“Apple still makes the bulk of its money selling iPhones. But… the company has built a services unit that’s now approaching $40 billion in annual revenue,” Jordan Novet reports for CNBC. “But it’s leaving money on the table by failing to embrace the biggest trend in the software industry: subscriptions.”
“Apple has a suite of products called Pro Apps, used primarily by audio and visual professionals, that customers buy and download onto their local hard drives — the way software worked in the pre-cloud days. Users of Mac computers go to the App Store to purchase Final Cut Pro, Logic Pro X, Motion, Compressor and MainStage 3. They each have separate prices — Final Cut Pro X costs $300 — and the whole package costs $630,” Novet reports. “Those are all products that Apple could conceivably host in the cloud and charge monthly subscriptions to use (Apple Music, for example, costs $10 a month for unlimited streaming). The model, known in the technology world as software as a service, provides less revenue up front but potentially much more over time if customers see the value and renew annually. Last year Apple said Final Cut Pro X had 2 million users, but none are paying for the video production software on a recurring basis.”
“Gene Munster, who spent 12 years covering Apple as an analyst before starting investment firm Loup Ventures in 2016, estimates that only 30 percent of Apple’s services revenue comes from subscriptions, suggesting that the company is potentially leaving billions of dollars of future sales on the table,” Novet reports. “‘I don’t know why it hasn’t happened yet,’ Munster told CNBC. He said that converting pro apps to subscription services would be ‘very logical.'”
Read more in the full article here.
MacDailyNews Take: Perhaps Apple knows something about their pro Mac users and they feel that subscriptionware wouldn’t fly at the current time?
Of course, knowing something about your pro Mac users would also mean that you’d know they expect annual Mac Pro updates, so what Apple knows (or cares about) their pro Mac users is eminently debatable.