Apple Doubles Down On Ecosystem As Differentiator

| About: Apple Inc. (AAPL)

If you haven't been paying attention to Apple's (NASDAQ:AAPL) movements over the last six months I can sum up their public stance in one word: ecosystem. Every event or announcement Tim Cook has cited not new features or products but the strength of the Apple ecosystem as the main differentiator from competitors BlackBerry (NASDAQ:BBRY), Google (NASDAQ:GOOG) and Microsoft (NASDAQ:MSFT). Everything from their new commercials to their repeated boasting of developer payout figures reflects the Cupertino based tech giant's focus on the ecosystem.

Each of Apple's competitors have their own story they are pushing. BlackBerry is pushing enterprise security and adoption, Microsoft is pushing one ecosystem across computing devices and Google is pushing their Google services (G+, Google Docs, Gmail, Hangouts, Google Play). Apple has long since made it clear they intend to keep Mac OS X and iOS separate. The recent evidence suggests competitors are continuing to add value to Apple's ecosystem which gives Apple time to slowly bring their offerings online while they mature. Apple's recent debut of iWork suite online is an example of this.

Google has brought their most valuable differentiator, Google Now, to iOS. This has upset and ruffled the feathers of many Android users and caused them to consider switching to iOS devices. The reason cited when polled is that Google often times has their services done best on the iOS platform. Google Maps is also one of the most valuable apps users enjoy on their iPhone.

BlackBerry has publicly made plans for their vaunted BBM messaging service to come to iOS later this month. With very little reasons for consumers to buy into the nascent BlackBerry 10 platform this provides consumers another reason to stick to something familiar and enjoyable.

Microsoft for their part has today announced on the official Skype blog that Skype's newest feature Video Messaging is now out of beta and available on iOS but not supported on their own Windows Phone 8 platform.

At this year's WWDC Apple unveiled iTunes Radio. iTunes Radio is Apple's first-party streaming music service that capitalizes on the most complete music collection in the industry. Last minute deals with major record labels helped Apple announce this valuable feature without any caveats. Services like Spotify and Pandora (NYSE:P) will now have chief competition that carries strong brand loyalty in iOS users. This new service also quickly provides a countermeasure to Google's recently announced Google Play All Access Music & Microsoft's Xbox Music Pass.

The user engagement for Apple's first-party services tend to be much higher than on other platforms. For this reason I believe that iTunes Radio will provide Apple with another strong and growing revenue stream that will add significant value to the company going forward. The service will not launch until this fall so this is a long term consideration for investors.

Another play that has not been mentioned much but will gain traction due to Apple's third-party accessory ecosystem is the support for MFi game controllers in iOS7. The Wall Street Journal recently reported that documents sent to them confirm this. "The Apple document describes controllers that devices like iPhones could be inserted into-providing control buttons around the edge of the hardware-as well as versions that would connect wirelessly to iOS-powered devices and Macs." I alluded to the possibility of Apple utilizing their Apple TV platform in the future to help make a strong living room push in my previous article here.

Apple's recent moves to aggressively cut prices on their older iPhone models in emerging markets signals to me that they are after market share and seek to make up the difference in income when users become invested in their ecosystem.

These are just a few ways Apple is doubling down on their ecosystem as the big difference. They are smartly leveraging their enormous user base and the clear best accessory, app and content ecosystem they have built. Developers continue to champion Apple's ecosystem and continue to provide a steady stream of valuable add-ons Apple has become famous for.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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