Apple’s famous walled garden starting to show cracks

As Apple struggles with sluggish iPhone sales and a falling stock price, all eyes have turned to the company’s services businesses and whether they can meet the company’s lofty expectations.

Apple already gave us a few hints over the last month or so. In a series of uncharacteristic partnerships with tech rivals, Apple has shown its willingness to rethink how its tightly-controlled ecosystem of software and services can expand beyond the iPhone.

The famous Apple walled garden may not be crumbling, but the cracks are starting to show.

Apple’s first major partnership announcement came in November, when Amazon said it would bring Apple Music to Echo devices and let users control playback using Alexa, a competitor to Siri. Less than a year earlier, Apple made an attempt to take on the Echo with its own HomePod speaker, so quickly partnering with Amazon felt like an admission by Apple that it can’t generate the kind of momentum in the home that Alexa has captured.

More questions arose this week at CES in Las Vegas, where TV makers like Sony and Vizio announced new models that work with Apple’s AirPlay 2 technology, which lets you beam video from your iPhone or iPad to a TV. The TVs are also compatible with HomeKit, Apple’s system for controlling smart home devices like connected light bulbs and power outlets. Until now, these features have mostly been restricted to Apple TV.

The big one came from Samsung, one of Apple’s major rivals. The Korean gadget maker announced at CES on Sunday that it would bring a new iTunes app to some models of Samsung TVs, meaning you’ll be able to log into your Apple account on your Samsung TV and stream movies and TV shows from your iTunes library.

These moves aren’t unprecedented and certainly don’t suggest impending disaster at Apple. But they do signal that the company is feeling the pressure to keep its services business growing at an impressive rate to shift the narrative from the iPhone’s challenges.

Earlier this month, Apple lowered its revenue guidance, and CEO Tim Cook blamed an economic downturn in China for lackluster iPhone sales. Beyond that, he said factors like cheaper battery replacements kept users from upgrading to the latest models.

Meanwhile, Chinese retailers have already started cutting iPhone prices, and Apple has offered greater discounts if you trade in your old model. Those efforts might mitigate the drop, but it’s clear the days of significant iPhone sales growth are over.

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