Apple is compromising on other aspects of the slim iPhone’s design to ensure its thinness. For instance, the thin iPhone will only have a single speaker in its earpiece because there is no room for a second speaker at the bottom, which is standard in other models, one person said.
The thin iPhone also has a large, centered camera bump on its back containing a single lens as opposed to two lenses in the standard iPhone and three in the Pro models, three people said.
The average consumer is making phone purchase decisions based on brand affinity, and a few key specs like battery life, camera quality, and screen size.
Given the fact that Apple uses the addition of just one more camera lens as the primary upsell for the Pro phones, it is very significant that the Slim (or Air, or whatever it will end up being called) will lack not one, but two rear cameras. It cannot be understated how much people care about the quality of pictures their phone can take, and the Slim will be at a camera disadvantage to all of its siblings in the lineup.
The M4 iPad Pro is strikingly thin, and also remarkably capable. It is an uncompromising beast, packing more performance than most PCs in a fan-less compact tablet form factor. It is a marvel of technology.
In comparison, the iPhone 17 Slim will require radical compromises to achieve its thinner design. Even considering its physical characteristics in isolation, I don’t think it will have the same impact as the feeling you get when you behold the iPad Pro; the phone’s thinness is spread over a smaller body than a tablet, and it will still have to accommodate a pretty big protruding camera bump.
As is, I’m struggling to envision the iPhone 17 Slim as a smash hit. But perhaps it only needs to outperform the Plus for Apple to deem it a successful venture. Whether speaking of the Mini or the Plus, Apple’s previous efforts at establishing a fourth iPhone model have not been well received in the marketplace.
The iMac received a bigger-than-expected update this time around, with a new nano-texture display option and an upgraded front camera in addition to the M4 speed bump.
I think I prefer the new colours over the old ones, too. The old generation was confidently going for a two-tone style, which I didn’t love. The backs of the new iMacs are a little more desaturated, though, while the lighter fronts are mostly unchanged. In sum, that means there’s less contrast between the colours used on the back and the front. It looks a bit more cohesive to my eye.
Mac mini
The darling of the week, the new Mac mini is super cool. It is drastic enough to turn heads. Rather than shipping empty space, the M4 Mini is compact and befitting of the efficiency of the technology inside it. The redesign essentially looks like a Mac Studio chassis, that has been shrunken down to a plump, five-inch square size.
An older incarnation of Apple design would have probably rejected the idea of putting ports on the front of their consumer machine, and kept that as a Mac Studio exclusive detail. But not so here. The new Mini has two USB-C ports and a headphone jack proudly facing outward.
MacBook Pro
The M4 Max chip is incrementally better than last year’s, with Apple quoting a roughly 20% performance jump, and a 35% increase in memory bandwidth, compared to M3 Max. Each core is faster, but the number of cores did not change. That is unlike the M4 Pro, which saw much more significant differences over its predecessor.
Remember that last year, Apple downscaled the ambitions of the M3 Pro chip, with a balanced configuration of 6 performance cores and 6 efficiency cores. Memory bandwidth was significantly reduced, too. It’s still unclear why they opted for that approach. The M4 Pro basically pretends like that diversion never happened; it returns to the trend of the earlier M1 and M2 Pro. As such, the M4 Pro is decidedly pro again, with a 14-core CPU composed of 10 beefy performance cores and four efficiency cores, and memory bandwidth is higher than ever before, at 273 GB/s.
Outside of raw performance, the chip enables some welcome improvements for the laptops themselves. The base M4 MacBook Pro can drive two external displays at the same time, finally. And it has a third Thunderbolt port. Both the M4 and M4 Pro versions are also rated for the best MacBook Pro battery life ever, topping 24 hours on a single charge. Curiously, though, the quoted battery life estimates for the M4 Max MacBook Pro are actually slightly worse than their M3 Max counterparts.
USB-C Magic Accessories
Apple replaced the Lightning ports with USB-C on the Magic Keyboard, Magic Trackpad, and Magic Mouse. And changed nothing else.
Not that I was necessarily expecting more, but it still feels a little disappointing that they only did the bare minimum here. What I had been really hoping to see is some kind of new pairing system that makes switching your keyboard and mouse between Macs as seamless as AirPods can switch between your devices when playing audio. Alas, we keep waiting.
The iPhone 16 lineup could stand on its own, sporting the new A18 chip, bigger screens, thinner bezels, better cameras, longer battery life, attractive chassis colorways, and the new Camera Control button. Apple Intelligence could have been treated as more like a bonus, with Apple taking the angle of how cool it is that you’ll be getting some fun new AI-powered enhancements arriving every couple of months.
Instead, Apple has used Apple Intelligence as the underpinning of the phone’s marketing. On Apple.com, the strapline for both the iPhone 16 and 16 Pro is “Hello, Apple Intelligence”. No mention of anything else that is new about the phone. Somewhat comically, in the European Union and other countries where Apple Intelligence has no release date, there is no alternative copy. It’s just left as blank space. It’s quite literally Apple Intelligence or bust.
By relying on AI as a focal point, Apple provoked immediate critiques. Firstly, there are those who simply reject anything “AI”. It’s a touchy subject, with swirling concerns about privacy or intellectual property theft or dehumanisation of the creative arts. Apple isn’t necessarily breaching those topics with the implementation of its models, but it doesn’t really matter. They are painted with the same brush. This unforced error could have been avoided if Apple Intelligence was perceived as an add-on, rather than fundamental to the phone. That positioning would also more accurately reflect the truth. While Apple presents the iPhone 16 as “built from the ground up for Apple Intelligence”, when the first features ship as part of iOS 18.1, they are exposed in the software as an opt-in toggle the user has to actively enable.
Secondly, there’s the release timetable complaints. Although people will buy the phone throughout the next year, the iPhone 16 went on sale on September 20. Apple Intelligence is a piecemeal rollout with the first features launching in October. Naturally, all of the reviewers covering the phone under embargo couldn’t meaningfully cover the unreleased stuff. It also meant the bottom-line recommendations of their reviews were heavily caveated. Why bother buying a phone right now that is seen as incomplete?
Whereas, if Apple had been less aggressive with the Apple Intelligence push upfront, I think they could have substantially blunted both of these criticisms. Push the actual features of the hardware harder, now. Push Apple Intelligence when it actually arrives.
I also wonder if a third category of negative reaction is brewing. After all of the advertising and the hype, iOS 18.1 is going to drop … and users may be let down by what new stuff their phone can actually do. Apple Intelligence is nice, but it’s not blowaway. It’s taking features that people have mostly already seen done elsewhere, but integrated neatly into the apps and services that they actually use every day. It’s convenient and useful, but it’s not game-changing. The day one reactions of disappointment may also be exacerbated by the fact that the set of AI features coming in iOS 18.1 are not the coolest, flashiest ones of the promised suite. Genmoji will be a hit, but that’s not there. New Siri actions and app integrations have potential to be big, but that isn’t coming until 2025 — although some people will inevitably be confused by the prettiness of the new Siri edge-lit animations which are part of iOS 18.1.
Apple Inc. is planning a new version of the Mac mini that will be its smallest desktop computer yet, part of a broader overhaul of the Mac line with AI-focused chips.
The new model — due later this year — will mark the first major design change to the mini since it was revamped under Steve Jobs in 2010, according to people with knowledge of the matter. The device will be far smaller than its predecessor, approaching the size of an Apple TV set-top box, according to the people, who asked not to be identified because the work is secret.
The Mac mini gets about as much of Apple’s attention as it deserves, given its niche appeal and proportionally low sales. The redesign cadence seems to be on the order of once a decade. But when its time comes, it is nevertheless an exciting moment.
The original Mac mini had to accommodate the size of the slot-loading optical disc drive that featured on its front. The drive went away with the 2011 revision, and the chassis got thinner as a result, but its width stayed the same. In the absence of any other design change in the intervening fifteen years, we fast forward to the present day and the size of the Mac mini is still fundamentally defined by the diameter of a physical storage medium that has been long since abandoned.
The anachronistic nature of the design is further exacerbated in the era of Apple silicon. At least with the Intel models, the internal space was mostly filled with a big motherboard, heatsinks and fans. But with M1 and later, the actual computer innards only take up about 40% of the machine’s volume. There’s a lot of wasted, empty space inside.
With the M4-generation redesign, it is finally time for the Mac mini’s physical appearance to catch up to the state of the art of the technology inside it.
The really interesting thing about Apple TV+ is that it is not so unsuccessful that it can be called a failure, and yet is also not so successful that it can be heralded as a home run win. It sits in a murky grey area, where no one is quite sure whether Apple is happy with its progress. Some days, I wonder if even Apple themselves can define what the success metrics for TV+ are meant to be.
Apple TV+ programming does not define culture or conversation on a regular basis, but it has had some sporadically popular moments, with Ted Lasso being its biggest high; Ted Lasso was the number one streaming original on the Nielsen chart in 2023, and was an undeniable breakout hit. None of its original films are iconic, and its attempt to start a franchise with Argylle was an almighty flop, but they have secured an Oscar Best Picture award for CODA, an achievement that every other streamer has so far failed to do. Five years in, viewership of content on the service remains low, but is seemingly continually growing each and every month. It is in a steady state of existence that is neither stagnant, nor especially vibrant.
Apple disputes the accuracy of Nielsen streaming ratings, but also refuses to share numbers itself, so it’s what we have to go on. Apple TV+ ranks last of all streamers, bar Paramount+, with 0.2% monthly share of US viewership. Naturally, Netflix is doing laps around everyone with an unassailable lead in first place. Of the rest, Apple is behind but not hugely so. You also have to account for the fact that its rivals have much deeper content catalogues on their services for people to rack up viewing hours against. There’s simply more stuff for people to watch elsewhere, which skews aggregate viewing figures. For a platform that only has about 200 shows in total, Apple having 0.2% share of overall streaming viewership doesn’t seem that bad.
That being said, it’s still very much an unprofitable venture for the company, on raw financials. Apple is spending about $5 billion annually on content, and is definitely not taking in that amount in direct subscriptions. It gets complicated when you try to consider the contribution of things like the Apple One bundle, but I still think it surely boils down to a negative bank account overall. Eventually, I think Apple wants TV+ to stand on its own, matching expenditure with revenue, but it isn’t there today.
Obviously, Apple has the money to subsidise the service for eternity. The question, then, is what is the appetite at the management level to persevere. Even for Apple, a billion dollar loss per quarter is a significant line item. The Bloomberg report published last week certainly suggests that the company is a little bit more hesitant with the chequebook as of late, and wants to be slightly more prudent with spend on the budgets of individual projects. Apple doesn’t want to be seen as the chump that forks out millions just because it can afford to do so. In the same way that they continuously negotiate with suppliers for the cheapest price on hardware components, they will try to get the best prices on content.
I think some people interpreted the Bloomberg story as meaning Apple is slamming on the brakes, and conceding defeat. Personally, I don’t get the impression that they will give up on the TV+ endeavour anytime soon. Cue and Cook certainly seem committed to it, and human willpower is really the only limiting factor right now. Based on extrapolations from the limited data we have as outside observers, I think they are on track to have a sizeable slate for 2024 and 2025, roughly in line with their 2022/2023 output. They haven’t stopped ordering new projects. In fact, they have actually been one of the most prolific streamers this year in terms of new original debuts. They have even branched out further internationally, announcing more new foreign language originals than ever before.
Looking forward, I expect they will spend just about as much as they have been per annum, perhaps spread over a larger number of slightly less expensive titles. Strategy shifts, such as an ad-supported tier and licensing third-party content to make the subscription more attractive to a broader audience, are definitely in play though.
You could say that Apple Intelligence takes a handful of ChatGPT-3 chatbot class features, exposes each with a button to press rather than a text box to type in, and weaves in some pretty animations and colourful effects when you invoke them. That’s a curt summary, but it is not wrong necessarily. Everything Apple Intelligence does, we’ve seen before.
However, what makes it profound is the intentionality of the design, and the way in which these features are being realised. The marketing is straightforward and easy for people to understand, and the features are integrated naturally into the operating system surfaces that people already use. In fact, most of the ‘new’ features are things that the OS already ostensibly does; things like text editing and manipulation, notification management, smart replies, transcriptions, and — yes — emojis. Apple isn’t trying to convince people on wholesale new dimensions of what a phone is capable of. It’s taking what users already do, but made better by using modern AI techniques, so that users can extract more value out the other end.
When watching the demos and looking at the screenshots, all of these new buttons and panels fit in naturally as a component of the iPhone experience, as we know it. That’s a really significant point and speaks to how well they have executed here. They could have very easily screwed this up and announced a bunch of whizz-bang, discombobulated, AI-powered stuff that would ultimately land as extraneous gimmicks, go unused in practice, and feel like they were bolted on just for the sake of it.
The exception is the Image Playground stuff. I don't think it is completely pointless, but it's the hardest to find long-lasting value in. It might just be a rarely used gimmick, like Memoji.
I don’t think that’s the case at all. These features are compelling and — assuming they work as advertised — will be used en masse. I was pleasantly surprised that Apple is offering all of this for free. Despite being powered in part by the Private Compute Cloud server infrastructure, they have not used it as an opportunity to slap another subscription fee upsell onto its user base (at least not yet).
That means every iPhone 16 buyer this fall is going to be delighted by notification summaries of group text threads when they wake up in the morning, appreciate that when they scan their list of emails they can actually get a sense of what each message is about before tapping through, and enjoy creating emojis that have never existed before and sending them to their friends.
I am personally looking forward to all the new Siri improvements, although it remains a little murky as to exactly what will get better. The semantic index stuff isn’t shipping until next year, and it doesn’t seem to cover everything. New Siri might be able to dig up information from my emails and text messages, but will it still get confused if I ask it to turn off two HomeKit lights at the same time? I don’t know yet if Siri’s general knowledge base and understanding of user intent is evolved. I hope so, but Apple was evasive on specifics. My impression is that while new Siri makes progress on that front, paths to “I found this on the web” answers will still be a relatively common occurrence.
Perhaps my biggest disappointment of the entire endeavour is there is no indication as to how any of this could conceivably come to products like the Watch or HomePod, Apple’s most voice-oriented devices. Maybe they are working on solutions behind the scenes, but as it stands right now, it’s a big gap in the Apple Intelligence strategy.
It has been a while since Apple introduced a new product that was markedly thinner than its predecessor, such that it was a selling point of the device. Throughout the early 2010s, it was almost a meme that every new shiny Apple gadget was touted as thinner. Apple rolled out the thinnest ever marketing blurb for the iPhone 4, the iPhone 5, the iPhone 6, the iPad 2, the iPad Air, the 12-inch MacBook and many more.
Those priorities shifted by the end of the decade, and certainly in the years since Jony Ive’s departure. On the phone side, goals to pack in bigger batteries and better cameras dominated any desires for more compactness. iPhone thinness peaked with the iPhone 6 at 6.9 mm in 2014, and has gradually increased ever since. The iPhone 15 Pro series measures 8.25 mm, in contrast. On the Mac front, the tribulations of the butterfly keyboard and related dramas resulted in a substantial change of course and the 2021 MacBook Pro was celebrated for its thicker enclosure, with customers grateful that Apple had not made compromises for thinness’s sake.
The 2024 iPad Pro bucks the trend, in style. Apple is incredibly proud to present the new iPad lineup as the thinnest Apple devices ever, and having seen the new models in person, it deserves all the plaudits. The new iPad Pro is breathtaking to hold in your hand. It is slender, and an insanely cool sight to behold. Picking it up feels like a flourish in itself. They also achieved all this whilst also improving burst and sustained performance of the device, thanks to the efficiency of the M4 chip and some clever heat dissipation trickery. The hardware is impressive and hard to fault.
Is this a one-off event or is thinness back in fashion again? It certainly feels like the new iPad is existence proof that Apple could make a really thin yet uncompromised MacBook, but we aren’t hearing that is on the cards quite yet. Interestingly, as of this week, there are rumours that Apple is readying an upscale iPhone redesign for 2025, that The Information describes as thinner than current models. I struggle to imagine that a thinner pro iPhone will have the same visceral impact as the iPad Pro though; the large protruding camera bump is a figurative and literal thorn in its side.
FIFA, soccer’s global governing body, is close to an agreement with Apple that would give the tech company worldwide television rights for a major new tournament, a monthlong, World Cup-style competition for top teams that will be played for the first time in the United States next summer.
The value of the deal might be as little as a quarter of the $4 billion FIFA had first estimated, the people said. It is unclear if the deal with Apple will include any free-to-air rights, meaning the entire event could be available only to subscribers of Apple TV+, a factor over which senior executives at FIFA have raised concerns.
In his Puck newsletter, John Ourand said that Apple is garnering a reputation of being a ‘bottom feeder’ in sports. The perception is that Apple is an insignificant player, and can only secure the leftover scraps of sports rights, while the likes of Google, Amazon and — to a lesser extent — Netflix fight for the big national packages from the NBA, NFL and others. This is on a backdrop of the reality that Apple’s streaming service, Apple TV+, can only boast low two-digit millions of subscriber membership.
As you might expect, Apple would probably reject the idea of weakness and frame their position differently. Eddy Cue and team clearly value exclusive, unrestricted, streaming rights that are exploitable in many countries and regions. That’s what they got with the MLS deal and MLB Friday Night Baseball, and that’s what the FIFA Club World Cup would be.
Evidently, Apple has the stature and the financial might to secure deals of that nature, when they are available. The simple fact of life right now is the number of those possible deals are thin and far between. The major leagues are not yet willing to yield everything over to streaming, as they try and preserve as much of the reach and exposure that the slowly-dying-but-still-huge traditional broadcast networks provide.
With that context, it becomes more of a strategy question. Is it a blunder not to get what you can, even if it isn’t exactly what you want? Apple certainly has the confidence to sit out and taking things slowly. We’ve seen this play out, almost in the open given the amount of coverage it got, with the NFL Sunday Ticket negotiations. Apple was the frontrunner, but seemingly backed out when it didn’t go their way in the late stages of the dealmaking process.
Another similar situation transpired with the Pac-12. Apple was the leading bidder for a package of rights for the conference, with very similar terms to the MLS deal, but it was held up as some of the leading schools balked at the presented figures. Rather than overspend or give concessions, Apple held firm and they simply watched while member schools defected and the conference imploded altogether.
Perhaps it is misguided bravado, but I think Apple sees themselves as the ones in the position of strength, able to bide their time unless they can get what they want. That doesn’t sound like the mindset of a bottom feeder to me.
Apple Inc. is in talks to build Google’s Gemini artificial intelligence engine into the iPhone, according to people familiar with the situation, setting the stage for a blockbuster agreement that would shake up the AI industry.
Apple is preparing new capabilities as part of iOS 18 — the next version of the iPhone operating system — based on its own AI models. But those enhancements will be focused on features that operate on its devices, rather than ones delivered via the cloud. So Apple is seeking a partner to do the heavy lifting of generative AI, including functions for creating images and writing essays based on simple prompts.
Apple Silicon was such a triumph that I think people now lean too heavily into the idea that Apple should design everything in-house, or otherwise they are doomed to fail. That is a misguided view. As well-resourced and technically proficient as Apple is, they are never going to be the best at everything; outsourcing and licensing some components inside your products is the usual and pragmatic route. You have to pick your battles.
Just look at what happened with the 5G cellular modems. Apple hates Qualcomm’s guts, and their hefty patent royalties, but they use them because they are the best. If Apple had waited until they had a competitive in-house modem, they still wouldn’t be shipping a 5G iPhone today.
I think the situation with generative AI is analogous. Apple is working on their own stuff to defend against the future as AI becomes increasingly more embedded in their products, but as of 2024, their home-grown technology is not ready to match the quality of OpenAI or Google’s models. Thus, they are licensing Gemini.
Some of Apple’s AI-powered features will be serviced by on-device neural networks, some will hit Apple’s servers only, and some will be shuttled off to a Gemini backend. I expect this to happen transparently to the user, depending on the task at hand. The routing and mix of suppliers may change over time, even. At least for the foreseeable future, a dependency on Google as a dumb pipe supplier of AI tooling is not a weakness.
Web Distribution, available with a software update later this spring, will let authorized developers distribute their iOS apps to EU users directly from a website owned by the developer. Apple will provide authorized developers access to APIs that facilitate the distribution of their apps from the web, integrate with system functionality, back up and restore users’ apps, and more. For details, visit Getting ready for Web Distribution in the EU.
In my original commentary from January, I said these policies should be seen as an opening gambit rather than a final word on the matter.
Surely driven by backchannel negotiations between Apple and the EU commission, Apple has rolled out significant amendments to these rules in the last couple of months. Today, it announced perhaps its largest concession yet.
The rules as originally written were specifically orchestrated by Apple to offer “sideloading” without offering sideloading. The rules prevented the obvious, straightforward, approach of letting a developer host a binary on their website for users to download directly to their device. Instead, A developer wanting to offer their software outside of the App Store was forced to partner with an intermediary, an alternative app marketplace in which to list their app, and then would have to somehow explain to their customers how to install said marketplace in order to install said app. It induced business relationships and a whole bunch of complexity that didn’t really have a justification to exist other than frustrating the process.
The new “Web Distribution” method makes all of that obsolete, and feels like a direct response to the criticisms raised by the likes of Spotify. Eligible developers will now be able to offer up their apps ‘directly’. Some Apple oversight and system permissions scare sheets remain, but the essence is Spotify will now be able to have a link on their website that initiates an install flow for the Spotify app. The obstacle of the viability of the Core Technology Fee remains, but that’s about it.
Whether Epic Games will be able to distribute Fortnite in this way is currently unclear. Apple’s rules say that a participating developer must be a “member of good standing in the Apple Developer Program” and “have an app that had more than one million first annual installs on iOS in the EU in the prior calendar year”. Unless Apple makes an exception, as is, Epic doesn’t meet either of those requirements.
I was bracing for the critical response and early reviews to the Vision Pro to be dire; a joke, a waste of a time. But the sentiment is actually far more positive than I expected. Amidst the ungainly ergonomics of the first-generation hardware, and the window management omissions of a first-generation operating system, people have found glimpses of greatness. More so for entertainment, but productivity use cases too.
Those touting daily usage will inevitably taper off, and I’m sure many will stop remembering to charge it altogether in about two months’ time. There’s just not enough you can do with it right now, with a dearth of worthwhile content to consume and slim pickings of high-quality apps to use. A portion of enthusiastic buyers will end up returning it as they confront the physical realities of something so heavy and bulbous sitting on your face. But if you squint enough, you can almost see the future. The day one Vision Pro experience already feels more capable than an iPad in many respects, and it’s a great plane computer. Those niches and bubbles of utility will only grow larger over time.
Apple doesn’t enter a new product category too often. With the iPhone, iPad and Watch, Apple was coming out swinging from the start with a product concept that was ready to draw huge mass market attention. The Vision Pro is obviously not going to do that, nor does Apple expect it to. The market dynamics of AR/VR have basically forced Apple’s hand into launching a bit earlier in the hardware development curve than usual. More than anything the company has released before, the Vision Pro bumps against the limits of the state of the art in so many ways.
The first iPhone does not look that different from the iPhone we know today; the bezels disappeared, the cameras got bigger, but it’s still unmistakably of the same family as the device Jobs pulled out of his pocket in January 2007. Same with the iPad, and the Watch. However, I expect that the Vision Pro’s tenth incarnation will be vastly different from what we have today. There’s just so much room for everything to get better, and for key tentpoles of the design to shift based on what becomes technically possible in the future.
Apple is sharing new business terms available for developers’ apps in the EU. Developers can choose to adopt these new business terms or stay on Apple’s existing terms. Developers must adopt the new business terms for EU apps to use the new capabilities for alternative distribution or payment processing.
The new business terms for apps in the EU are necessary to support the DMA’s requirements for alternative distribution and payment processing. That includes a fee structure that reflects the many ways Apple creates value for developers’ businesses — including App Store distribution and discovery, the App Store’s secure payment processing and related commerce services, Apple’s trusted and secure mobile platform, and all the tools and technology to build and share innovative apps with users around the world.
Firstly, I do not consider the policies introduced this week as the end of the conversation. In many ways, it is the opening gambit. The Digital Markets Act leaves much to interpretation and the EU regulators have essentially left it up to companies to apply the law, and then assess whether the changes that companies implement is sufficient. I view the published Apple rules as a working proposal, very much subject to change. Apple would rather it wasn’t weakened from here, of course, but I think the EU has shown that it is operating proactively and will follow up with addendums of legislation and enforcement action, as it sees fit.
As it stands today, here’s what iOS developers inside the European Union are facing. They can either keep the status quo, stay on the App Store and pay the traditional 85%/15% and 70%/30% commission split on digital purchases, or choose to adopt so-called “alternative business terms”.
These terms deconstruct the commission structure into two components and instate a new Core Technology Fee; an annual levy payable on a per-install basis. The commission is actually less. Apps listed in the App Store are subject to 10% commission for small developers, or 17% for larger developers (those that exceed $1 million in annual revenue). That’s down from 15% and 30% respectively.
However, for use of Apple’s In-App Purchase payment system, there’s an additional 3% fee. So, really, it is 13% or 20% to deliver the same end-to-end store experience.
Developers have the flexibility to use alternative payment systems, in which case the 3% is not due. If they don’t want to use the Apple App Store, they can list their app in a third-party app store (Apple refers to these as an “app marketplace”) and not owe any commission at all.
So far, so good. Spotify, Epic, and the rest will never be fully satisfied, but if that was the terms, I think they’d come away very happy.
The snag is the Core Technology Fee, priced at €0.50. The CTF is paid the first time an app is downloaded (or updated) by a user in a twelve month period. The next twelve month period, the fee is due again. Apple has essentially instated an annual fee for every active user of an app, whether the developer is able to monetise that user or not. You could also argue it has wider scope, as active installs does not correlate to active users necessarily. An iPhone user may stop using an app altogether and simply forget to delete it from their device. But it will keep receiving automatic updates in the background, and that will invoke the CTF, even if they never opened the app themselves. A downloaded app that is never launched a single time results in an annual bill to its maker.
The impact of the CTF on the cost-benefit calculus depends on the popularity of the application. For smaller developers, it’s actually not too bad, at least with a surface level examination. Apple gives you a million free installs before the CTF comes into effect. That’s a sizeable figure and many apps will easily stay inside that threshold, even accounting for some bloating of the numbers due to inactive users and whatnot.
But, Apple stacked the deck well. The upside is relatively small. Assuming you are switching away from the 85%/15% split of the Small Business Program, you’ll now be paying 13% commission (10% App Store + 3% IAP). That’s only a saving of just 2% compared to the status quo. In exchange, you bear a huge downside risk of CTF fees if your app grows and crosses the million install mark. You are basically betting your app will never get big, for the entire lifetime of your company, in exchange for 2% extra revenue. That doesn’t sound like a very compelling proposition. You might argue that taking this route allows you to set up a shop inside an alternative app store, and forgo Apple’s commission altogether. That is true, but smaller developers are unlikely to have the marketing budget and inertia pull to beat the might of distribution through the Apple App Store.
For bigger developers, the costs of the CTF are significant, but perhaps surmountable in some cases. I mean, the costs are immense. Averaging 50 cents in revenue per user, including a ‘user’ that may never open your app at all, is really hard. If you have 2 million installs per year, that equates out to almost a half a million euros in CTF fees alone, notwithstanding App Store commission or any other marketplace charges.
Apps supported by advertising will never take these terms. Why? They can live for free in the App Store. In the 70%/30% model, Apple takes no money earned from advertising so these apps pay nothing to Apple at all. If they want to venture out, they are slapped with a 50 cent per user fee. They’ll never take it.
Freemium apps, like games with micro-transactions, are also going to struggle. A free-to-download game with ten million users has got to find €4.5 million to give to Apple each year, solely for existing. You are going to need some big money spender whales to offset the costs of all the people that pay nothing, to have a chance at breaking even.
Apple remarks that it estimates less than 1% of developers would pay any CTF fees, because most apps don’t clear a million annual installs in the EU. But it’s the 1% that are really driving these changes. It’s precisely that 1% that lobbies governments and motivates the creation of the Digital Markets Act in the first place. Spotify, Epic, Netflix, Tinder, etcetera.
These ilk of companies do have high average-revenue-per-user, and I think probably could afford the CTF rates. But they aren’t going to be happy about it. They will argue why do they have to pay Apple anything. It’s almost ironic that Spotify has been pushing for Europe to crack down on the App Store monopoly, and the offer on the table actually has them paying more to Apple than they do now. Right now, Spotify pays zero. But Apple’s new terms sees Spotify paying 50 cents per user per year to them, if they leave the App Store and make themselves available elsewhere.
The other big gotcha here is that iPhone app sideloading is not a free for all. Spotify cannot simple host an app binary on its website, like Mac apps can. You can only install Spotify through an app marketplace. That means Spotify has to educate users to install the alternative app store that Spotify is contained in, then find and install the Spotify app from that store. It also implicitly entails Spotify into some kind of business arrangement with this third-party app store, possibly involving some form of commission revenue sharing on top of the mandatory Apple CTF. By the way, Apple also imposes the CTF on the app marketplaces themselves, which conveniently prevents these alt-stores from being open season charities. By necessity, the marketplace will need their own intermediary business model to at least afford the Apple fees for every user that installs them.
My current prediction is that almost nobody will actually make the leap of faith into the “alternative business terms” as they are written. Small developers don’t have the leverage to experiment and will stay put. Out of the big companies, Fortnite might be the only one, with Epic seemingly insistent on launching an iOS Epic Games Store, although that may not be viable in a 50 cent CTF world. Spotify, Netflix and the other constituent members of the aforementioned 1% will remain in the App Store, and appeal to the EU to make Apple make more changes. These companies will push for the abolishment of the CTF altogether; only time will tell if the EU commission is receptive to that.
Apple will not be making an Apple Silicon version of the 27-inch iMac to replace the Intel-equipped model that it discontinued in 2022. The company is instead focusing the iMac line around the 24-inch model that was first released in early 2021 and just updated with the new M3 processor this fall.
Apple PR representative Starlayne Meza confirmed the company’s plans to The Verge. The company encourages those who have been holding out hope for a larger iMac to consider the Studio Display and Mac Studio or Mac Mini, which pair a 27-inch 5K screen with a separate computer, compared to the all-in-one design of the iMac.
The all-in-one PC is perhaps the epitome of Apple design principles. The form factor pushes elegance and simplicity to the extreme. It accepts that some tradeoffs are necessary, and rejects trying to satisfy every little edge case demand, in order achieve the ultimate outcome for a certain mainstream customer. The end result is an iMac, a really great desktop computer. I am not the biggest fan of the aesthetics of the 2021 iteration, but that is beside the point. The iMac is great for what it is.
However, the market dynamics are not in the iMac’s favour. Portable laptops dominate everything these days, and frankly Apple Silicon has minimised many of the traditional disadvantages of choosing a laptop versus a desktop.
The iMac is not a dead end product line, but it naturally warrants far less company resources than the MacBook Air or MacBook Pro. I think we can all observe that the iMac is on a development cadence that sees it receive significant changes once or maybe twice a decade, subsequently upgraded with new more powerful chips every one to two years. The 2021 iMac was the big uplift, the 2023 revision is the example of the spec bump.
The base iMac is clearly set as is, with a 24-inch inbetweener design meant to split the difference between the previous Intel lineup of 21.5-inch and 27-inch sizes. That’s what Apple’s on-the-record press statement is affirming. But just like Apple offers both the Mac mini and Mac Studio, I do think it would be a shame if the company can never justify making a higher end iMac ever again. A true Apple Silicon successor to the iMac Pro could be very compelling, even if not a big seller.
It would make sense for this hypothetical machine to sport an even larger screen size, perhaps 32 inches to rival the Pro Display XDR. To further differentiate from a Studio Display setup, the screen could feature significantly higher display resolutions at 120Hz ProMotion frame rates, taking advantage of the fact that the bandwidth of an internally integrated display controller can far exceed what is supported by external HDMI or DisplayPort cables. The chassis would obviously be designed to house the hungrier Max/Ultra Apple Silicon chips, and — going out on a limb — I’d hope they’d choose an industrial design that can remove the chin bezel underneath the display for good.
Ever since the first virtual WWDC, I have not been enamoured by the virtual event format — it’s just less fun. In 2020, doing a pre-recorded video was a necessity. Now, it’s a choice. Google, Microsoft and others have done a few live presentations in the last year and it’s engaging, even if I don’t care so much about what they are announcing. In contrast, Apple’s events are lacking that feeling of flair and vitality. The novelty of the swooping Apple Park shots has worn off, and what’s left is something quite dry and quotidian. I’m sure Apple marketing loves controlling the message with a carefully-crafted and perfectly edited 90-minute video. I call it picking the dull, risk-free route.
Albeit still a pre-recorded video, I am hopeful this October 30 event will take the opportunity to mix it up a bit. ‘Scary fast’ and the dark imagery certainly suggests they are embracing the end-of-October Halloween spirit, which would be a fun twist on proceedings. It’s also the first ever Apple event held in the evening, kicking off at 5 PM Pacific (rather than the usual 10 AM start). Different is fun. It does mean that I will be watching it at midnight local time in the UK, but swings and roundabouts … I’ll take it. I’m assuming it will be under an hour in duration.
My expectations are proportionate. Bloomberg’s Mark Gurman is very confident that the M3 Apple Silicon chip generation is beginning, and I have no reason to doubt that. I expect to see the launch of the M3 24-inch iMac, and M3 Pro/Max MacBook Pro. In summary, notable spec bumps, same designs.
Perhaps one of the most provocative changes Apple announced at its event this month is the abandonment of the ‘Bionic’ moniker for its A-series chips in favour of a ‘Pro’ adjective. The conspicuously veiled truth in choosing that name is the absence, at least to date, of a non-pro A17 chip.
For the longest time, Apple would update all of its flagship iPhones with the same, new, chip each fall. Starting last year, Apple set out to distinguish the base mode and higher-end phones by only upgrading the chip in the iPhone 14 Pro and iPhone 14 Pro Max. They got the A16 Bionic, whereas the base model 14 and 14 Plus were powered by the A15 Bionic, the same chip as the year-ago iPhone 13 Pro. Apple repeated that product stratification strategy again, such that the base model 15’s house an A16 and the 15 Pro and Pro Max get the upgraded chip, the A17 Pro.
The ‘Pro’ chip naming is clearly an indicator that this pattern is here to say. One outcome is that next year, the iPhone 16 gets a plain ‘A17’ chip, perhaps merely a binned variant of the A17 Pro silicon, with one less CPU core or something insignificant. The Pro phones would continue ascending to be even more powerful, with A18 Pro innards. The non-pro A17 chip could also find its way into other lower-end iOS devices like the entry-level iPad, at some point.
The other way to look at this is to consider this a transitional year. Perhaps, the A17 will never make its way into a future iPhone and the A17 Pro is a one-off outlier. It would follow that next fall, Apple’s strategy would fully reveal itself by introducing both an A18, and an A18 Pro chip lineup, for the iPhone 16 and iPhone 16 Pro respectively. This would certainly provide naming symmetry across the models of the same year, and closely mirrors what Apple does on the Mac side, in which the M-series of chips comprise a family that includes higher-end (Pro, Max, Ultra) variants. You could even easily foresee an A18 chip above Pro, if the iPhone Ultra rumours come to pass.
“We are happy to report that we had an all-time revenue record in Services during the June quarter, driven by over 1 billion paid subscriptions, and we saw continued strength in emerging markets thanks to robust sales of iPhone,” said Tim Cook, Apple’s CEO.
Apple’s hardware sales growth has been negligible-to-flat for several quarters in a row. More than ever, their quarterly financial statements depend on the Services business to show a record result. This quarter, Apple reported 8% revenue growth for Services, topping $21.2 billion for the quarter, and announced it had reached 1 billion paid subscriptions on its books. They also said the installed base of active devices hit an all-time record, without disclosing a specific figure. (Apple has repeatedly argued that a bigger install base means more customers will engage with services over time, and so far that has held up.)
But that’s about all Apple will tell us as to the performance of Services. It hasn’t reported Apple Music subscriber numbers since 2019, nor has it ever given hard figures about the performance of Apple TV+, Apple Arcade, News, iCloud, or Apple One in general. A billion subscribers is a huge headline figure, but it obscures the real story of what most people think of when you say ‘Apple services’. Services includes the App Store, and so a majority of that 1 billion total includes In-App Purchase subscriptions from third-party apps in the App Store. Although we never know for sure because Apple won’t tell us, it follows that the majority of Services revenue growth hails from the 15-30% commission Apple collects on those in-app purchase transactions.
If I was a financial investor, I would be growing increasingly dissatisfied with the murkiness of the Services business. For Apple’s flagship growth unit, it’s really hard to get a read on its performance. The golden goose of Apple’s stronghold on the App Store is constantly under threat from regulation, but we can’t measure the potential impact on Services revenue. The success of Apple’s content services are a hedge against the risk of App Store commission drying up, but we don’t know anything about the state of those offerings — we can’t even say for sure they are successful.
Apple stopped reporting unit sales numbers for its hardware products in 2018, but it still reports revenue per division. Rather than a single ‘Hardware’ revenue total, Apple reports quarterly revenue breakdowns for iPhone, Mac, iPad, and Wearables, which gives some visibility into how each product line is doing over time. In contrast, Services is completely opaque. There is no breakdown provided, just one total revenue figure. I am surprised there isn’t more pressure here from Wall Street for Apple to reveal more details. A few years ago, Services was small enough that it didn’t really make sense to split it out. These days, though, Services is so large that it is bigger than the Mac, iPad and Wearables units combined in revenue terms. If you hypothetically split out the App Store as a sub-unit, there’s a decent chance it alone would be larger than the iPad on the balance sheet.
At the very least, I think it’s time for Apple to be more transparent about that subscription total. How many of the 1 billion subscriptions are for Apple’s services, versus third-party subscriptions? And how many unique users does that 1 billion subscriptions represent? It’s not even clear to me how it is calculated. A user who pays for iCloud and Apple Music presumably counts as two subscriptions, but as a subscriber to Apple One Premier, do I count as one subscription, or six?