On April 28, 2003, Apple launched the iTunes Music Store, saving the music industry from the scourge of piracy while creating a large and steady source of revenue for Apple. Thirteen years later, however, what started as a simple and intuitive way to find music has become a cluttered festoonery of features. As Apple begins competing with focussed streaming services like Spotify, the company’s strategy of tacking new services, like Apple Music, which became available last year, onto already bloated software has made the experience of using the application more and more unpleasant. “It’s yet another major feature added to iTunes on Mac and Windows—an app that everyone seems to agree already has too many features and responsibilities,” John Gruber, a prominent Apple observer, wrote. Just last week, Apple acknowledged users’ complaints about a bug that was deleting music files on personal computers, and promised a quick software update. Many Apple Music customers took to the Internet to warn their fellow-users to back their stuff up. So when Apple said that it would release a new streamlined version of Apple Music at its developers’ conference next month, it seemed as though the company was finally reckoning with the confusion in its music services.
Apple may, in fact, clear up some of the mess and present a simpler solution, but its struggles in the delivery of music are merely a symptom of a deeper problem: how to provide Internet services. Just this week, Apple introduced a smaller visual refresh to the iTunes software, and almost immediately complaints arose about that change, too. As I pointed out when Apple acquired Beats Audio for $3.2 billion, two years ago, the company’s corporate genes are not encoded for exploiting the cloud and user data, which is, like it or not, the realm in which it now competes.
Apple has always been, and always will be, a hardware-first company. It produces beautiful devices with elegant designs and humane operating-system software. It sets the industry standard with its chips and innovative uses of materials. Its engineers design manufacturing processes to make lighter, thinner, and more desirable devices. These efforts take time, which is perhaps a reason the company likes to make a big splash when it announces new devices a handful of times each year. This hardware-centric approach is extended to software, with big-bang releases once or twice a year. Such a schedule works when the software is a desktop operating system, say, or a mobile iOS, both of which get minor updates whenever necessary. But when it comes to Internet services, a yearly release cycle feels dated. To perform well, these services need constant tinkering based on how people are actually using them.
By now, we all know that our every move online can be tracked and traced, and that, ideally, services learn from and adapt to customers based on an artful deployment of that data. Spotify, while not perfect, feels more personalized than Apple Music. Spotify’s Discover Weekly feature is a good example: it takes the music I’ve listened to in the past, and clusters it into microgenres. It also analyzes some two billion playlists created by other users and algorithmically compares my preferences with those playlists, creating a weekly playlist that feels extremely intimate. Every time I skip a track, it learns, adapts, and makes sure that my Discover channel continues to appeal to me for maximum engagement. Facebook does something similar with its News Feed. Instagram does it with its photo streams. Google does it with Google Now and other services. Constantly updated data defines the service, almost in real time.
Apple, by comparison, designs and builds products with a very distinct vision of what a product will do and how its customers will want to engage with it. This works well for hardware, just as it did for pre-Internet software. But it doesn’t serve to capture the unexpected or mundane behavior of people on the Internet, and it certainly doesn’t allow the company to learn or adapt as quickly as others.
Apple is phenomenally successful, but like Microsoft, which stumbled when Google’s Internet-only, advertising-based businesses took off, it may find it difficult to adapt success to new terrain. A former Apple executive told me that, because Apple’s power structure is built around hardware, no one really wants to work on its services business, even though they generate more than Facebook’s annual revenues. In other words, good product people view services as a place where careers go to stagnate.
Because Apple’s corporate DNA is that of a hardware company, its activities are meant to support hardware sales. For example, its “Made with iPhone” advertising campaign talks up the iPhone’s camera, and thus drives up hardware sales. Similarly, all of Apple’s services—iCloud, Apple Music, Apple Photos, iMessage—exist to support the sales of phones, tablets, and laptops. The executive team, the sales machine, and the manufacturing, software, and services components are all locked into the hardware schedule. Even the welcome Apple Music update will be revealed at the World Wide Developers’ Conference. Why should Apple Music have to wait for the conference to make usability fixes when Facebook and Google, and every Internet-services-oriented company, does this on a routine basis?
Compared to Apple, Internet companies like Google and Facebook don’t have strong perspectives on the way they want the world to work. Google wants all your data and Facebook wants all your attention (and uses data to be good at that), but both companies are basically agnostic about how they get there. For Facebook and Google, this also means compromising and running roughshod over their users’ privacy, often using personal data to tailor ads to customers. Apple has a different approach, keeping its users within its Apple-defined walls. These radically different approaches are reflected in how Apple thinks about privacy, too. Apple and Google services look and sound alike on the surface, but they do it in remarkably different ways, as I described in a previous piece. Apple sells services based on the information contained on your phone or in the walled universe of Apple products; Google collects your billions of data bits that are in the cloud to create services.
It’s not impossible for companies to adapt to new circumstances. Netflix made a bumpy transition from physical goods to digital services, and has now become a preëminent entertainment channel, one that mines user data successfully. The people who guided that transition could offer their insights. Maybe Apple should even consider buying Netflix. It could afford it: Netflix’s market cap is about thirty-eight billion dollars, which is far less than the fifty billion a year that Apple is currently spending just to buy back its shares. Whatever Apple does, it is time for Cupertino to make some quick and bold moves.
