Apple’s growth challenge: The services conundrum

One of my goals for January is to reevaluate my monthly media services. There are some services that I consider essential, such as Netflix and Biznews/The Wall Street Journal. Others, such as Spotify, are just nice-to-haves.

As I culled my list of services, it got me thinking about Apple Services. I don’t presently subscribe to any of Apple’s services because many of them only work on Apple devices. I can play Netflix on any device that has an internet connection. But the Apple eco-system is a walled garden.

As Apple focuses on growing Services revenue in the face of slowing iPhone sales, this presents a challenge. The benefit of Apple’s strict control over software is that there is little malware in the App Store. The downside is that, while Apple users can freely use Google services on their iPhones, those with Android phones can’t enjoy all of Apple Services. Apple’s potential market, therefore, is limited by sales of its devices and slowing device sales thus pose a threat to long-term Services growth. It’s a circle that CEO Tim Cook will need to square.