Apple solidifies its transition to a services company
It's no surprise that Apple is evolving. As we have seen previously few years, smartphone sales are flat, and the company's other hardware doesn't result in the splash in the market that it accustomed to. Sure, the Apple Watch is selling well, with Apple taking more than half of the global smartwatch market, and the company's wearables-the Apple Watch and AirPods-are \”approaching how big a lot of money 200 company,\” according to Tim Cook.
Apple knows that the hardware market is getting tougher, as smartphones become commodified and price pressure can make it hard for the company to keep the current prices and margins of the flagship devices. At the begining of 2021, Apple said that they would double their professional services revenue after 2021, and also the clients are on target to do so, even if the growth in services earnings are slowing.
Apple's March 25 event was interesting in that the company did not present any new hardware . It opened by having an explanation of the items \”services\” are. It was a curious choice, as if the presentation was more for shareholders than consumers or even the press.
Apple introduced several new services on March 25: news, TV, games, along with a credit card. Useful likely to help Apple solidify its non-hardware income, but also start pointing toward a potential bundle of services from the company.
Apple is transforming
In November of this past year, I wrote about how Apple is evolving from a hardware company to some services or media company, and also the March 25 event showed that this is actually the case. Apple's services catalog is expanding quickly, even though most of the new releases will not be available before the summer or fall. And also the idea of an \”Apple Prime\” subscription, that we discussed within my November article, has become even more compelling.
Think of the numerous services you are able to sign up for from Apple:
- iCloud storage: for most of us, this is $1 or $3 a month, but could reach $10 a month for 1 TB of storage.
- Apple Music: $10 a month, climax only $100 should you re-up for any full year. Students pay $5 per month. A family plan is $15 per month.
- Apple News+: $10 per month; no annual subscription rate yet.
- Apple Arcade: no pricing was announced, but it's conceivable this, too, would sell for the easily digestible round number of $10 a month.
- Apple TV+: this can be a tough someone to call. Apple can provide this programming away as a loss leader, since they'll get individuals to buy other channels from Apple through its TV app, or they may charge for it. If there is only Apple's original content, it's difficult to see the company charging $10 a month, and, up to now, Apple has not suggested they would bundle other streaming content with this particular service.
- AppleCare+: if you have an iPhone or any other Apple device, this is optional; however, if you purchase an iPhone while using Apple Upgrade Program, this really is required. Apple accustomed to sell this at a fixed price for 2 years, but now offers it at $10 a month for that iPhone XS or XS Max.
Add those services up, and you get potentially around $40 per month, or $30 for those who don't buy AppleCare. Or potentially more; the iCloud storage could be as much as $10 a month for 1 TB , and we have no idea yet whether, or how much, Apple might charge for Apple TV+.
What Apple might do next
If Apple would add the price of an apple iphone right into a subscription bundle-on the upgrade program, so users would customize the phone each year-they could sell just one subscription to hardware and services.
This is really a powerful idea; individual subscriptions add up and appear like shiny things cost several monthly payment for a bundle, and Apple could lock in consumers with this sort of plan.
Once people remove subscriptions, they often don't change them. It isn't they are difficult to change or cancel, but people get used to them. Getting a few millions of users to pony up, say, $100 a month to have an iPhone, AppleCare+, and other services, provides a powerful revenue stream. You cannot deny this is an extremely enticing idea, and it is simple to suppose Apple will head down this route later on.
But consider another element of the March 25 presentation. The service that could net Apple probably the most revenue with time may be the one whose set you back don't see: the Apple Card. Just like Apple Pay, in which the company receives a fraction of the items spent on each purchase by using this service, the Apple Card could potentially provide Apple with increased revenue with time, and change the organization much more than these content services.
Given the company's presence around the world, and ideal reputation, an Apple Bank may be in the cards a while in the future.
How can one find out more?
We'll come with an in-depth discussion of Apple's transition to a services company about this week's episode of the Intego Mac Podcast, so be sure to sign up for make sure you don't miss the latest episode. You will also want to sign up for our e-mail newsletter and a watch here on The Mac Security Blog for updates.
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What do you consider, readers? Will Apple provide a bundle of services, and it so, what might it look like? And just how will Apple still change as a company? Share your ideas within the comments below!