How Apple’s Changes to Its Store Could Benefit App Developers

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The New York Times 11 September, 2021 - 09:24am 33 views

Who won the Apple vs epic lawsuit?

In her decision, Judge Yvonne Gonzalez Rogers of the US District Court for the Northern District of California said she agreed with Apple's claim that Epic had violated its developer agreements, and awarded damages equal to 30% of the $12 million Epic collected from iOS users between August and October 2020, plus 30% ... CNETApple mostly wins in Epic Games Fortnite trial, but must ease payment rules

After a judge opened up a way to avoid Apple’s commission on their sales, companies big and small are seeing dollar signs.

Apple has taken to calling its iPhone App Store an “economic miracle,” and it has pointed to developers like Zach Shakked as proof.

Mr. Shakked created an iPhone app that helps companies find trending hashtags on social media. Over the past 12 months, his sales have topped $5 million.

But one of Mr. Shakked’s largest expenses is paying a cut to the world’s richest company. In his case, Apple took nearly $1.5 million — its fee for letting him run his app on its devices.

Now, Mr. Shakked has hope that he could soon keep at least some of that money. On Friday, a federal judge ordered Apple to allow developers to steer their customers off their iPhone apps to pay for their goods or services, which Apple had banned. That is big news for developers like Mr. Shakked because sales completed outside Apple’s payment systems are not subject to its commission of up to 30 percent.

“It finally feels like the small guys got a win,” Mr. Shakked, 25, said. “There’s a sense of justice.”

The ruling, in Apple’s yearlong legal fight with Epic Games, the maker of the popular video game Fortnite, set off celebrations among app developers. From one-person start-ups to Fortune 500 companies, they have long complained about paying hefty cuts of their businesses to Apple.

The impact of the decision will be most felt by the smallest developers like Mr. Shakked. He said the change could save him hundreds of thousands of dollars a year, which would allow him to hire more employees.

“It’s a very big deal,” said Denys Zhadanov, a board member at Readdle, which makes five productivity apps for tasks like email that together have been downloaded roughly 175 million times. The change could save his company millions of dollars each year, he said.

The court fight has often been framed as a battle between industry heavyweights: Apple, which is worth $2.5 trillion, versus Epic, a far smaller company but still one of the few app makers capable of taking on the Silicon Valley titan.

Friday’s verdict is not expected to be a big hit to Apple’s bottom line. In fact, the company declared victory, since Judge Yvonne Gonzalez Rogers, of U.S. District Court for the Northern District of California, ruled that Epic had failed to prove that Apple had a monopoly in the mobile gaming market — which would have had a much more serious consequence.

The decision appeared to disappoint Epic. Tim Sweeney, its chief executive, said the ruling wasn’t a “win for developers or for consumers.” He vowed to continue his company’s fight.

There could be a number of barriers to the mandated App Store changes. Apple could ask another judge to temporarily block the order, which is set to take effect in 90 days. And both companies could appeal the ruling, a process that could take several years.

Apple could also restrict how developers direct customers off their apps to complete transactions, including by making them list Apple’s payment system as an option and barring them from offering discounts for customers who don’t pay via Apple. Such discounts may be necessary to persuade customers to take the extra steps to open a web browser and enter their credit card information, versus simply tapping a button and paying via Apple.

“I’m sure app developers will benefit somewhat, but it’s unclear to me to what extent consumers will actually use this,” said Sumit Sharma, a senior researcher for tech competition at Consumer Reports.

Nevertheless, the tide may be starting to turn against Apple’s tight control over its App Store. Regulators in Japan and South Korea have forced Apple to tweak how it manages the store, and regulators and lawmakers around the world are also considering measures to curb the company’s influence.

Dan Burkhart, the chief executive of Recurly, a subscription management and billing platform that works with more than 2,000 companies, said many of the app developers he communicates with regularly were buzzing with enthusiasm on Friday afternoon. Larger companies with “established momentum and notoriety” are likely to benefit from being able to direct their loyal customers elsewhere, he said.

Match Group, the maker of the dating apps Tinder and Hinge, is on track to pay Apple and Google — which controls a similar app store for phones that run its Android software — more than $500 million in commissions this year, the company’s single largest expense, said Gary Swidler, Match’s finance chief. The company was already considering ways to use Friday’s ruling to cut down that bill as much as possible, including by charging less for subscriptions that are paid on one of its websites, he said.

One analyst estimated that the change could save Match $80 million a year, but Mr. Swidler said there were too many questions to make such a forecast.

“Depending on what the take rate would be, it will help us from a bottom-line perspective, and it will allow us to invest more in our business, and will also allow us to pass on the benefits to consumers,” he said.

Michael Love, the founder and chief executive of a Chinese dictionary app called Pleco, said the prospect of avoiding a commission — he pays Apple 15 percent — was good news. Even better? The possibility that he could interact directly with customers in ways that App Store rules prevented, like sending promotional emails, issuing refunds and looking up old orders.

“I’m excited for the possibilities for payments without Apple getting in the way,” he said.

Mr. Love, 39, said he had not been able to strike many deals with other dictionary publishers because those publishers did not want to pay commissions to both Apple and him and lose out on a lot of money.

Now, by avoiding the Apple fees and working directly with publishers, he could potentially transform his business and become a “boutique e-book retailer,” Mr. Love said. That could increase his revenue from about $500,000 a year to $5 million or $10 million, he said.

“It makes it possible for little guys to compete,” he said.

Read full article at The New York Times

Apple's iPhone 13 has a lot to live up to after the iPhone 12's success

The Washington Post 11 September, 2021 - 07:00am

Apple's iPhone 12 was one of its best sellers.

Last year, Apple tapped 5G wireless as one of the key new things about its iPhone 12, promising faster downloads and more reliability. With this year's next iPhone, Apple may be looking to the heavens for its next big breakthrough.

The tech giant is expected to offer new iPhones on Sept. 14 that could include technology for making emergency phone calls even without a cellular signal. The new feature, which reportedly will rely on a chip designed to talk to satellites, may not arrive this year, according to earlier reporting by Bloomberg. Regardless, the new iPhone is expected to still rely on 5G wireless technology for day-to-day connectivity.

"The challenge is getting the same level of attention and creating a cycle of upgrades," said Carolina Milanesi, an analyst at Creative Strategies. But, she said, Apple has a knack for coming up with something for fans to get excited about.

An Apple spokeswoman declined to comment ahead of the company's event.

Read more: Apple Sept. 14 event: How to watch the expected iPhone 13, Apple Watch 7 launch live

This year's launch will mark another test for Apple, which already counts a billion iPhones actively being used around the world. And the phone's popularity continues to grow. Last year's iPhone 12 was such a hit that it pushed Apple's sales and profits to new records, even though the device launched in the middle of one of the worst health and economic crises in a century. The iPhone 13's job will be to help Apple keep the momentum going, even with a pandemic that stubbornly won't go away.

Historically, the hype around new iPhones seems muted when the outward design remains the same. Apple somewhat acknowledges this, adding an "S" to the name of these inner-changed iPhones, starting with 2009's iPhone 3GS, which the company originally said stood for "speed." And though some critics might say the S stands for "snooze," Apple has used these off-year iPhones to introduce new marquee features.

Stay up-to-date on the latest news, reviews and advice on iPhones, iPads, Macs, services and software.

When it launched a decade ago, the iPhone 4S introduced the Siri voice assistant. The iPhone 5S, in 2013, introduced the Touch ID fingerprint sensor. The iPhone XS offered a "markedly improved dual camera," CNET reviewer Scott Stein wrote on its 2018 debut. (But it was the iPhone XR, released the same year, that stole the show, with a compelling cheaper price tag in exchange for a lower-quality screen and camera.)

Whether Apple calls its next iPhone the iPhone 12S or the iPhone 13, as the internet seems to have already christened it, won't matter. What'll matter is whether Apple can pack enough into the device to hit the mark after one of its biggest iPhone launches ever, last year.

The good news for the company is that it already appears to have a head start. A survey by SellCell, a phone reseller, found that 44% of current iPhone owners plan to upgrade to one of the four reported iPhone 13 models when they launch. That alone could amount to tens of millions of iPhones.

Read more: iPhone 13: Stylish color options and new design may be revealed at Apple's Sept. 14 event

"Apple does an amazing job making hit products seemingly year after year, like a pop band," said Bob O'Donnell, an analyst at Technalysis research. And just like any band, he added, some releases may not hit the general population the same way a smash album does. "They're still OK, and still important to fans. That's probably what we'll see with the iPhone 13."

The Apple Watch has become more than merely an accessory for the iPhone.

Part of Apple's success has been thanks to companion products like the Apple Watch, which starts at $279, and the company's AirPods wireless earbuds, which start at $159. That ecosystem of interconnecting products and services has helped create a behemoth of industry.

So it's worth noting that though the iPhone may not have many physical changes this year, the Apple Watch reportedly will.

Leaks suggest the Apple Watch 7, as it may be called, will come in 41mm and 45mm sizes, up slightly from the 40mm and 44mm offered today. That slight increase is expected to account for a new, flat-edge design, marking a significant shift from the curved edges Apple has used since the device's 2015 launch. Reports from Bloomberg and from Apple leakers suggest the screen's bezels may also shrink, allowing for more viewable screen area.

Though the Apple Watch doesn't sell anywhere near as well as the iPhone -- Apple doesn't even publish individual revenue for the device -- it reportedly sells better than the entire output of the Swiss watch industry. And it's become a key halo device for iPhones, with Apple saying 75% of purchasers are buying their first Apple Watch.

"Traditional Swiss watch makers, like Swatch and Tissot, are losing the smartwatch wars," Neil Mawston, an analyst at Strategy Analytics, wrote in a report last year. "Apple is delivering a better product through deeper retail channels and appealing to younger consumers who increasingly want digital wristwear."

Last year was all about 5G for Apple.

Apple observers saw a sure bet with the iPhone 12 when it launched last year. The tech giant was finally adopting superfast 5G wireless, playing off a culmination of years of hype from mobile carriers. Now, a year later, Apple CEO Tim Cook said he believes last year's record iPhone sales were just the start of 5G wireless upgrades.

"We're only in the early innings of 5G," Cook said during a conference call with analysts this summer. One data point he noted was that people around the world, and the US, still don't have easy access to 5G signals. That gives people less reason to upgrade now and potentially more reason to buy when the signals arrive.

While the carriers boast 5G coverage across the nation, the speeds are often disappointing relative to marketing hype. Consumers haven't rushed to embrace the technology, and many people still don't have the new wireless signals available around their homes. But the carriers have been steadily upgrading their networks, improving on those early lackluster experiences. Both the iPhone 12 and its newer sibling stand to benefit from those coming changes. 

Satellite connectivity could also offer an extra incentive to help the iPhone stand out from the pack. It remains to be seen whether this is a regular perk or more of an emergency-use feature, as rumors suggest.

What's certain is that Apple will be sure to tout some feature of the iPhone 13 as a breakthrough that makes the device the next must-have product. But with a similar design, and an S-type year, that could be a tough sell, even when it comes to the most loyal Apple fan. 

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