple’s practices. EOS.

    9
    September 28, 2021
  3. Robert Paul Leitao said:
    Acquiescence isn’t the pathway to long-term success. If privacy is a “building block” it’s because it has real and tangible value for customers. Apple isn’t focused on privacy to point of obsession because it sells more units or services. Apple sells more units and has crafted a safer environment for the selection of services because at the core of the company is the concern for human rights and human dignity. Apple elevates the importance of privacy because it matters to most of us. Those who desire to exploit others just have a bigger megaphone because compromise loves a crowd.

    4
    September 28, 2021
  4. Apple will lose the 30% or less cut from Apps/Games when Sony, Nintendo, MSFT, GOOG and all other platforms do. The courts or Congress cannot pick & choose who to punish based on the distorted view of a CEO named Sweéney or Nadella.

    8
    September 28, 2021
  5. Jonny T said:
    The ONLY thing that really matters is that Apple stays true to itself in wanting to make the best products possible. No doubt it is.

    As Ben says, she sails along serenely, and ignores (as she always has) the noise and poor advice the world offers her! ⛵️

    (NB Please Apple can we have a better, white sailed elegant sailing yacht than this emoji).

    1
    September 29, 2021

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