- REUTERS/Mark Kauzlarich
Apple’s venerated App Store is waging a quiet war for its future.
While the App Store business is looking pretty secure today – Apple announced this week that it recorded record-high revenue in the last quarter, up 37% – barbarians are at the gates.
Companies like Facebook, Google, Amazon, and Microsoft are all pitching technology for developers to build artificial-intelligence-powered bots that let you use your voice or text messaging to get tasks accomplished. Think: the Amazon Echo.
Meanwhile, developers like Spotify are increasingly grumpy about the 30% cut Apple takes of App Store purchases, directing users to do their buying in their web browsers.
Both trends are existential threats to Apple: They reduce reliance on the App Store, in turn hurting Apple’s bottom line, as developers increasingly find ways to use chatbots or the browser to circumvent that 30% “Apple tax.”
As CEO Tim Cook tries to steer Apple toward making more money from services like the App Store, any alternative method of downloading and using apps means trouble.
That’s why Apple is so in love with the Pokémon Go phenomenon. In the short term, the smash hit stands to make Apple a lot of money, since it takes its cut of the estimated $1.6 million per day that the game is generating on iOS devices.
In the longer term, though, it proves that the whole concept of smartphone apps still has legs. It’s an important philosophical victory for Apple as it navigates a changing tech landscape. And Cook knows it.
What Cook said
Here’s an important piece of what Cook had to say about Pokémon Go on the Apple earnings call yesterday:
“I think it’s a testament to what happens with innovative apps and the whole ecosystem and the power of a developer being able to press a button, so to speak, and offer their product around the world.”
In other words, Pokémon Go is the poster child for what apps and the App Store are really good at. The augmented-reality functions of the game require a camera, which means it’d be a lousy web app. It relies heavily on a map and walking around, which means it could never work as a chatbot app (or on a PC).
And it has global appeal, so the existing App Store worldwide infrastructure helps Pokémon Go seamlessly roll out in different markets (though Niantic is being cautious on that front, as server capacity continues to be a problem).
- Stephen Lam/Getty Images
Which makes the iPhone (and Android, for which it’s also available) the ideal home for Pokémon Go. It could never happen anywhere else, in any other way, and it proves that innovation and sensational hits are still possible from the App Store.
The augmented-reality aspect of Pokémon Go, which many have seized on, is nice and may portend big things for the future – but it’s not as close to Apple’s heart as what it says about the App Store.
It’s a great victory for Cook as he tries to show Wall Street that the App Store can keep growing, forming the cornerstone of Apple’s transition to a services model, even as competitors line up to erode its lead.