iPhoneApple reported lackluster earnings on Tuesday as the company’s iPhone sales continued to slide. The numbers make it clear that the future of the consumer products behemoth is no longer in its consumer products. The fix? Apple should release a version of iOS for non-Apple devices. This suggestion will seem like heresy to the brand’s loyalists, but it may be necessary for the success of the company.

Imagine those Samsung, LG, and Xiaomi smartphones having an original Apple operating system on them rather than the imitations they are presently running. Offered the choice, users would upgrade in droves. And those users would download new applications and sign up for Apple’s subscription services, giving the company a cut of everything they purchased, as well as valuable data and marketing opportunities. Google’s Android business would finally have a formidable rival.

Apple’s second-quarter profits were 27 percent lower than in the same quarter last year. On the bright side, it said that quarterly revenue from its services business — the App Store, iTunes, and streaming music — grew by 19 percent year-over-year to $6 billion, making these services its second-largest revenue earner after the iPhone.

If Apple made iOS available on other phones, it would not only multiply the markets for its service businesses but would also allow the devices to become a platform for all sorts of new products and subscriptions that other companies would develop.

Apple has reportedly been working for years on developing video-streaming services that act as a version of Apple Music for TV and movies. If the company opens its platform, these could potentially be made available to billions of people.

The reason Apple’s profits are falling is that it doesn’t have any bold new products. Also its worldwide market share in smartphones is shrinking. According to Gartner, Apple’s marketshare fell to 14.8 percent in the first quarter of this year from 17.9 percent a year earlier. At the same time, the overall market grew by 3.9 percent, and Android increased its market share to 84.1 percent.

Instead of owning a big chunk of a large pie as Google does, Apple owns a decreasing share of an increasing market. Yes, Apple’s slice has been the most profitable, but, as this quarter’s results indicate, that will not last.

Microsoft offers a cautionary tale. The company was protective of its core operating system for the longest time, causing it to lose the smartphone market. When Microsoft released its mobile operating system, Windows RT, in 2012, Microsoft bundled its Office product into it and charged resellers a price of around $85 per device. This made Windows more expensive, in some cases, than the hardware. And even though Microsoft changed strategy after Satya Nadella took over as CEO in 2014, and started giving Windows away, it could not regain the momentum it had lost. Today, Microsoft retains a paltry 0.7 percent of the smartphone market.

Without expanding its operating system, the future looks bleak for Apple. Full-featured smartphones can be purchased for as little as $50 in China and India today. That price will fall to less than $25 over the next three or four years, and billions of people will be purchasing them. But these will be Android-powered devices. Apple will find that its market share has shrunk to the low single digits and that it has become even less relevant in the consumer space. Yet, unlike Windows RT, which was inferior to Android, iOS is far better than Android. That is why Apple needs to grab this market while it still has an advantage.

Will doing so eat into iPhone revenue? Yes, it will in some markets, but that is happening anyway. Chinese competitors such as Huawei and Xiaomi Corp. are selling devices with comparable hardware, for a fraction of the price of the iPhone. As a result, the iPhone’s market share in China reportedly fell from 16 percent in 2015 to less than 13 percent in 2016.  Apple doesn’t even have the best devices any more. Consumer Reports recently ranked the Samsung Galaxy S7 far higher than the iPhone 6s.  Samsung has also topped Apple in customer-satisfaction surveys.

And then the question is whether iOS can run on non-Apple devices. It surely can. Hackers have been demonstrating that for years. One ported key parts of the iOS core to the Nokia N900 in 2013. I have myself installed an older version of Mac OS X on a Dell desktop and been able to dual boot between Windows and OS X on the same hard drive. Most of the components of an iPhone are purchased from third-party suppliers, so there is little that is proprietary.

Making iOS available on other devices will remove a critical competitive advantage that the iPhone enjoys, but it will create many new revenue streams and will be better for Apple’s long-term survival. Apple’s innovation machine has largely stalled; the iPhone was the company’s last major product invention. Declining market share may be just what it will take to jolt Apple’s hardware designers and product developers out of their complacency and get them aspiring to deliver products as imaginative and groundbreaking as the iPhone once was.

Link to article on Washington Post’s website

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  • Dwyght Bryan

    Where did you get the idea that LG, Xiaomi, and Samsung use imitation iOS? They use Android. Only iZombies believe that iOS is better than Android. Why do I have an Android phone? Specifically because Android is better than iOS. It’s easier to understand and works more smoothly. Well that, and the fact that the hardware on my LG is also better and at a fraction of the price.

  • ProductiveMonk

    Stupid idea because Apple makes money off their hardware, not software which they give away for free. No one would buy an iPhone if they implemented your plan.

  • IF

    Interesting point of view – though I can’t imagine Apple going through with it.

    The biggest problem I forsee is that Apple will run into the problem that Android has had for years – Fragmentation of its operating system.

    True there will be millions (billions??) of people who can buy a cheap affordable phone in Africa, China, India but those phones all have varying levels of tech in them. Even if Apple were to offer an iOS Android Edition, is Apple committed to offer an operating system that they will support throughout the life of that phone? Sure some will upgrade and move onto a better phone with the latest iOS but what about those who can’t afford to?

    Apple’s biggest strength is releasing a standardized device that they KNOW will be able to handle their OS and have complete control over their rollout. It makes their customer service much easier if they only have to troubleshoot select devices – rather than multiple Android phones.

    Just my two cents – thanks for the article Vivek.

    • I didn’t say Apple has to work on every device. I can partner with the top manufacturers to adapt iOS for their phones. I agree that if every variation of every device has to be supported—as was the case with Windows, this will lead to an inferior product. Apple can pick a few leaders to support.

      • Supratheesh Thiyagarajan

        If offered only for premium devices/ front-runners then ios could not fight it out against android, even as it may be a lot more simpler and efficient. (Just when Google focuses on ‘Android One’)

        To be of some significance ios should be rolled out to all devices at varying levels but then as you have already mentioned -it would be following the windows’ way – which is of no use either.

        What really could happen is this: Apple loses one of it’s USP of it’s iPhone sales which is already declining and this decision could only make it worse!

  • Ed Lara

    Limitations on Android? I think you have that the other way around. You’re trying to tell us that Android users would install iOS on their devices in droves? Thanks for my first laugh of the day.

    • You can laugh, but most people I know think that iOS is much more elegant and easy to use. 🙂

      • Matt

        You’ve been sipping the apple kool-aid way to long. Might be time to start doing some thinking for yourself.

        • Yes, the emperor has no clothes. Look at its financials. And look hard at what it has been releasing—nothing world changing.

      • Ed Lara

        I would argue that most of the people that believe that are perfectly fine with phones with an abysmal screen resolution of 640×1136, so long as the outside is pretty. I’ve worked in IT through the rise of smartphones in the workplace and 80-90% of the issues we see are with Apple users not knowing how to set up their domain email, actions that are very simple and yet despite it’s “elegance” they still don’t know how to perform on their phone. Elegance is very subjective and in 2016 ease of use is dead even across the board, even among Windows Phone users.

        • On this, I agree. But the iPhone is a lot easier to use for people such as this, than are Android phones. People don’t want too many options or features.

          • Ed Lara

            Too many options or features? I thought you said Android was full of limitations…

          • Ed Lara

            If you truly believe that people don’t want “too many options or features” then why would they go through the hassle of installing a third party OS? I personally run CyanogenMod and getting it all set up is not the easiest process for the average user. There’s no way Samsung and LG would preinstall iOS on their devices, the licensing fees would cut deep into their profits and they’ve invested tons of time and money into the TouchWiz UI and LG UX respectively.

          • People like iOS because it is simple yet very functional. It doesn’t offer a maze of complex settings to adjust.

          • Dwyght Bryan

            Does Apple pay you to write this? There is no other explanation for an intelligent person to say the things that you are writing.

          • appetite

            why would apple pay him to write something they would have no intention of promoting. I agree it would be foolish for apple to license their os. It is not the same situation as it was with the mac originally, and it’s not 30 years ago.
            If apple wanted to branch out they could make android phones and race to the bottom feeding with everyone else. Tim Cook is good enough with supply management that they could likely make some money off that, but the
            REAL issue is that people keep whining about apple not having a majority of market share when it’s about margins and not market share. Doom and gloom prognosticators have been pontificating for at least 10 years about commoditization blah blah blah.

            Tell it to BMW, Bose, and a hundred other sought after brands, of which apple is STILL the top of the heap, not only in phones, but also in computers.

            I agree that it is strange for someone who would be perceived as intelligent to come up with such an idea as apple licensing their os (either one) at this point. It just doesn’t make sense.

          • Dwyght Bryan

            The premise of the article is ridiculous. I asked if Apple pays him because of his repeated assertions in then discussions that iOS is better and easier to operate than Android. This for example: “People like iOS because it is simple yet very functional. It doesn’t offer a maze of complex settings to adjust.” I am not and expert in sales,marketing, or finance and certainly not in technology. iPhone is still the largest selling smartphone worldwide. So in that aspect Apple is at ten top of the heap. Technologically iPhone is notably behind the premium phone offerings of other companies. You say that Apple is at then top of the heap in computers also yet most of the articles I have read point out that most of their income comes from phone and tablet sales. As for being at the top of the heap in computers for either sales or quality I respectfully disagree. I don’t think the company will be going under any time soon or even posting negative numbers. There has been a general slump in phone sales for everyone. If Apple wants to remain competitive within the next decade it does need to give up the exclusivity and proprietary policies regarding it’s products. IoT is the next big wave and Apple has shown less interest in catching it than other companies.

          • appetite

            They are at the top of the heap regarding profitability with phones and computers – that is undisputable. Sorry for not clarifying.

          • Dwyght Bryan

            Yes. That is because of their very successful premium marketing strategy. I agree, although I repeat that I read earlier this year that they are not making as much money off computers now; that their hardware success comes from phone and iPad sales. Hey. Have a great weekend!

          • Dwyght Bryan

            You did not understand what Ed Lara wrote.

        • Dwyght Bryan

          Actually I found Windows Phone to be the easiest of all; the best for the non-tech savvy and beginners. I can believe that Apple users have more problems with basic functions on their phones. Most of then iPhoners I know use their phones mainly for texting, playing games and watching videos in low resolution.

  • Pink