The fallacy most make when critiquing Apple’s service challenge is to believe that Apple needs to out-innovate competing services. The truth is, all they need to do is out-integrate them. Apple’s advantage is unique in this area because they create the software that runs on their hardware. They will always have an unfair advantage with the services they chose to invest in.
The challenge facing Apple is similar to that of Netflix. Whereas Netflix must come up with great original content before HBO gets its internet act together, Apple has to become a services company before Google becomes a devices company. The games are Apple’s and Netflix’s to win or lose.