Apple Inc. (NASDAQ:AAPL) appears to be getting out of the wireless router business. A report has the company dropping the AirPort Express, AirPort Extreme and AirPort Time Capsule routers from its lineup. This would be the second major product category AAPL stock has exited in 2016, after discontinuing the Thunderbolt display in July.
Apple Routers, Including AirPort Extreme, on the Chopping Block
According to a report in Bloomberg, AAPL has disbanded the division that developed Apple routers, including the AirPort Extreme. The engineers formerly working on Apple routers have been reassigned to other products, including the Apple TV. The company is expected drop any plans to release new versions of the Apple AirPort line going forward.
Bloomberg’s sources have asked not to be named because the decision has not yet been publicly announced, but this appears to be the end of Apple’s router business.
Given that the last time the AirPort Extreme — AAPL’s flagship router — was updated was 2013, the company was expected to release an update soon. At the time, 802.11ac Wi-Fi routers were just hitting the market and since then, the standard has progressed significantly. The current Airport Extreme has a maximum data throughput of 1200 Mbps, while competing high-end routers from companies like Linksys can now hit 5400 Mbps.
Discontinuing the Airport routers altogether — a category the company introduced in 1999 — wasn’t expected to be in the cards.
Apple Appears to be Focusing on Core Business
Apple appears to be embarking on a strategy of focusing on its core products, trimming everything else. Apple routers were clearly not a big revenue generator, so they appear to be finished. They would join Apple’s computer display business that ended when it discontinued the Thunderbolt display in July, and the Apple battery charger that got the axe in January.
It can make sense to get rid of small volume add-on products. This lets a company re-focus engineers on critical products and frees up shelf space at Apple Stores for marquee gear like the iPad, iPhone and MacBook.
However, Apple’s strategy also risks alienating core customers and makes the overall Apple ecosystem less “sticky.”
For example, take the AirPort Extreme. Like all AAPL gear, it has a reputation for “just working.” I had been using the latest-generation model since it was released in 2013 (you can read my review here) and I can attest to the fact that it offers drop-dead-simple setup and configuration. It requires no user intervention once running — literally set it up and forget about it. The Apple router takes up minimal space and it’s attractive.
Because it has fallen so far behind in specs, I replaced it a few months ago with a Linksys router with more than four times the throughput, better range and smarter network management. The new router blows away the Airport Extreme on raw power, but it takes longer to configure, it requires frequent re-boots, it takes up four times as much space and it’s bristling with antennas that have to be perfectly adjusted to maximize performance.
I love the speed, but if Apple had updated the Airport Extreme to the latest technology, I’d switch back in a second.
Apple products have historically risen above the complexity and the more functional design of mass market competitors. They look good, they’re easy to set up and they work. That’s why they have helped to make the Apple ecosystem so sticky and helped to encourage owners to keep buying other Apple products.
But if you were setting up a home office today and had to pick a third-party PC monitor (that doesn’t physically match any Apple computers in design cues), and a third party Wi-Fi router, why not also experiment with saving a few bucks by buying a Windows laptop instead of shelling out the big bucks for a new MacBook Pro? Even if you’re an Apple fan.
The stickiness is losing its power.
At this point, the Bloomberg report has not been confirmed by Apple. You can still buy the Airport Extreme and other Apple routers. Probably not for long, though.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.