Blink and you may have missed it at Apple’s event on Tuesday, but the announcement, which the tech giant spent the shortest amount of time, has possibly the biggest impact on the company.
While CEO Tim Cook paid endless attention to new hardware like the Apple Watch Series 6 and the iPad Air, the company spent two minutes doing it Apple One.
Was this his way of downplaying expectations? Maybe. But there’s tremendous long-term potential for this long-awaited package of services that brings together Apple TV +, Apple Music, Apple Arcade, Apple News +, and Apple Fitness + in three different pricing plans ranging from $ 1
If successful, Apple One will be the smartest step Cook has taken during his tenure at Apple to address the company’s greatest challenge: shift focus away from iPhone addiction to expand the service business. Last year, services revenue grew 16% year over year to $ 46 billion, but still only accounted for about 18% of Apple’s total revenue. IPhone sales accounted for around 55% of total sales.
With the introduction of a unique bundle like Apple One, Apple not only has one more channel to accelerate monthly recurring revenue in the service business, but it is also bringing more people into its software ecosystem and making them stay.
Sure, many of the services in the package are relatively new and consumers are still trying to figure out what they are about. This gives Apple the ability to cross-promote. Regardless, Apple TV + or Apple Fitness may not be fully incorporated companies yet, but together they are more than the sum of their parts.
From the consumer’s point of view, it makes economic sense to bundle only two services if you are already using at least two of the services included in the package. For example, if you’re already using Apple Music ($ 9.99 per month for the custom plan) and Apple TV + ($ 4.99 per month), you’re already paying three cents more than the $ 14.95 per month for the Apple One bundle with the lowest tier cost. And if you have a family, it makes even more sense to save costs.
Additionally, the timing of the Apple One announcement couldn’t have been better due to the subscription fatigue in the marketplace. An easy-to-monitor package only makes sense for consumers who are already in the massive installed base of Apple hardware users that give the company a huge head start.
Due to COVID-19, people are spending more time at home, which means above-average consumption of video, music and games. If you’ve been curious about Apple TV +, Apple Music, Apple Arcade, Apple News +, or Apple Fitness +, now you have more incentives to try them out.
For Apple One to be successful, each of the services has to prove itself in a highly competitive environment. Apple Fitness + has to outperform companies like Peloton, and Apple TV + has a lot of competitors when it comes to content.
Of course, Apple One probably won’t be an overnight success. Look for more experimentation with pricing and possibly even adding new components to the bundle. But with the right fine-tuning, Apple has a winner in hand.
Apple One isn’t just transformative for the business, however. The offer could redefine our understanding of the streaming wars. Perhaps it is time to think of it as a bundle battle rather than a competition focused on a single application like video or audio. Amazon has been moving in this direction for years. Single track companies like Netflix and Spotify may need to partner or consolidate to stay relevant.
Apple One could force the hands of other media and technology giants to “pool” or venture out in the cold in the coming years.