21 November 2016Bloomberg:
Apple Inc. has disbanded its division that develops wireless routers, another move to try to sharpen the company’s focus on consumer products that generate the bulk of its revenue, according to people familiar with the matter.
There’s a difference between cutting products because they don’t make enough money and cutting products because they don’t align with the product strategy. Some products justify their existence in ways that aren’t about profitability or sales metrics. I think Apple TV is a good example; it makes very little money but gives Apple a crucial presence in the living room which enhances the usability of its other products. The iPhone is better because I can quickly AirPlay my photos to the television and that is only possible because of the set-top box.
Discontinuing products that don’t generate significant revenues is a slippery slope. If you extended the naive strategy to its extreme, Apple would drop every product that isn’t an iPhone because nothing comes close in revenue terms’ an outcome that is obviously unhealthy. It has to be more nuanced than that.
The relevance of a WiFi router is hard to judge. It is a pervasive part of iOS devices and Macs so a router is an essential component of the experience. However, Apple has failed to demonstrate that it can contribute features and functionality to a WiFi router that a third-party cannot.
I hope that Apple evaluated the AirPort roadmap, decided there was little scope for improvement over the status quo, and then shuttered the division. Whether I believe that Apple could add value to the router space is irrelevant; I have to trust Apple is in the omniscient position here about its own lineup.
On the other hand, if AirPort development was cancelled simply because it ‘only’ made a few million dollars, I would be deeply disappointed. Accessories support the core products — it is unreasonable to expect them to make money. Apple has the privilege to make choices that aren’t constrained by financials. Abandoning products that don’t make money is what companies on the brink of bankruptcy do.