Apple Makes Quiet Gains in Local Mapping
In a recent conversation with the always-insightful Andrew Shotland, we speculated why no one talks about Apple Maps anymore. This was inspired by its ever growing list of content partners (Yext, et al.) to boost utility and heal the black eye left by Mapgate.
The irony is that in the heat of Mapgate a few years ago, everyone seemed to miss the fact that Apple Maps is actually pretty slick mapping tool — it just lacks the requisite place and navigation data.
Here’s what I wrote on the day of it’s release:
However one thing Apple could underestimate is that mapping and local search are games ultimately won on function over form. In other words will it find what I’m looking for, regardless of pretty flyover images of Big Ben?
That’s governed by the local data and algorithms that deliver relevant search results. And this is new territory for Apple, which is now cobbling together a silo’d list of local content partners like Yelp and Waze.
So lesson learned. The question since then is if it can recover, both through content/data partners and iterative development as more people use it. That’s where it is now — quietly picking up the pieces with data partners and a blitz of mapping acquisitions.
As for why no one is talking about Apple Maps, it’s simple: Users still have a bad first impression; tech media sees it as a tired story; and Apple itself is gun shy about publicizing product milestones (short of small wins) until they know they’ve nailed it.
The reason why this is a big deal, as Shotland and I discussed, is that Apple continues to cede its direct consumer touch point — at least at the app layer — to competitors who operate on its platform. In this case, Google Maps has more users.
Similarly, Twitter commerce division head Eckart Walther commented to me last week that Apple’s direct consumer access is paradoxically limited to a handful of its own apps, which have seen limited success — at least proportionate to iOS’s reach.
But here’s the thing: Apple doesn’t need to own the consumer at the app layer. It knows its strength isn’t in apps but in hardware (and OS). It so happens that the latter — selling iThings — is where its massive revenues and valuation are derived.
Everything else is to drive and protect that core revenue stream. So it offers best of breed — albeit third parties and competitors’ — apps to make iThings more attractive. That larger win sometimes requires smaller losses, like being a second-place mapping engine.
If you don’t believe me, consider the numbers. Revenue potential of a mobile mapping engine is in various flavors of local paid search. There, the addressable market is the mobile local search spend, which has total projected 2015 revenues of $6.6 billion.
Compare that to Apple’s $75 billion in quarterly revenue and $18 billion in profit, mostly from selling iPhones. Beyond revenue, iPhone ubiquity and 38 percent margins have made Apple the most valuable company in history. Horse, then cart.
Another example: Apple Pay has whipped the tech blogosphere in a frenzy of misguided punditry about chasing payment processing revenues. That would be a drop in the bucket; and it ignores the larger play of positioning Apple Pay’s utility to sell more iPhones.
Back to Apple Maps, it could fit right into this formula of boosting the appeal of owning an iPhone. One possible direction is creating central hub to integrate apps that are related to local searches — another nice consumer utility. Shotland says it best:
I still expect Apple Maps to develop an integrated app strategy where the map will know that you have a certain app on your phone that has data relevant to your map query and will either display the data on the map or provide the ability to open the app to complete the query, similar to what Google Maps is doing with Uber.
Apple has much ground to cover to convince the world that Mapgate never happened. Shotland’s vision for app integration is one step in that direction. If it can pull it off, it will also fulfill that prevailing goal of selling more iThings. And we’ll probably be talking about it a lot more.
Michael Boland is chief analyst and VP of content at BIA/Kelsey. Previously, he was a tech journalist for Forbes, Red Herring, Business 2.0, and other outlets.