Apple’s exit from some fringe businesses — external displays and more recently, wireless routers — is probably nothing more than a refocus on its core competencies, analysts said today.
But parting with such products, while they have been minor money makers, may have outsized consequences.
“I don’t think there’s value in the business today,” said Carolina Milanesi of Creative Strategies, referring to reports by Bloomberg that Apple had disbanded the division responsible for developing its wireless routers. Instead, Apple is “looking at its businesses and deciding where they make sense, where to put their priorities,” Milanesi continued.
Last month, Apple dropped its own external display from its online store and instead recommended models from South Korean electronics giant LG.
Jan Dawson, principal analyst at Jackdaw Research, also saw the exits as markers, not of a retrenchment from unprofitable businesses but of concentration on the revenue streams that matter. “I think they suggest something about focus, that perhaps it makes sense [to close those businesses] that don’t have a strategic role,” said Dawson.
Apple does not split out revenue from its smaller portfolios, such as monitors and routers — or even the broader “accessories” category on its e-store — but pours them, with others, into “Other Products,” which includes much bigger money makers like Apple TV, Apple Watch and the Beats headphone line.
But while it made sense for Apple to withdraw from minor markets to devote its finite resources to more important, more profitable businesses, the pull-back from wireless routers also puzzled analysts.
Both Dawson and Milanesi contrasted Apple’s retreat with the push by its rival Google into the same market. The latter launched its own router last month; the devices will begin shipping in early December.
Dawson wondered what the demise of Apple’s AirPort Express router meant for HomeKit, the company’s home automation technology and initiative. Routers, Dawson argued, are important to the smart home concept beyond providing network access to connect devices to each other, and the Internet in general.
“There’s a critical role for the router [in home automation], you want the router to make smart decisions,” he said, ticking off examples such as prioritizing communications among the many devices and providing responsive commands in certain situations.
If Apple doesn’t offer something else as the hub for HomeKit, then it must be ready to “open it up and let everyone else do the work,” said Dawson. That would be a major departure from its strategy of the past, when Apple portrayed a vision where its own products were central to the concept.
Milanesi saw the exit from wireless routers differently. Because Apple’s routers were also embedded in its Time Capsule backup devices, she assumed that the company was also getting out of the latter market as well.
Her assumption? “They might want to make everyone use iCloud,” Milanesi said, referring to Apple’s cloud-based storage service. Apple, Milanesi noted, has repeatedly stressed the revenue growth recorded by its Services group, which includes iCloud, and touted how the installed base of iOS and macOS devices can be leveraged into substantial recurring income.
his story, “Apple’s exit from wireless routers will have consequences” was originally published by joshsite.net