A changing Apple
Apple's golden child, the iPhone, is no longer the most profitable product line the company makes—for the first time since Steve Jobs passed away.
The company reported earnings for Q3 yesterday, and the story is about what we expected: services revenue is through the roof, surpassing almost every other division for the first time. Apple is all in on recurring revenue, and it hasn't even launched its TV service yet.
Where is all of that money coming from? Well, 'services' bundles a lot into one bucket: sales of apps, games, movies, music, iCloud and Apple Pay fees... which have been the second-largest moneymaker for a long time now—and will continue to grow as it slaps on more new things to subscribe to.
If that's the cash cow now, where is the rest of the growth? Well, mostly in accessories and wearables—which bundles up Airpods, Watch, Beats headphones, HomePods and other things like case sales.
The thing is, all of Apple's products and growth are coming from things that...depend on the iPhone. What happens when sales are properly flat? Despite the Apple Watch requiring an iPhone, it continues to grow for now, but I suspect the strategy is eventually untethering it entirely, so it can work independently and be purchased by anyone—which is likely to play out across other hardware as well.
Look, Apple made a ton of money in a single quarter—$53.8 billion—but the real question on everyone's mind is what that next thing is. For a long time it might have been Augmented Reality, self-driving cars, or some other wild hardware idea, but we were completely wrong: it's recurring, subscription-driven revenue.
If it's subscription revenue and a shift away from hardware-driven sales, that's a great cash cow for sure, but likely means the days of innovative, boundary-pushing devices are coming to an end.
The name of the game: locking you into monthly fees, and keeping you locked into as many services as possible to stop you looking for alternatives, ever. As the iPhone has become a fact of life, and more people than ever have one, it's a sure bet—and it guarantees you'll buy another one, even if it takes five years to need it.
Facebook's augmented reality tech starts with a brain implant
The next generation of computers apparently wants to be inside your brain—and Facebook has spent millions on researching exactly that. A project from 'Facebook Reality Labs' is working on a brain-computer interface, with the goal of controlling AR glasses without speaking out loud, and it's making good progress toward this.
If this isn't an episode of Black Mirror already, I don't know what is.
Amazon's Ring doorbell is very friendly with U.S. police forces
There have been a bunch of stories about Ring—Amazon's smart doorbell camera—working with police and even sharing data with them, which makes me really uneasy—but it's just genuinely mind-boggling how far they've been able to go. This story talks about how Ring even vets public statements from police about the product, and delays announcing they're working with authorities to avoid backlash.
DigitalOcean gets its second new CEO in a year
The Fortnite 'world cup' is over, and a teenager from Pennsylvania took home $3 million in prizes