Blink and you might have missed it at Apple’s event Tuesday, but the announcement the tech giant spent the shortest amount of time on may have the biggest implications for the company.
While CEO Tim Cook lavished endless attention on new hardware like the Apple Watch Series 6 and iPad Air, the company spent all of 2 minutes on Apple One.
Was this his way of playing down expectations? Maybe. But there’s tremendous long-term potential for this long-awaited services bundle, which brings together Apple TV+, Apple Music, Apple Arcade, Apple News+ and Apple Fitness+ in three different price plans ranging from $14.95 to $29.95.
In success, Apple One will be the smartest move Cook has made in his tenure atop Apple to address the company’s biggest challenge: shifting its focus away from iPhone reliance to grow its Services business. Last year, Services revenue jumped 16% from the previous year to $46 billion, but it still only accounted for about 18% of Apple’s total sales for the year. Meanwhile, iPhone revenue represented about 55% of total revenue.
With the introduction of a one-of-a-kind bundle like Apple One, not only does Apple have yet another channel to accelerate monthly recurring revenue in its Services business, but it brings more people into its software ecosystem and gets them to stay.
Sure, a lot of the services included in the bundle are relatively new and consumers are still trying to figure out what they’re all about. This gives Apple the opportunity to cross-promote. Separately, Apple TV+ or Apple Fitness may not be fully formed businesses yet, but together they’re more than the sum of their parts.
From the consumer standpoint, if you already use at least two of the services included in the bundle, it makes economic sense to just bundle up. For instance, if you already use Apple Music ($9.99 per month for the individual plan) and Apple TV+ ($4.99 per month), you’re already paying three cents more than the $14.95 per month it costs for the lowest-tiered Apple One bundle. And if you have a family, it makes even more sense from a cost-savings perspective.
Furthermore, the timing of the Apple One announcement could not have been better because of the subscription fatigue in the marketplace. One easy-to-monitor bundle just makes sense, particularly for consumers already in the massive installed base of Apple hardware users that will give the company a big head start.
People are spending more time at home due to COVID-19, which means higher than average video, music and gaming consumption. If you’ve been curious about Apple TV+, Apple Music, Apple Arcade, Apple News+ or Apple Fitness+, now you have more incentive to try them out.
In order for Apple One to be successful, each of the services will have to prove its worth on its own in a highly competitive environment. Apple Fitness+ will have to outshine companies like Peloton, and Apple TV+ has plenty of rivals when it comes to content.
To be sure, Apple One isn’t likely to be an overnight success. Look for further experimentation on pricing and maybe even the addition of new components to the bundle. But with the right fine-tuning, Apple has a winner on its hands.
But Apple One isn’t just transformative for the company; the offering could redefine our very understanding of the streaming wars. Perhaps it’s time to start thinking of them as more of a bundle battle than just a competition centered on any one single application, like video or audio. Amazon has already been moving in this direction for years. Companies like Netflix and Spotify that only play in one lane may need to partner up or consolidate to stay relevant.
Apple One could force the hands of other media and tech giants in the coming years to “bundle up” or get left out in the cold.
