Apple knows that the hardware market is getting tougher, as smartphones become commodified and price pressure will make it difficult for the company to maintain the current prices and margins of their flagship devices. In early 2017, Apple said that they would double their services revenue by the end of 2020, and the company is on target to do so, even if the growth in services income is slowing.
Apple introduced several new services on March 25: news, TV, games, and a credit card. (Read our overview of the March 25 event.) These services are going to help Apple solidify its non-hardware income, but also start pointing toward a potential bundle of services from the company.
In November of last year, I wrote about how Apple is changing from a hardware company to a services or media company, and the March 25 event showed that this is the case. Apple’s services catalog is expanding quickly, even though most of the new services won’t be available until the summer or fall. And the idea of an “Apple Prime” subscription, which I discussed in my November article, has become even more compelling. (Given the company’s new nomenclature for all of its recent services, I would think they might call it Apple+.)
Think of the many services you can subscribe to from Apple:
Add those services up, and you get potentially around $40 a month, or $30 for people who don’t buy AppleCare. Or potentially more; the iCloud storage could be up to $10 a month for 1 TB (although most people don’t buy that much storage), and we don’t know yet whether, or how much, Apple might charge for Apple TV+.
If Apple were to add the cost of an iPhone into a subscription bundle—on the upgrade program, so users would get a new phone each year—they could sell a single subscription to hardware and services.
This is a powerful idea; individual subscriptions add up and seem like they cost more than one monthly payment for a bundle, and Apple could lock in consumers with this sort of plan. (And even potentially provide cellular service, as an MVNO: a mobile virtual network operator.)
Once people take out subscriptions, they often don’t change them. It’s not that they’re hard to change or cancel, but people get used to them. (To learn how to edit or cancel Apple subscriptions, see this article.) Getting a few tens of millions of users to pony up, say, $100 a month for an iPhone, AppleCare+, and other services, would provide a potent revenue stream. (For each million users, that would come to $1.2 billion.) You can’t deny that this is a very enticing idea, and it’s easy to imagine that Apple will head down this route in the future.
Given the company’s presence around the world, and excellent reputation, an Apple Bank may be in the cards some time in the future.
Related articles:
How Apple is changing from a hardware company to a services and media company
At your service: The full lowdown on Apple TV+, Apple News+, Apple Card, and Apple Arcade
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What do you think, readers? Will Apple offer a bundle of services, and it so, what might it look like? And how will Apple continue to change as a company? Share your ideas in the comments below!
