Apple had its Q1 2021 earnings call on Wednesday, and Tim Cook talked about his company’s integration of hardware, software, and services. It came in response from an analyst about how Apple decides to enter new product categories.
Apple Ecosystem Integration
Tim Cook made the following comments in response to Katy Huberty from Morgan Stanley.
The kinds of things we love to work on are those where there’s a requirement for hardware, software, and services to come together. Magic occurs at that intersection.
I think that we have some really good opportunities out there and if you look at our current portfolio of products, we still have a relatively low share in a number of very big markets. We feel that we have really good upside there and good upside in the services area, which we’ve been working on for some time.
It made me start thinking about that formula of Hardware (H) + Software (SO) + Services (SE). As some examples:
- HomePod/AirPods (H) + Apple Music (SO/SE)
- Apple TV box (H) + Apple TV app (SO) + Apple TV+ (SE)
That doesn’t work for all of its products and services. Macs, iPads, and iPhones act as hubs for software and services. Services like Apple News+ and Apple Arcade don’t have hardware (game console anyone?).
For rumored products, Apple Glasses would probably act as another hub, while the Apple Car would be hardware. Would CarPlay be the software? And what about a service? A ride sharing program called Apple Car+? That depends on if it would be an actual self-driving car or a manual electric car. But the formula is interesting to think about when we try to divine Apple’s future.