1/ In 2010, Steve Jobs created a seemingly innocuous meeting agenda item that would set Apple on the path to becoming the most valuable company in the world.
It's #AppleEvent day so we're taking a look at how Jobs' vision became Apple's notorious "walled garden."
It's #AppleEvent day so we're taking a look at how Jobs' vision became Apple's notorious "walled garden."
2/ What is a walled garden?
It's a closed ecosystem of software and hardware products that restricts access to outside applications and content.
It's a closed ecosystem of software and hardware products that restricts access to outside applications and content.
3/ While lots of tech companies have created walled gardens with their products and services, no one has done it as successfully as Apple.
Let’s break down how that is possible.
Let’s break down how that is possible.
4/ According to WSJ reporter @JoannaStern, Apple's walled garden is composed of three areas:
hardware, software, and services
hardware, software, and services
5/ Hardware
iPad
iMac
AirTag
iPhone
Airpods
Apple TV
Macbook
Home Pod
Apple Watch
iPad
iMac
AirTag
iPhone
Airpods
Apple TV
Macbook
Home Pod
Apple Watch
6/ Software
iOS
iCloud
iMovie
iTunes
Photos
AirDrop
MacOS
iPadOS
WatchOS
FaceTime
iMessage
GarageBand
iOS
iCloud
iMovie
iTunes
Photos
AirDrop
MacOS
iPadOS
WatchOS
FaceTime
iMessage
GarageBand
7/ Services
iCloud
iTunes
App Store
Apple TV+
Apple Music
Apple Books
Apple News+
Apple Arcade
Apple Fitness+
Apple Podcasts
iCloud
iTunes
App Store
Apple TV+
Apple Music
Apple Books
Apple News+
Apple Arcade
Apple Fitness+
Apple Podcasts
8/ These are the walls that enclose Apple's garden.
The goal is for your Apple devices to work together in perfect harmony.
AirDrop lets you transfer files across devices. AirPlay lets you synch music or video. You can even use your Apple Watch to unlock your Macbook.
The goal is for your Apple devices to work together in perfect harmony.
AirDrop lets you transfer files across devices. AirPlay lets you synch music or video. You can even use your Apple Watch to unlock your Macbook.
9/ Just imagine what it would take to leave the Apple ecosystem.
What would happen if you stopped paying for iCloud? How annoying would it be to convert your iCloud data (email, photos, Messages, etc) onto a local drive?
What would happen if you stopped paying for iCloud? How annoying would it be to convert your iCloud data (email, photos, Messages, etc) onto a local drive?
10/ That’s where the power of the walled garden lies. Once you buy one Apple product, it becomes easier to go deeper into the garden than to leave it.
Then, once you’ve entered the garden, the service revenue kicks in.
Then, once you’ve entered the garden, the service revenue kicks in.
11/ The focus on services has been a characteristic of the Tim Cook era at Apple.
Apple generated a whopping $274 billion in revenue in 2020.
Its services division was the second-largest segment, responsible for 19% of the company’s revenue per Apple Insider.
Apple generated a whopping $274 billion in revenue in 2020.
Its services division was the second-largest segment, responsible for 19% of the company’s revenue per Apple Insider.
12/ The App Store is the crown jewel.
It generates nearly 2x the annual revenue of Google’s Play Store even though nearly 75% of the world’s mobile devices run on Android, according to market researcher StatCounter.
It generates nearly 2x the annual revenue of Google’s Play Store even though nearly 75% of the world’s mobile devices run on Android, according to market researcher StatCounter.
13/ But with great power comes great scrutiny.
Does Apple have too much control over our lives? Are the walls too high?
Does Apple have too much control over our lives? Are the walls too high?
14/ Like any kingdom, the lords get to set the rules.
According to Verge, the App Store paid out over $100 billion to developers from 2008-2018...but it also pulled in around $42 billion that could (and some say should) have gone to developers from its 30% “tax”
According to Verge, the App Store paid out over $100 billion to developers from 2008-2018...but it also pulled in around $42 billion that could (and some say should) have gone to developers from its 30% “tax”
15/ Apple takes a 30% revenue cut on each purchase made in the App Store. If developers want their app distributed via the App Stores, they don’t have a choice but to stomach the fee.
16/ But, "Fortnite" maker Epic Games fought back against the 30% fee in a high-profile court case against Apple that challenged the very concept of the walled garden.
17/ The Epic vs Apple fight came to a conclusion over the weekend.
A federal judge ruled that Apple must allow developers to send users outside the App Store to make payments—the biggest change to the platform since it was created in 2008.
A federal judge ruled that Apple must allow developers to send users outside the App Store to make payments—the biggest change to the platform since it was created in 2008.
18/ It means Apple stands to lose a decent chunk of change.
The App Store in its current state makes Apple more than $20 billion per year with at least a 75% profit margin, analysts say.
The App Store in its current state makes Apple more than $20 billion per year with at least a 75% profit margin, analysts say.
19/ But Apple is looking on the bright side
A few billion a year is a small price to pay for the court deciding the App Store is NOT a monopoly.
A few billion a year is a small price to pay for the court deciding the App Store is NOT a monopoly.
20/ Apple has responded to Epic’s lawsuit by doing what it does best: controlling the narrative around their products.
The company has been reframing public discourse by highlighting the privacy benefits the walled garden provides.
The company has been reframing public discourse by highlighting the privacy benefits the walled garden provides.
21/ So is the walled garden inherently bad?
From the inside, it’s quite lovely. The cozy embrace of the Apple ecosystem feels almost magical at times with how well its devices, services, and software interact with each other. The privacy benefits are nice too.
From the inside, it’s quite lovely. The cozy embrace of the Apple ecosystem feels almost magical at times with how well its devices, services, and software interact with each other. The privacy benefits are nice too.
22/ But from the outside, Apple's total control is a tough pill to swallow from a business perspective and borderline anticompetitive. The judge in the Epic vs Apple trial says that Apple isn’t a monopoly, but there will undoubtedly be more scrutiny going forward.
23/ Looking ahead...
Today is #AppleEvent day where it is expected to debut the new iPhone.
Thus the cycle begins anew.
Today is #AppleEvent day where it is expected to debut the new iPhone.
Thus the cycle begins anew.
24/ 11 years later, Apple is still working on Steve Job's last agenda item.
Expect new products and features debuting at the Apple Event today to build the walls around its garden ever higher, further locking customers into its ecosystem one device, one service at a time.
Expect new products and features debuting at the Apple Event today to build the walls around its garden ever higher, further locking customers into its ecosystem one device, one service at a time.
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