Apple as the new Disney
There are about 5.5bn adults on earth; 5bn now have a mobile phone, 3.5-4bn have a smartphone, and 800m of those smartphones are iPhones. We connected the Earth, and Apple did pretty well out of that. The trouble is that once you connect all the people, there are, well, no more people, and growth becomes a challenge. So smartphone sales are flat-to-down year on year, Chinese smartphones sales are down and iPhone sales do not have as much growth ahead as they had in the past. Boring. What next?
There are two conversations for Apple here. The first is that, just as when the iPod was The Thing and people wondered what was next, Apple has Projects. For example, some sort of car project has been very widely reported, and so have explorations around glasses or AR. None of these seem likely to ship tomorrow.
But the other conversation is around building on the platforms that we already have. Apple has been talking about services and subscription as a meaningful part of the business for a long time, but the event last week was a much more substantial piece of positioning, and in particular it was a clear articulation of a set of brand and product ideas that Apple wants to move into.
Everyone expected the event to be about TV, but the day actually turned out to be about launching a bunch of new things, with a subscription magazine and news service, a subscription games service and a credit card all on stage, as well as finally previewing that long-anticipated TV service.
Adding magazines (with some newspapers, especially the WSJ) to the News product, for $10/month, looks a little like Spotify: if your title is strong enough to get people to pay a unique subscription and give you customer ownership (in music - if you can get people to buy all your CDs), then you might want to avoid it, but for a lot of titles (that do not in fact have a strong enough position for this to be a good strategy) this is new distribution, discovery and revenue.
The 'Arcade' games product gives a flat rate subscription (price TBC) with no in-app purchases or ads, for a regulate flow of curated, creative and family-friendly indie games.
The Card (provisioned by Goldman Sachs) extends Apple Pay with their own credit option, giving simple cash back instead of "opaque" points, no extra charges or penalties and a bunch of user-friendly security, management and spending information features.
And then there’s TV, of which more later.
I think there are three ways to look all of at these products.
Steady and pretty predicable iterations of the News/Games/Apple Pay product, with nothing groundbreaking but solving simplicity/access/discovery problems for users. This is product managers doing product management.
All of these products tend to reduce churn - they make it more likely that your next phone is another iPhone (especially the credit card) and of course add incremental revenue to the service line (maybe up to $50/month per user if you add it all up, and some of Apple’s 800m iPhone users will do this).
Brand.
Brand is actually the important part, I think - rather more than the Services narrative. These products fit into what feels like a new and emerging brand promise for Apple: the Disney (in a good way) of tech. Trusted, secure, private, no ads, no scams, no tricks you have to watch for (scammy in-app purchases in games, scammy/weird credit card charges) - it's all curated. Apple has talked about privacy for a while, and sometimes curation, but these products make that much more tangible. The old Apple promise was that you don't have to worry if the tech works. The new promise is you don't have to worry if the tech is scamming you.
I think you could link this into a broader narrative about the evolution of tech: as we have moved to higher and higher abstraction layers (command line to windows & mouse to multitouch, and local software to cloud), some stuff disappears in the lower layers, but new problems appear in the upper layers. We don’t run defragmentation tools or worry about configuring hardware or files getting corrupted, and, on an iPhone or Chromebook, you don’t have to worry about viruses infecting your computer. But the malware moves with the times - now it’s adware, scamware, ad tracking, credit card fraud and maybe addictive games and phishing. And so now, just as Apple tried to solve defragging or plug and play, now it tries to solve some of these - it tries to solve new problems in your computing experience.
That brand promise leads to the big question: what is Apple doing in subscription TV? Well, it's another churn-reducer with incremental revenue. But what is the proposition? Apple spent half an hour waving famous Hollywood people on stage without ever giving specifics of the actual offer (due later this year), which felt very frustrating to tech journalists and analysts. We don't know the price (but can guess - $10-15, probably) and we don't know the ambition. How many shows? Is Apple going to spend $1bn or $10bn? Netflix is spending well over $10bn this year. I often describe TV as working like orbital mechanics - all that really matters is how much fuel you burn, so how much is Apple going to commit? (I would guess the lack of specificity in the event was because the event was really aimed much more at a Hollywood industry audience, but 🤷🏻♂️.)
But stepping back, the real proposition, again, was about trust and about values - about the kind of TV we can expect Apple to commission. Hence the reports that Tim Cook has been saying some of the scripts are ‘too mean’. They opened with Steven Spielberg and ended with Oprah. No Tarantino, no ads, no Game of Thrones massacres. Disney for tech.
So, on one level, this was a bunch of solid execution on new churn-reducing/revenue-driving incremental products. But I think it's more useful to look at Apple more broadly thinking about the nature of the services that people use on smartphones, and how it can bring an Apple set of attitudes to how those are built.