Have you wondered what insanely great new thing Apple will come up with next? I wouldn’t mind lower prices on everything. iPads that don’t bend would be nice. Affordable subscription apps in the App Store.
None of those are insanely great things as much as they are insane. Apple is a capitalist company and they want our money. What Apple hasn’t done much recently is something new. Apple Watch is bigger than iPad, but it’s still an accessory to iPhone. What’s coming?
The Book of Cook
The Bible is filled with many books; some merely a history of humankind ands its dealings with God; some filled with prophecies. How about The Book of Cook? I cannot count the times that Apple CEO Tim Cook has pointed out all the wonderful products in Apple’s pipeline and how excited he is about what’s coming.
Well, let’s look at what came down the
pike pipeline. Accessories. If Apple co-founder was the King of Market Disruption (from PCs to Mac to iPod to iTunes to iTunes Music Store to iPhone to App Stores to iPad) then Cook is the King of Accessories (Apple Pay, Apple Music, Beats headphones, Watch, AirPods, and, how about this; accessories to shareholders via much undeserved dividends?).
If that’s the case then we can rest assured that future Apple products will be accessories to existing Apple products.
Cook, in an attempt to divert attention from woes elsewhere:
The services are on a tear… On services, you will see us announce new services this year. There will more things coming. I don’t want to tell you about what they are.
I know. How about Apple’s version of cable TV? Google has it with YouTube and YouTube TV (little more than cable TV from the 1990s but with higher quality and streaming instead of a coaxial cable).
Apple TV has a decent array of content, and with more new televisions also sporting AirPlay 2 capability, Apple’s customers will have many options to stream content to the widescreen. Yet, Apple TV is a gaming platform, an information platform, and a streaming media platform.
Apple cable TV. If differentiation is a key component of product marketing, Apple is spending more than a billion dollars on unique content to differentiate itself from Netflix, Amazon, and others in the content business. While a streaming media content business will add to the bottom line, is that really a big money maker?
Look at it this way. YouTube TV is $40 a month for a handful of local channels and a variety of cable TV networks. Spend more, get more. That’s much like cable TV today but available on a variety of devices.
Apple has a billion customers so let’s say, after a few years, they get 10-percent of their customer base to buy into a monthly YouTube TV-like Apple Cable TV streaming service with unique content (as well as everyone else’s content, thanks to hardware). 100-million subscriptions at $40 each is $4-billion a month. Or, $48-billion a year.
Good money, right?
Better than Watch. Better than iPad or Mac. Almost as good as Services, but without the fatter gross margins. Apple may go the YouTube TV route and bundle unique video content onto Apple TV or iTunes or even Apple Music, but it all sounds like an accessory business to me, albeit a big one.
What else could Apple do in services? Apple Doctor (call for health advice on Watch or iPhone). Apple Drive (an Apple car you summon on demand instead of owning). I would rather see Watch have blood pressure readings, or blood oxygen detection, or even blood glucose monitoring, but those are not likely to be services unless…
Apple’s iRent, where we rent everything from Apple. Based on the monthly price tag for iPhone Upgrade Program, I’d rather not do the math on that idea.
Instead of divulging the future, Cook deflects the lack of a new product pipeline.
If you sort of back up and look at Apple, in our last fiscal year, we had $100 billion of revenue that was not iPhone. $100 billion. And in this last quarter, if you take everything outside of iPhone, it grew at 19 percent. 19 percent on a huge business.
All good news, of course, but it says nothing about the future.