How Apple is transforming from a hardware company to a services and media company

“The iPhone has been Apple’s biggest product for many years now, and Apple has leveraged it to become the first trillion-dollar company,” Kirk McElhearn writes for Intego. “But things are starting to change.”

MacDailyNews Take: Starting with, Apple is not a trillion-dollar company anymore. It’s merely a $924.329 billion, post Wall Street’s extended, irrational hissy fit over having their unit sales crutch pulled away.

Pity the pro analysts who were repeated told by Apple to study the company’s services model and to stop relying on the unit sales crutch. Failing that, Apple simply pulled the crutch away. Walk on your own, Apple analysts! — MacDailyNews, November 2, 2018

“In Apple’s recent earnings call, the company said that it would no longer break out unit sales of the iPhone or its other products,” McElhearn writes. ” This change comes as Apple’s iPhone sales have been essentially flat for the past two years – they peaked in the holiday quarter of 2016 – signaling the first time that the company is facing up to the slowing growth in the smartphone market.”

“As Apple increases the average selling price of their device, unit sales are less important, and they don’t want to highlight the fact that they’re not growing any more. But there’s a lot more to it than just the iPhone,” McElhearn writes. “Apple’s ‘services’ revenue for the last quarter was about $10 billion; or about $37 billion for the past year. Services revenues – which include income from the App Stores, the iTunes Store, Apple Music, iCloud, Apple Pay, and AppleCare, along with the money that Google pays Apple to be the default search engine on its operating systems – bring in nearly as much money as the Mac and iPad combined and represent 16% of Apple’s income.”

“This has led a number of analysts to consider the idea of an ‘Apple Prime’ subscription service; one subscription to all of Apple’s services (perhaps including AppleCare),” McElhearn writes. ” Imagine a single monthly fee for Apple Music, Apple’s video service, additional iCloud storage, and perhaps other perks. This would be an easy sell if it were priced right, and it’s a lot easier to get people to pay for a bundle of services than individual services.”

Read more in the full article here.

MacDailyNews Take: Yes, as soon as Apple launches their original content video service, an “Apple Prime” will make even more sense.

We’d really like to see a way to pay for all of the Apple services we choose for one price. Give us a bunch of tick boxes and let us choose our combination of iCloud storage, Apple Music, iTunes Match, etc. and let us pay a single price for all of our choices.MacDailyNews, October 17, 2016

SEE ALSO:
Imagining an Apple All Access plan: What if Apple offered iPhone, iCloud, Apple Music, and more all for a single monthly fee? – August 29, 2018
A bundled media subscription would be good news for Apple users and for Apple itself – June 29, 2018
Apple reportedly considering subscription bundle of Apple Music, News and original video content – June 28, 2018
Apple is building a media platform like we’ve never seen before – June 27, 2018
Here’s how much Apple could make from streaming – June 27, 2018
Apple’s next $10 billion frontier is content creation – June 25, 2018
Apple intends to beat Netflix on price with standalone subscription to original content – June 19, 2018

3 Comments

  1. Apple is not transforming into a service company.. that is ludicrous.

    They are merely balancing service revinues and hardware revenues in order to diversifiy and create a path towards more growth.

    Apple without their hardware will equate to nothing.

  2. OK, so if every company will switch to service/media company, who’s going to make hardware? Samsung? And I am not talking Apple only, this is a trend among large hardware companies.

    1. Yup exactly..
      The Author or anyone who believes Apple is transforming into a service and media company,.. must also believe that Apple hardware will be manufactured by someone else… and that revenue from services and media will over shadow the revenue of 200 billion+ from hardware. .
      And that all the R&D in hardware, design and chips initiatives, vertical integration, etc etc Apple so heavily has and is investing in will simply be abandoned.

      It beyond ludicrous.

      Or if this is not what the author believes.. then he should be more clear…Starting with the heading of the article.

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