Like Apple, twenty years ago Microsoft was the world’s most valuable company, but when it became clear that Microsoft had missed the internet boat their value plummetted, and despite remaining extremely profitable their share price never recovered until they managed to find a new growth path.
Yesterday Apple announced their earnings, and still managed to make tens of billions of profit, and despite the decline in iPhone sales, and Apple was able to point towards a growing installed base and service revenue as the way forward. Like the image above, this is like saying the prow of the ship is rising while the stern is sinking – the eventual outcome is still inevitable.
Like Microsoft twenty years ago, Apple is stuck on its own platform, and that platform is seeing declining sales which means eventually the installed base will stagnate or possibly even shrink. While Apple may try and extract as much money as possible via services from these users, the tighter they make their grip the more users will defect to platforms which offer the same services for cheaper.
Unless Apple makes their services cross-platform, they will forever be trapped on their own sinking installed base, unfortunately, surrounded by more competent competitors who are all too happy to snatch up their most profitable customers.
Welcome to Apple – the Microsoft 2.0.
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