The original report reads like it was heavily influenced by Apple's marketing team. There are asides that are just ad copy for Apple's other products, for example,
> Users can find thousands of apps on the App Store to help them adopt healthier lifestyles. Many of these apps take advantage of Apple’s HealthKit API, which allows the use of sophisticated sensors on iPhone and Apple Watch, while ensuring that user data is safe according to Apple’s rigorous privacy and data security protocols.
The actual 1.1T number comes mostly (81%) from goods and services purchases (mostly retail) made in mobile apps on Apple devices. The methodology?
> We estimate the share of each app category’s sales that occur via mobile apps, within each geography, using information collected from marketing surveys or data on usage patterns. Finally, we apportion usage to Apple platforms based on the overall iOS share market share.
So it's an estimate; not hard data.
I don't want to discount the conclusion, because it's always difficult to understand Apple from outside the company, and the point really is just that people make a lot of purchases on Apple devices.
I hate to break it to you, but virtually everything at this scale is an estimate based on models and not direct data. We don't e.g. get more reliable GDP numbers because we get hard data; we get it by creating new models that recognize and/or emphasize variables which were previously being ignored.
The reason to be skeptical here is not because "it's an estimate"; it's because it's one group's model, studying a very nascent space for which there's been very little academic research.
What this estimate shows is that this is a clearly very large economy that isn't being rigorously modeled or studied right now. And we should probably devote some resources to that since what happens in this economy will meaningfully contribute to employment and national GDPs.
>The original report reads like it was heavily influenced by Apple's marketing team.
When you read enough over Apple's marketing and PR over the years. You can easily detect them. Not saying all marketing are bad, but I would be cautious simply because of that.
Horace is one of the better thinkers regarding Apple’s business. He consistently ranks relatively high amongst the independent analysts at predicting Apple’s quarterly earnings, although to be honest I don’t put much stock in that.
He did a lot of analysis to determine how many active devices Apple had in the world before Apple even started reporting those figures.
He was one of the only analysts who understood Apple’s position and scale, as well as some of the internal culture that helped explain a lot of their seemingly abstruse decision making.
Recently he got really focused on “micro-mobility” (ie, Bird/Lime scooters, etc) which hasn’t really been as earthshaking as he predicted, but he’s been mostly proven right about Apple.
It’s unreal to see the scope of Tim Cook’s Apple (or the iPhone Apple if you prefer).
> Recently he got really focused on “micro-mobility” (ie, Bird/Lime scooters, etc) which hasn’t really been as earthshaking as he predicted, but he’s been mostly proven right about Apple.
What was his prediction? Seems like that's only increasing in popularity as people realize cars are like the most absurdly wasteful, lazy, and/or excessive methods of transportation imaginable for most daily activities, but it would depend on where you are and what your real requirements are.
I think he is mostly correct that small, cheap, easy transportation can revolutionize urban centers in a variety of ways. I think he has been relatively bullish on the companies, and they haven’t exactly panned out, from a business perspective.
> Recently he got really focused on “micro-mobility” (ie, Bird/Lime scooters, etc) which hasn’t really been as earthshaking as he predicted
Mostly because of antisocial behavior of all sorts: people thinking that scooters were similar to bikes so you could drive them while wasted, random youth groups throwing them off of bridges, into waterways or otherwise destroying them "for the lulz", inconsiderate dumb fucks parking their scooters right where they stepped off, or companies that plastered scooters, bikes and cars over entire cities without coordinating with any authority beforehand.
All of that led to a massive amount of public resentment and subsequent regulation that impeded usage (e.g. no-park-here zones, speed limits during the night and sobriety tests to reduce the risk for drunkards, requirements to force people to submit parking photos), and on top of that come the sometimes ridiculous "unlock fees" or absurd pricing of 20-30 ct/min or more. Public transport tickets cost less than that.
Part of this is the companies themselves to blame:
Scooter and bike share companies routinely parked (and still park) bikes and scooters directly in the path of pedestrians because they know that the more visible their devices are, the more likely someone will use them.
Additionally, as you point out the pricing these companies charge started out very low but have escalated quickly. But this isn't always true - micromobility can replace ownership if done right: Companies with presumably less VC funding, such as Donkey Republic or Forest have different pricing models that are still affordable. In Donkey Republic's case, you can sometimes sign up for a $10/month subscription with minimum three months (equivalent in local currency) where you can then reserve a bike and take it home with you or park it near your house but blocked from others renting it. You pay a discounted fee to ride it, and an even smaller fee to reserve it.
Cities are also to blame:
Better than no-parking-zones are cities like Paris where they created parking spaces specifically for bikes and scooters. You rarely see problems in these cities. Some places require designated parking areas without making the space in the roads for them - those are much more problematic because the parking spaces fill and spill over onto where people would prefer to walk or drive.
But users are indeed part of the problem:
The number of times I've seen unsafe drivers of any vehicle, or two people on one scooter, or scooters or bikes going the wrong way down a bike lane... the problems are actually endless.
But the problems aren't always with scooters or e-bikes themselves. Sometimes it's an ecosystem problem, and sometimes the rental companies are too short-sighted.
And regulation isn't always bad:
As a scooter rider myself, I look forward to the day when the 2027 E.U. law requiring removable batteries might take effect in the private scooter market. It's silly that so many high end scooter brands aren't making batteries removable simply because they don't want to have to deal with shipping batteries and user-replaceable parts and the inherent design costs of a removable battery.
We’re drifting away from the original topic, but I suspect it has less to do with antisocial behavior and more to do with saturating the intersection of people interested in riding on scooters and places where scooter riding is a plausible mode of transportation.
Horace (and the various VC firms that dumped money on e-scooter companies) probably assumed that intersection had more people in it than seems to be playing out in reality.
Crazy to think when they started, their product was a chipboard. You had to put the video monitor on yourself.
What has gotten them huge, and sustained them throughout the years, was a series of products that really look nothing like their first. Or their second. Just a continual evolution against a vision, which I think has been pretty consistent.
Worth putting modern, small startups today in that context...you never know what they'll evolve to become beyond their first, second, even third products
Given the context, you would then want to look at value extraction.
How much is each entity extracting from the suggested economy in terms of income.
PayPal operating income: $4 billion
Apple operating income: $114 billion
And of course PayPal is a skimmer, somewhat similar to Visa, so their extraction is miniscule compared to the transaction base. Apple carves out a fat profit from their ecosystem by comparison.
Maybe PayPal is beaten down here and their stock is relatively cheap as a value play. Or maybe they're about to be destroyed as the US switches to a European style, low cost insta money moving system courtesy of FedNow, and the market is pricing it accordingly. PayPal better diversify in a hurry, the transaction skimming business isn't going to be so nice in the future.
But this is a bit of a risk, isn't it? It means that there is a huge margin in anyone who could disintermediate Apple, and an incentive for other parties to encourage that. And clear evidence of some kind of monopoly rent -- how are they sustaining a ~30% margin when PayPal's is a fraction of a percent, unless they have a monopoly that should be subject to antitrust action?
The fact that Apple is even allowed to charge more than 100% markup is one of those tell tales signs of "you might be living in a suboptimal society when".
The same one where advertisement for prescription-only drugs are not allowed on TV, politicians are forced to run on the merit of their party's platform and negative campaigning is illegal, where the housing market doesn't allow someone to "wait for a higher bid" when someone offers them asking price and rent bidding is illegal, and where health care is practiced in a way that actually helps people in a cheap and effective manner because that's your tax dollars at work.
Only if you use their definition of monopoly at minimum they form an Oligopoly in phones. (They repeatedly have claimed in court that all computing devices are the market they compete in with iPhone)
If you are an Apple user what real choice do you have? The cost of switching is massive for established users as everything Apple only supports Apple.
Sure an unaffiliated user can choose but once you are in one camp it requires a massive change to switch.
They utilize this to raise their prices holding the difficulty to switch against their users.
On a similar note they use heavy vertical integration to avoid options for users. You want their OS you need to buy their hardware.
"Doesn't have a monopoly" only makes sense in a make believe world where you have 95% market share or enough competition.
Of all the big tech companies Apple is the most innocuous. There have no monopoly in any of their sectors and you can just ignore them if you wish, as I do, without any consequences.
> this data includes payments which are not captured by Apple directly. In the words of the authors, “More than 90% of this figure originated from transactions that did not happen through the App Store, meaning that these amounts accrued solely to developers and other third parties, and that Apple collected no commission on them.”
Who's gonna break them up? The government itself, that enables companies to grow this big, and whose politicians are paid and dined by megacorporations?
FTA: “More than 90% of this figure originated from transactions that did not happen through the App Store, meaning that these amounts accrued solely to developers and other third parties, and that Apple collected no commission on them.”
As a non-American I would love if Americans started doing more impulsive footgun politics like breaking up their big tech companies. That will finally give European and non-Chinese Asian competitors a chance.
And the Visa system US$6.8 trillion in 2014 says wikipedia 9 yrs ago as opposed to yrs from now for Apple, and China's UnionPay still more, etc, etc. Sure these are big numbers and Apple's are not particularly crazy. And like market cap they don't have much to do with much else.
The article is about an estimation of the total volume of transactions going through apps on the app store, both in the app store and outside of the app store direct to the app publisher. It's currently at 1.1 trillion, they're projecting given the growth rate it could be 2 trillion in 2 years. That is the figure being discussed.
Crazy how big Apple has become. Yet I haven't bought or voluntarily used a single one of their products in the last 5 years. Interestingly though, as a developer, I was forced to use Apple laptops at 2 of the last companies I worked at. I feel it creeping into my personal space. I have some resentment against the company as a result. It's better than Windows but I'm less productive with it than on Linux. It may even have (in a small way) contributed to me losing my job in my last company due to various UX gotchas I could never get used to and lost motivation (I'm a developer so all the small things add up).
I wouldn't develop for their platform but I do like the products. I have far more concerns about Microsoft (products developed for the enterprise and government) and Google (services developed for the advertiser) than Apple.
My only concern is whether their push into services ends up corrupting the core products. If so I'll deal with that when it happens.
Readit News
> Users can find thousands of apps on the App Store to help them adopt healthier lifestyles. Many of these apps take advantage of Apple’s HealthKit API, which allows the use of sophisticated sensors on iPhone and Apple Watch, while ensuring that user data is safe according to Apple’s rigorous privacy and data security protocols.
The actual 1.1T number comes mostly (81%) from goods and services purchases (mostly retail) made in mobile apps on Apple devices. The methodology?
> We estimate the share of each app category’s sales that occur via mobile apps, within each geography, using information collected from marketing surveys or data on usage patterns. Finally, we apportion usage to Apple platforms based on the overall iOS share market share.
So it's an estimate; not hard data.
I don't want to discount the conclusion, because it's always difficult to understand Apple from outside the company, and the point really is just that people make a lot of purchases on Apple devices.
(Conflict of interest: I'm an Apple shareholder.)
The reason to be skeptical here is not because "it's an estimate"; it's because it's one group's model, studying a very nascent space for which there's been very little academic research.
What this estimate shows is that this is a clearly very large economy that isn't being rigorously modeled or studied right now. And we should probably devote some resources to that since what happens in this economy will meaningfully contribute to employment and national GDPs.
When you read enough over Apple's marketing and PR over the years. You can easily detect them. Not saying all marketing are bad, but I would be cautious simply because of that.
He did a lot of analysis to determine how many active devices Apple had in the world before Apple even started reporting those figures.
He was one of the only analysts who understood Apple’s position and scale, as well as some of the internal culture that helped explain a lot of their seemingly abstruse decision making.
Recently he got really focused on “micro-mobility” (ie, Bird/Lime scooters, etc) which hasn’t really been as earthshaking as he predicted, but he’s been mostly proven right about Apple.
It’s unreal to see the scope of Tim Cook’s Apple (or the iPhone Apple if you prefer).
What was his prediction? Seems like that's only increasing in popularity as people realize cars are like the most absurdly wasteful, lazy, and/or excessive methods of transportation imaginable for most daily activities, but it would depend on where you are and what your real requirements are.
Mostly because of antisocial behavior of all sorts: people thinking that scooters were similar to bikes so you could drive them while wasted, random youth groups throwing them off of bridges, into waterways or otherwise destroying them "for the lulz", inconsiderate dumb fucks parking their scooters right where they stepped off, or companies that plastered scooters, bikes and cars over entire cities without coordinating with any authority beforehand.
All of that led to a massive amount of public resentment and subsequent regulation that impeded usage (e.g. no-park-here zones, speed limits during the night and sobriety tests to reduce the risk for drunkards, requirements to force people to submit parking photos), and on top of that come the sometimes ridiculous "unlock fees" or absurd pricing of 20-30 ct/min or more. Public transport tickets cost less than that.
Scooter and bike share companies routinely parked (and still park) bikes and scooters directly in the path of pedestrians because they know that the more visible their devices are, the more likely someone will use them.
Additionally, as you point out the pricing these companies charge started out very low but have escalated quickly. But this isn't always true - micromobility can replace ownership if done right: Companies with presumably less VC funding, such as Donkey Republic or Forest have different pricing models that are still affordable. In Donkey Republic's case, you can sometimes sign up for a $10/month subscription with minimum three months (equivalent in local currency) where you can then reserve a bike and take it home with you or park it near your house but blocked from others renting it. You pay a discounted fee to ride it, and an even smaller fee to reserve it.
Cities are also to blame:
Better than no-parking-zones are cities like Paris where they created parking spaces specifically for bikes and scooters. You rarely see problems in these cities. Some places require designated parking areas without making the space in the roads for them - those are much more problematic because the parking spaces fill and spill over onto where people would prefer to walk or drive.
But users are indeed part of the problem:
The number of times I've seen unsafe drivers of any vehicle, or two people on one scooter, or scooters or bikes going the wrong way down a bike lane... the problems are actually endless.
But the problems aren't always with scooters or e-bikes themselves. Sometimes it's an ecosystem problem, and sometimes the rental companies are too short-sighted.
And regulation isn't always bad:
As a scooter rider myself, I look forward to the day when the 2027 E.U. law requiring removable batteries might take effect in the private scooter market. It's silly that so many high end scooter brands aren't making batteries removable simply because they don't want to have to deal with shipping batteries and user-replaceable parts and the inherent design costs of a removable battery.
Horace (and the various VC firms that dumped money on e-scooter companies) probably assumed that intersection had more people in it than seems to be playing out in reality.
What has gotten them huge, and sustained them throughout the years, was a series of products that really look nothing like their first. Or their second. Just a continual evolution against a vision, which I think has been pretty consistent.
Worth putting modern, small startups today in that context...you never know what they'll evolve to become beyond their first, second, even third products
How much is each entity extracting from the suggested economy in terms of income.
PayPal operating income: $4 billion
Apple operating income: $114 billion
And of course PayPal is a skimmer, somewhat similar to Visa, so their extraction is miniscule compared to the transaction base. Apple carves out a fat profit from their ecosystem by comparison.
Maybe PayPal is beaten down here and their stock is relatively cheap as a value play. Or maybe they're about to be destroyed as the US switches to a European style, low cost insta money moving system courtesy of FedNow, and the market is pricing it accordingly. PayPal better diversify in a hurry, the transaction skimming business isn't going to be so nice in the future.
Id say thats scary
I’m just glad it’s Apple and not some other company…. I guess :-/
You know. A good society.
If you are an Apple user what real choice do you have? The cost of switching is massive for established users as everything Apple only supports Apple.
Sure an unaffiliated user can choose but once you are in one camp it requires a massive change to switch.
They utilize this to raise their prices holding the difficulty to switch against their users.
On a similar note they use heavy vertical integration to avoid options for users. You want their OS you need to buy their hardware.
"Doesn't have a monopoly" only makes sense in a make believe world where you have 95% market share or enough competition.
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> this data includes payments which are not captured by Apple directly. In the words of the authors, “More than 90% of this figure originated from transactions that did not happen through the App Store, meaning that these amounts accrued solely to developers and other third parties, and that Apple collected no commission on them.”
Or did you mean you and me?
Deleted Comment
This mostly means that AAPL is seen as a safe asset to park large amounts of (fiat) money.
My only concern is whether their push into services ends up corrupting the core products. If so I'll deal with that when it happens.
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