Apple's Sweet Solution for Revenue: Web Apps
It is well known that Apple has been trying to diversify their revenue. If you look back over the last 7 years, the percentage that Services made up of Apple's overall revenue has ranged from 9.15% in Q1 of 2017 to 28.23% in Q3 of 2024. At the same time, the percentage of revenue that was generated by the iPhone went from 69.40% in Q1 of 2017 to 45.81% in Q3 of 2024.
It should be noted that it has not been a steady decline, the revenue for each product category does differ each quarter. As an example, there are typically more sales in Q1 of a fiscal year, because this covers October through December, when iPhone sales are their highest.
In order to stave off any possible decline in iPhone sales, Apple has needed a means of increasing revenue. There are two ways of doing this, increase overall sales, and increasing the amount you get from each user. If you are just entering a market, the former may be possible, but in a situation where the market is matured, like the iPhone, you need to use the latter method. The way that they have been trying to do this is through subscriptions, and in particular services.
It should be mentioned that a bulk of Apple's yearly income comes from an agreement with Google, where Google pays Apple to be the default search engine on the iPhone. It is estimated that this agreement is valued up to $20 Billion per year, which is approximately 25% of all of Apple's services revenue.
The remaining 75% of Apple's services revenue comes from purchases, from the App Store, TV Shows, Movies, and Music. Much more of the services revenue comes from subscriptions like Apple Music Apple TV+, iCloud, Apple One, Apple Care+, and of course, app subscriptions and in-app purchases.
Within the last couple of months Apple has released a couple of new methods for expanding their services, web apps.
Recent Web apps
Apple has now released two brand new web apps in the last month, Maps in July and podcasts just this past Monday. The addition of these means that there are now four services that are available via the web. The other two items are Music and TV.
When Apple Music was announced in 2015, it was only available in iTunes and the Music app on iOS and macOS. It was not until June of 2019 when Apple Music was made available on the web. The rollout of Apple TV+ was slightly different. Apple TV+ was announced in March of 2019 and made available to the public in November of the same year. When Apple TV+ launched, it included a corresponding web version. This allowed users to watch Apple TV+ wherever they were, provided they had access a web browser. This also made it so the service could be made available to non-Apple device users, expanding the base for those who may want to watch Apple TV content.
I have been wondering why Apple is just now releasing web versions of Podcasts and Maps. These releases come many years after they these services have been available via an app. Ultimately, I think it is to help bolster their services revenue. Each of the services that are available on the web, excluding Maps, can generate income, specifically subscriptions. Some of the services will generate more revenue than others, but they all have a potential to create income.
I think that some groups within Apple have finally realized that only a certain percentage of Apple's existing customers who have purchased Apple hardware will subscribe. In order to help subscriptions they have turned to the "Sweet Solution", known as the web, can help generate revenue.
In case you are not aware, at Apple's World Wide Developer Conference in 2007 Apple provided a means of creating apps, and that "Sweet Solution" was to write web apps. Below is a video of that segment from WWDC 2007.
Having a web app can allow those who are not entirely ensconced in the Apple ecosystem to subscribe to Apple's services. As some have postulated, it could also be a way of easily enabling API endpoints for Apple's services for areas where Apple does not control the platform, possibly within cars, or any other internet connected device.
As an example, they could easily make apps that are effectively just wrappers for web pages. Taking this approach would absolutely minimize development costs. Furthermore, it could allow Apple to more easily create country-specific, or even area specific, app, and control it entirely on the server-side.
Lastly, it would also allow Apple to have feature parity for all platforms, because the web is available on a vast majority of new devices.
Closing Thoughts
Apple releasing web versions of their services makes complete sense from a financial standpoint. Being able to provide services to more users, particularly non-Apple users, only extends their possible revenue streams. Even if the services does not make direct revenue, in the case of Maps, it is still worthwhile to provide the service so others can use it, even if it's just within a web app.
With the recent release of both Maps and Podcasts, I would not be surprised to see additional services, like Weather, come to the web at some point in the not too distant future.