Biggest winner from Apple’s iPhone event may be its booming services business
That’s not to say that the iPhone X or the Apple Watch 3 weren’t impressive. It’s just that in the short term, on a relative basis, not many people are going to buy either one. The expensive $ 999 iPhone X hints at the kind of iPhone most of us will be using in 4 or 5 years, when all available versions are using OLED screens and prices come down from the stratosphere. And smartwatches still remain an early-adopter’s dream rather than a must-have for the average user.
But there’s an interesting pattern emerging around these other announcements that points toward Apple’s growing focus on its Services business, which includes App Store sales, Apple Music subscriptions, digital content downloads, Apple Pay, and other assorted goodies.
For instance, the Apple Watch 3, with its cellular connectivity, is certainly interesting for its ability to make calls without a phone. For Apple, however, it would seem to be just as important that one can now stream Apple Music over the air. While there are some signs that Apple’s subscription music service is losing ground to streaming leader Spotify, the latter still does not have an Apple Watch app. So Apple Watch 3 is some home-grown terrain where Apple can perhaps regain some lost momentum.
Likewise with the release in December of Apple’s voice-activated HomePod speakers. We didn’t really get any new info on the Siri-driven HomePod this week. But it’s a woefully overdue entry, behind Google and Amazon. Unlike those two gadgets, it only works with Apple Music. That’s likely going to cause some consternation for users. But it’s another subtle way for Apple to encourage subscriptions to its own services.
The introduction soon of ARKit, to enable augmented reality features, should give a shot of adrenaline to a whole new category of AR apps. We’ll see whether this truly makes AR a mainstream thing. But it seems well positioned to give app developers a big incentive to try to wow users with the possibilities.
Likewise, the Apple TV 4K isn’t going to change your world, given the number of streaming devices on the market. But this is another area where Apple has been losing ground to Roku, Amazon, and Google. The good news is that at $ 199 for the 64GB version, Apple kept the prices about the same as the last edition, rolled out in 2015. Just as critical may be the deal Apple announced for 4K video content that sets the price at $ 20 for a 4K movie, lower than the Google Play store and about what people paid to buy HD movies. Over time, this could be an incentive for people to rethink whether to buy versions of their favorite movies from Apple, rather than rent or hope they show up on Netflix one day.
Finally, one of Apple’s most unusual decisions, and one that didn’t draw much commentary from executives on stage, was its decision to not kill off the iPhone 6s and iPhone 6s Plus that were introduced in 2015. These proved to be somewhat disappointing following the blockbuster sales of the iPhone 6 generation. And typically, Apple would narrow its field of phones to just three generations after a new one is introduced.
But from the iPhone X at the top end to the iPhone SE at the bottom, users can now select from 5 generations of iPhones (I’m counting iPhone 8 separate from iPhone X), which I’m pretty sure is the most ever. Throw onto that the three Plus versions, and you really have 8 choices, ranging in starting price from $ 349 to $ 999.
At one point a couple of years ago, there was talk of a “cheap” iPhone to help Apple in places such as developing markets. It never materialized, and Apple has been very consistent in saying it wants to make the best smartphones, not sell the most.
And yet, if Services is the big growth area, having more devices in more hands has long been a rationale for accelerating use and consumption. Of course, Apple is no doubt being careful not to trumpet this. But the decision to maintain a broader lineup of iPhones than ever at a wider range of price points certainly seems to hint at the idea that executives are looking for ways to extend its user base without getting into a race to the bottom over pricing.
Again, no one of these things is a game changer unto itself. But taken together, it seems to point toward a company that is beginning to embrace the idea that Services may be as much a part of its core as its vaunted gadget business has been. And that may be as critical to the way we think about the future of Apple as any fancy futuristic designs of its iPhones.