The walls of Apple’s garden are tumbling down

🌈 Abstract

The article discusses the evolution of the smartphone market, particularly the dominance of the iPhone, and how Apple's tight control over its ecosystem has come under increasing scrutiny and pressure from regulators and competitors.

🙋 Q&A

[01] The Rise and Dominance of the iPhone

1. What was the author's initial reaction to seeing the first iPhone? The author describes the moment of seeing the first iPhone as "like seeing the moment that something fragile falls out of your hands. You know it's going to be everywhere, but for a second, it isn't." This suggests a sense of awe and recognition that the iPhone would become ubiquitous.

2. How did the iPhone's launch events differ from other tech product launches the author had covered? The author notes that the energy around a new iPhone launch was different, as "Normal people were aware of them, making them very different from the camera launch events I was covering." The iPhone launches felt like events that "made everyone stop and take notice" and "reverberated across the country."

3. How has the perception of the iPhone shifted over time? The author notes that the "vibe" around the iPhone has slowly shifted, with a sales associate describing the new iPhones as just "phones" rather than something exciting. The author suggests that iPhones have become more "appliance-like" in people's consciousness, with getting a new one feeling like an inevitability rather than an event.

[02] The Challenges Facing Apple

1. What factors have contributed to the slump in smartphone sales in recent years? According to IDC, smartphone sales have shrunk in 6 out of the last 7 years, attributed to improved device durability and a "lengthened replacement cycle" as smartphones have become more reliable and capable over time.

2. How does Apple's reliance on iPhone sales differ from other tech giants? The article notes that Apple is unique among the top revenue-generating companies in the US in that it derives the majority of its revenue from a single product: the iPhone. When the smartphone market declines, Apple feels the impact more acutely than companies like Amazon or Walmart.

3. What defensive strategies has Apple employed to maintain its dominance? The article discusses how Apple has built a "walled garden" around its ecosystem, making it difficult for users to take Apple products outside of the garden. This includes limiting cross-platform compatibility for services like iMessage and FaceTime, as well as maintaining tight control over the App Store and its revenue-generating commission structure.

[03] Regulatory Pressure and the Future of Apple's Dominance

1. What legal and regulatory challenges has Apple faced regarding its App Store and ecosystem practices? The article mentions the Epic lawsuit over Apple's 30% commission on the App Store, the EU's legislation to reign in big tech companies, and the recent US Department of Justice antitrust lawsuit against Apple for operating an illegal monopoly in the smartphone market.

2. How has Apple responded to these challenges, and how effective have these responses been? Apple has made some changes in response to the new regulations, such as adding a new App Store commission structure, enabling third-party app stores, and creating a choice screen for users to pick their preferred web browser. However, the article suggests these changes are seen as "malicious compliance" by app developers, and further regulatory pressure is likely.

3. What is the long-term outlook for Apple's ability to maintain its tight control over its ecosystem? The article concludes that the "pressure buildup" on Apple over the past five years is unlikely to stop, and that the company may have had more control over its destiny by opening up its services earlier. The article suggests that "a little daylight is creeping into the walled garden now, and I'll bet there are even brighter days ahead of us."