Hey everyone, it is Mark. Deeper integration among offerings is likely to be part of the next phase of Apple's services push. Apple has hired a Facebook communications chief as it readies its own headset and Covid cases close Apple stores.
The free version is called Power On. If you like it, you'll get a newsletter several hours earlier and exclusive access to a Q&A section with me.
The people who start.
Tim Cook is introducing Apple.
The launch of the iPhone X marked the beginning of a shift from hardware to services at Apple.
The starting price of the iPhone X was a few hundred dollars more than previous ones. The days of annual or biannual iPhone upgrades were out for most consumers, and in were longer replacement cycles, creating a potential problem for Apple. As the pace of upgrade slowed, Apple needed new ways to make money.
The plan worked. Apple generated $32 billion in services revenue. This past year? More than double: $65 billion. What happened? New recurring offerings were identified by Apple at the end of the year.
Credit cards, gaming and news are where it landed. Apple TV+ was already in the works, Apple Music was growing quickly, and iCloud subscriptions were still a must-have for many Apple users given that the free 5GB plan is basically good for nothing.
The company spent billions of dollars on content for TV+, nearly half a billion dollars on Texture, and struck deals with a few dozen game makers to make content for Apple Arcade. Apple likely makes money from Apple Card interest charges, while customers pay a fee for its other services.
Apple One is a subscription bundle that was launched in 2020. That was a way to get more users to subscribe to services.
Apple One currently exists.
Individual: Apple Music, Apple TV+, Apple Arcade, and 50GB of iCloud storage for $19.95 per month or $19.95 per month for a family plan.
Apple Music, Apple TV+, Apple Arcade, Apple News+, Apple Fitness+, and 2TB of iCloud storage are included in the premier.
The first plan's upsell is pretty simple. A person who already subscribes to Apple Music gets additional storage for $5. $5 in free money is added to the high margin services for Apple. The second plan is very lucrative for the company.
If Apple wants to grow its services business even more, it needs to expand the Apple One program and better integrate services.
Cook is announcing a show.
You can get Apple TV+ for free with Apple Music, so you get both for $9.99 per month. This will push the subscription numbers for both services higher. Why would Apple do that? Apple TV+ has a relatively sparse content selection, slow schedule of follow-up seasons, and lack of back catalog, so it isn't worth it for a lot of people.
I believe Apple can grow services by better integrating them. Apple One makes sense for consumers because of the discounts, but Apple's individual offerings don't integrate with one another in the same way that an iPhone, Mac, and Apple Watch all play nicely
Apple TV+ could be integrated with the iTunes Movies. The company could offer a few free rentals a month with a TV+ subscription. The monthly fee could be more valuable if the back catalog problem is solved. It is possible to require a TV+ subscription to access the Podcasts app.
In order to get more value out of its services, Apple will need to offer better bundle packages and better integration.
The bench.
A demo of augmented reality.
Apple hires Meta to lead augmented reality communications before its headset launch in 2022. Apple is getting ready for the launch. I am told that the company has hired a public relations head for its augmented reality efforts. As Apple nears its launch, it makes sense to hire Meta, who has been the market leader in headsets.
There is a sign at a store.
Apple store closings continue to increase as Covid cases rise. There were a few Apple retail stores that were closed because of rising Covid-19 cases among employees. It was a great week for Apple. At least 10 Apple retail stores were forced to close because of cases over the past week. Here is a list of recent closings.
Dadeland is in Miami.
The Gardens Mall is in Palm Beach.
There is a square in Atlanta.
Cumberland Mall is in Atlanta.
There is a village in Houston.
The mall is in Ohio.
Crocker Park in Ohio has been closed recently.
The second recent closing is Eton in Ohio.
New Hampshire's Pheasant Lane.
Sainte-Catherine is in Montreal.
Mark Gurman's Power On newsletter gives you the scoop on what's next in tech.
I am told by employees at other retail stores that cases are starting to occur at their locations, so I would imagine this list will grow. I don't think Apple will shut down all of its stores again like it did at the beginning of the Pandemic in 2020, but I think it will return to an appointment-only system for locations in Covid hotspots.
People wait in line to enter the play space.
The annual CES show is hanging on by a thread as big name companies continue to drop out. Over the past week, a number of major attendees and major exhibits have stopped showing rising Covid-19 cases. Here is a list of the major companies that are leaving so far.
Both companies are part of the Alphabet Inc. company.
Meta, TikTok, Twitter Inc., andPinterest are all social networking giants.
Advanced Micro Devices is no longer in the business.
Microsoft is a software company.
The Hisense Group Corp. is a subsidiary of the Lenovo Group.
Amazon.com has a subsidiary called Ring.
T-Mobile US Inc. and AT&T Inc.
A representative from General GM.
The group putting on the conference remained steadfast despite the cancellation of the event throughout the past week, saying it believes vaccines, testing, smaller crowds and social distancing will keep the event safe. Let's see what happens.
You can always send me a message on social media.
