The Latest Apple Event Focused on Services, Not Gadgets

March 26, 2019

On Monday, Apple CEO Tim Cook stepped onto a big stage at the company’s headquarters in Cupertino, California, to make some important announcements. Events like these are meant to remind Apple fans of the times when late founder Steve Jobs stepped on the same stage to reveal world-changing products like the iPhone and iPad. Unlike on those occasions, however, Cook didn’t unveil any new or updated gadgets at Monday’s event. Instead, celebrities like Steven Spielberg, Reese Witherspoon, and Oprah Winfrey joined him to announce the launch of Apple TV+, the company’s new streaming video service.

The star-studded panel talked at length about some of the platform’s upcoming shows and how it “is not just another streaming service.” As Oprah put it: “They’re in a billion pockets, folks. The whole world’s got them in its hand, and that represents a major opportunity.” Apple said the service will launch in the fall but did not mention how much it will cost. Along with its TV streaming platform, Apple announced a few other new services as well. Apple News+, for instance, gives subscribers access to more than 300 magazines and newspapers for $9.99 per month. The tech giant also introduced the Apple Card, a credit card backed by Goldman Sachs that can be fully integrated with the iPhone.

According to analysts, Apple is starting to focus on providing services as its smartphone sales decline. Although the iPhone accounted for two-thirds of its revenue last year, sales of the gadget have not grown since 2015 and even fell 15 percent in the last quarter of 2018. With many consumers choosing to hold onto their phones longer, the company needs to find a way to make up for that lost revenue. Apple executives hope services like Apple TV+ will be the answer. Of course, the company faces a tough task ahead as it goes against established competitors like Netflix and Amazon.

Questions:

  1. Why is Apple starting to focus more on providing services rather than creating new gadgets?
  2. Do you think the revenue earned from services like Apple TV+ could make up for Apple’s declining iPhone sales? Why or why not?

Sources: Julia Carrie Wong, “Apple Unveils TV Subscription Service With Help From Oprah Winfrey,” The Guardian, March 25, 2019; David Goldman, “Apple Just Made One of Its Boldest Bets Ever. It Will Have to Do a Lot More,” CNN, March 26, 2019.

One Response to The Latest Apple Event Focused on Services, Not Gadgets

  • 1. There are multiple reasons Apple is moving to a service-based model. For starters, a ton of companies are. As mentioned in the article, the distribution platform – televisions and phones that are streaming-enabled – are in many homes now and it seems the logical next step to create content for them. Additionally, also as mentioned, people are holding onto their old phones for longer periods of time. And why not? The last few models of iPhones cost about a grand and are replaced within 2 years. Or, the new features don’t have a lot of widespread appeal to inspire people to buy new phones (especially the loss of the normal headphone jack). As a personal anecdote, I only recently replaced my (cracked) iPhone 7 after 3+ years with the iPhone SE – which is lower-priced, still has a thumbprint scanner as opposed to face unlock (especially in this time of wearing masks), a smaller and more compact design, and honestly, it seems a bit more sturdy than the edge-to-edge glass surface trend.

    2. I’m vaguely skeptical about the profits from Apple TV+ completely replacing lost revenue. I feel like it’s a bit of a late market-entry, and more people are starting to draw the parallel that having several streaming services is starting to feel somewhat like cable again. They would definitely need a big draw to get people on-board with it, or even several big draws – after all, a lot of people did cancel HBO after Game of Thrones ended. They would definitely have to be all-in on developing the platform and attracting people to it. But at the same time, it may be a smart move – I’m no creative R&D expert, but I don’t know where else to go with the iPhone, and pivoting the business to something else long before phone sales bottom out may be a smart idea.

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