If the founder and CEO of one of the world's biggest tech companies trash talks another behemoth of the industry, it's bound to make headlines. So when Meta CEO Mark Zuckerberg shared his candid thoughts about where Apple stands now during a recent appearance on Joe Rogan's nearly 3-hour long podcast, the comments certainly didn't go unnoticed.
We've highlighted multiple times how Apple seems to have put innovation on the back burner, despite continuing to present itself as perhaps the most innovative company in the industry. Its product launch events used to have a ‘One More Thing' surprise that sent the fan base into frenzy and got the industry to sit up and take notice. But of late, they've been nothing but boredom.
Apple's getting too comfortable
The iPhone hasn't had a major design upgrade in many years. Apple hasn't worked on new form factors like foldables. Some analysts have even downgraded Apple's stock due to its lazy attitude to phone design.
This eventually led to the departure of design chief Jony Ive, a close confidant of Apple co-founder Steve Jobs. Ive was responsible for many of the designs that cemented Apple's products as icons. A recent book highlighted how Ive was opposed to the way Apple was being run after Jobs passed away, with there being a feeling that Apple had lost its soul.
Zuckerberg said that Apple hasn't “really invented anything great in a while.” He added that “Steve Jobs invented the iPhone and now they’re just kind of sitting on it 20 years later.” He also made an interesting observation that perhaps Apple isn't even selling more iPhones at this point as sales decline year-over-year, while also pointing out that since each upgrade isn't as significant as it used to be, people just aren't upgrading their iPhones as frequently.
Yet Apple continues to be a very profitable company. But it's not driving its record profits from hardware sales. Its services business, which includes revenues from the App Store and subscription platforms, is growing exponentially, going from approximately $78 billion in 2022 to $85.1 billion in 2023 and projected to hit $96.1 billion for 2024. Meanwhile, hardware revenue from iPhone sales has gradually declined over the same period.
Zuckerberg says Apple does this “by basically like squeezing people,” referring to the 30% cut Apple takes on App Store sales from developers. Apple has faced significant legal challenges over this policy. It was only recently that Apple was forced to allow developers to integrate third-party payment methods in apps, thereby enabling them to avoid the 30% fee.
Circling back to the topic of innovation, Zuckerberg pointed out that “they've been so off their game in terms of not really releasing many innovative things,” highlighting that the nature of the tech industry is so dynamic that if you don't do a good enough job, you will eventually get beat by someone.
Samsung's unsung brilliance was its ability to move quickly into the foldable space as it understood that demand in the high-end smartphone segment was stagnating. It needed to give people a reason to upgrade from their current flagship phone. A brand new form factor that enabled new use cases was certainly a big enough reason.
From launching the first foldable in 2019 to expanding the lineup and seeing it through the pandemic, Samsung is now selling more than 10 million foldable phones every year.
It's now the biggest global foldable brand despite intense competition from Chinese rivals. Those rivals are making more wacky and less expensive devices, yet Samsung's position is a bit too dominant, particularly in all of the markets that matter.
We've also seen Samsung making incredible innovative strides across its entire product lineup, whether that be for high-end tablets, smartwatches, or wireless earbuds. It even has what's objectively one of the better smart rings on the market, despite the fact that the Galaxy Ring is only in its first iteration.
There hasn't really been a push from Apple to explore new frontiers. The company seems content to milk its walled garden for every last penny. It's just business, after all. And if shareholders are happy with how the business has been set up to deliver consistent returns, does that really matter?
For what it's worth, Zuckerberg hopes that Apple “gets back to building good things and not having their ability to compete be connected to just like advantaging their stuff.” While he did say that the Vision Pro is probably the only big swing at a new product that Apple has taken in recent years, he feels that “it definitely did not hit it out of the park.”
Samsung is diving into the mixed reality headset space as well, but not as a knee jerk reaction to the Vision Pro. The company has been working on its Project Moohan headset for a number of years. There's reason to believe that the implementation could be better than the Vision Pro largely because Samsung has taken a more collaborative approach, as opposed to playing the role of the lone ranger that Apple prefers. It's even making smart glasses, a product category that Apple has yet to explore.
To be clear, Zuckerberg has many frustrations with Apple and that certainly influence his view of the company. Meta loses a lot of money due to the App Store's 30% cut. The privacy-focused changes Apple has made to iOS have obliterated billions in advertising revenue for the social media company. Zuckerberg admitted during the podcast that based on some of his back-of-the-envelope calculations, if Apple's rules didn't apply, his company would make “twice as much profit or something.”
Apple hasn't responded to Zuckerberg's comments and it likely won't. The company typically doesn't involve itself in tit-for-tat exchanges. Nevertheless, this is cause for some much-needed introspection. Is Apple fine if it ends up being regarded as a “has been”? It may not think that is the case, but it is no longer just anonymous posters on online forums pointing out its shortcomings. One of the most influential figures in the industry is highlighting them as well.
You can view the relevant part of the Zuckerberg episode below.
