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What if there's no 'next big thing' for Apple?

Matt Asay | Aug. 1, 2016
Spoiler alert: There probably isn't. But that shouldn't cause anyone to panic (aside from Wall Street lemmings)

Yes. Maybe.

But it's also very possible that consumers don't have a universal need for a smartwatch, unlike the widespread need for a smartphone. Despite living in a home awash in Apple hardware and working for an employer that will buy me one, I've never felt the slightest interest in using an Apple Watch.

Perhaps that will change as services like Apple Pay spread, making it even more convenient to use the Watch than an iPhone. That certainly has been Tom Dale's experience using his Watch to pay for goods and services in London.

Therein lies a potential answer to Apple's iPhone problem. Though there may not be a breakout iPhone-sized hit sitting in Apple's labs right now, it's also likely that the company don't need one. Arguably, a series of Apple Watch-like devices that hit the sweet spot for a corner of the consumer market -- and tie into the ever-growing Apple Services ecosystem -- should be enough to accelerate both hardware and services growth for many, many years.

For example, even during the despair of last quarter's iPhone slide, services revenue from Apple Music subscriptions, Apple Pay, and more climbed 20 percent to $6 billion. For this quarter, Gene Munster, a Piper Jaffray analyst, expects Apple to record $5.9 billion in services revenue, up 18 percent from the previous year.

In this world, no particular device in Apple's ecosystem needs to drive outsized growth. Instead, each small addition complements the broader ecosystem and drives greater need for Apple's services to animate the relatively underpowered devices. Those services, then, displace the iPhone at the center of Apple's universe and make Apple's ecosystem incredibly profitable and sticky.

Source: Infoworld


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