Words Gadjo Cardenas Sevilla
Apple Inc. has been searching for “One More Thing” to serve as its next big product category. The iPhone is still the biggest earner and now has more variants than ever (including a lower-priced iPhone XR), but it is hardly the bastion of innovation it once was. Meanwhile, products such as the Apple Watch, iPad, HomePod, AirPods, Mac, and Apple TV haven’t taken off to the heights the iPhone has achieved.
Now, Apple is looking to services to ensure its future profits. It already has a comprehensive range of services including iCloud, iTunes, Apple Music, and in certain markets Apple Pay and Apple News. All these services are exclusive to iOS or Mac devices and will require a monthly subscription to use.
The Cupertino company also has some cachet in building a services business. The iOS app store is famous for being the most profitable app store. Apple also became to world’s biggest music publisher years ago with iTunes and dominated.
New horizons, new risks
During its Keynote event last March, Apple announced that it is planning to be a player in the content subscription service. Hoping to take a slice of the pie shared by Netflix and Amazon Prime Video, Apple will focus its streaming services around the Apple TV app as well as on partner Smart TVs and set-top boxes.
In terms of original content, Apple is said to be tapping some of Hollywood’s biggest names to produce exclusive movies and TV shows. Whether or not these shows will be very good or compelling enough for people to add another monthly subscription depends on the price.
Apple is also creating a news subscription that promises access to over 300 magazines. After buying a similar service called Texture, Apple is applying its subscription model to news and magazines. This might be a tougher sell since people already get a lot of their content online for free. Some users may also not want or need such a vast range of content and might feel overwhelmed by the need to pay for buckets of content they are likely not going to use.
Finally, Apple is getting into the credit card business with its own Apple Card service that is tied in to an app. Apple already has over a billion credit cards on hand from users purchasing services and products on a regular basis. They obviously want these users to switch to an Apple-focused credit card to ensure constant profit.
All of these are new and potentially risky maneuvers for Apple. Some might say the company is trying to do a lot in areas that it is unfamiliar with. Even a company of Apple’s size and financial influence can take a hit if any of these new business models fail to work as promised. Another thing to consider is that most of these services are limited to the U.S. and a few other countries, so the impact isn’t going to be felt right away,
The iPhone era is ending
The rush to get all these new subscription services online means Apple is preparing for the inevitable. The global smartphone market is saturated, and the iPhone isn’t selling as well as it used to. Despite making more iPhone models than ever, Apple has had to resort to trade-ins and discounting strategies to push sales.
Meanwhile, Android competitors are coming up with foldable flagships, multi-camera smartphones with jaw-dropping night shot and zoom performance, while offering users a wider range of apps and services outside of Apple’s walled garden. That walled garden is now going to extend to streaming content, premium shows, and news and magazines. Can Apple significantly innovate in this area to generate more interest? That remains to be seen. In the meantime, the competition is likely going to see Apple’s attention scattered and will double-down on gaining market share.
This article was originally published in Speed Magazine’s May 2019 issue.