Do you remember when Apple and the Mac were synonymous? Sure, back when Steve Jobs returned to Apple, the company sold printers and cameras, the Newton, and other devices, but the Mac itself is what brought home the bacon.
Steve Jobs changed all that and brought Apple into a new and different era beyond mere software and hardware integration. Apple Stores made it easier for customers to view and try the company’s products. iTunes made it easy to Rip. Mix. Burn. The iPod got Apple’s toe into the entertainment business.
Hey, Siri. What’s On TV?”
One can argue whether Apple saved the music business with the iPod and iTunes Music Store, but more than anything the company became an entertainment center as iTunes took on the role of media mall– the place to get music, TV shows, radio shows, podcasts, and even movies.
If iPod was the toe in the entertainment waters, iTunes taught Apple how to get wet and prosper at the same time. Getting wet does not a swimmer make, and Apple still makes most of its money the old fashioned way– selling hardware. Increasingly, the company also relies on growth from the so-called Services group which brings in more revenue and profits every year.
Services accounted for nearly $25-billion in revenue last year, an amount that would come close to making the company a Fortune 100 entrant. Services? iTunes, the App Stores, Apple Pay, Apple Music, and now Apple entertainment.
Sure. If Netflix and Amazon can spend tens of millions to develop original video programming, surely Apple– sitting on a $200-billion pile of cash– can afford to create some original content for… insert drum roll here… iTunes. With Planet of the Apps, Apple is doing just that and we can expect more to come. Why? Entertainment sells. And entertainment helps Apple sell what it sells best. Hardware.
Wait. Am I saying that Apple’s entry into video content production is a come on for Apple Music and iTunes? Yes. That’s exactly what it is. Netflix spends big money on original video content because distributing video via subscription is what the company does. Amazon spends big money on original video content because the company’s Prime membership pays the freight, and gets customers on board a subscription gravy train.
Apple’s subscription gravy train is Apple Music. The only problem there is that everyone with a music subscription service distributes and streams the same music so there’s no real differentiation between the major players. What can set Apple Music apart from competitors is obvious. Exclusive and original content found only on Apple Music or iTunes. Subscribers are more willing to ante up a few extra bucks per month of their favorite stars’ music shows up on iTunes and Apple Music first. Original content is Apple’s new grease for hardware sales. After all, you need an iPhone, iPad, Mac, or Apple TV to view original content financed by Apple and distributed only by Apple.
That makes Apple TV look like something of a bargain device because not only does it have Apple’s original content, you can get Netflix and Amazon’s original content, too. Yeah, there’s no 4K Apple TV yet but you know one is coming, right? And with tens of billions of dollars collecting dust in banks all over the world, you can bet Apple has more original content in mind because that’s the grease that moves hardware sales, and that’s where most of Apple’s profits are.