Facebook’s big announcement this week is Messenger Platform, which allows businesses and brands to interact with their customers through a chat exchange in Facebook Messenger.
But Facebook’s experiment to replace 1-800 numbers could end up being an “existential threat” to Apple, according to a research note from UBS.
In the note, Steven Milunovich explains that part of Apple’s value is as a platform company, thanks to its App Store. Part of the reason that Apple can boast 90% repeat customers is that it has the best apps on its platform.
But if Facebook were to turn its Messenger into a major computing platform, that would mean that new or innovative apps would live inside Messenger, not on Apple’s App Store.
As Business Insider’s Matt Weinberger wrote on Tuesday:
Once people have a bunch of iPhone apps, they’re more likely to upgrade to another iPhone rather than start from scratch on an Android phone or any other wannabe upstart phone platform. It’s in Apple’s best interest to keep the App Store strong and well-stocked.
Chatbots, like those debuted by Facebook today, present an alternate path for users and developers. At risk is Apple’s stranglehold on the world of apps, and maybe over the smartphone market itself.
However, early response to Facebook’s bots has been less than stellar, so it might take some time before Facebook’s latest experiment turns into a real competitor for Apple’s platform, if it ever happens.
Bots were only one of three “existential threats” that Milunovich named in his note. Other issues facing Apple include the “attack from below,” or the possibility that “good enough” phones running Google’s Android operating system could make Apple’s devices, which sell for a premium price, less popular.
Another threat facing Apple is that China, which as been the company’s growth engine for the past few years, might decide to favour homegrown smartphone makers over Apple, either through taxes, regulation, or government endorsement. Milunovich writes:
A more serious issue would be if the government were to favour domestic suppliers as we have seen in enterprise computing. IBM, HP, and Cisco have suffered declining sales in China as domestic champions like Lenovo and Huawei mature.
UBS concluded that Apple should be priced like a platform company, not a mere computer manufacturer, and set a target price of $120 per share.
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