Apple as a Service – What A Monthly Tech Outfit Subscription Model Could Look Like
Image Source: Apple Music Membership – Apple.com
Apple has indeed changed very much over the years. I don’t want to talk about what happened in the 80ies or 90ies or how Steve Jobs saved the company. I also don’t want to talk about the iPod or the even bigger iPhone and iPad era. Neither do I want to point out how Apple might be changing since Steve Jobs passed away. That has been said and discussed abundantly. Recently I started thinking more and more about Apple’s rapidly growing software and services business with its subscription models.
“Once upon a time, Apple was a hardware company that also maintained a software and media ecosystem since it helped drive purchases of Macs, iPods and more. But over the years, the software and services side of the business has become increasingly important, and CEO Tim Cook even went so far as to state out right that Apple is “not a hardware company.” Not once, but twice.”
Source: Tim Cook Talks Up Apple Software And Service: ” We Are Not A Hardware Company” – techcrunch
Quite obviously, I couldn’t agree more. iTunes, Apps, movie rentals and recent subscription services such as Apple Music are making up for a substantial share of Apple’s revenue. Most interesting are developments with the subscription models, I think. These services provide a steady and projectable revenue stream and might be very appealing in contrast to regular sales, which are more volatile even for Apple.
That’s probably why Apple is experimenting more with subscription based models for a variety of their products. There is iCloud storage, which is becoming more and more affordable, and Apple Music with family options but thats far from it. Apple also introduced a subscription model for the iPhone, the iPhone Upgrade Program, basically allowing customers to get a new iPhone each year for a premium starting at $ 32.41 per month for the smallest iPhone version. Apple is offering up to 0% financing and leasing models for creative professionals and businesses as well, which could be considered as kind of subscription like as well.
Source: iPhone Upgrade Program – Apple.com
Apple Outfit on a Monthly Subscription
Apple could be offering subscription like models for every product they have, converting much of their regular sales revenues into projectable continues revenues. And since we are talking about Apple, they would not be not aiming for a $ 9.99 $ per month target, not even $ 99.99 if you think about it.
Take into consideration my current Apple outfit, which is far from high end compared im my opinion. I use a high end Macbook Pro 13″ Retina, a iPhone 6S 64 GB, an iPad Mini 4 64 GB, an Apple TV 64 GB, an Apple Watch, another moderately pimped Mac Mini, a Thunderbolt Display and some amount of adapters and software in addition to an Apple Music and iCloud storage subscription. Even if I consider yearly updates for the iPhone and updates for the Macbook Pro and everything else every 3 years (which I consider to be very conservative), it amounts to quite some money.
Based on current Apple product pricing (November 2015) in the US, this would amount to $ 9,137.16 over a 3 year period, not considering potential returns from reselling used products. But in fact, this might not be possible in a subscription model if things turn out the way they do with the iPhone Upgrade Program, where you are required to return the iPhone to Apple when receiving the newer version, as far as I understand it.
- Macbook Pro 13 Retina 3.1 GHz, 16 GB memory, 1 TB flash storage = $ 2,699
- iPhone 6S 64 GB = $ 649
- iPhone 6S 64GB Upgrade Program = $ 36.58/month x 36 = $ 1,316.88 (basically 2 additional iPhones)
- iPad Mini 4 64GB Wifi + Cellular = $ 629
- Apple TV 64 GB = $ 199
- Apple Watch Sport 42mm = $ 399
- Mac Mini 3.0 GHz, 16 GB memory, 1 TB fusion drive = $ 1,399
- Thunderbolt Display = $ 999
- Adapters & Software = $ 200
- Apple Music Family = $ 14.99/month x 36 = $ 539.64
- iCloud storage plan 200 GB = $ 2.99 /month x 36 = $ 107.64
This insanely sum would come down to $ 253.81 per month. This is without tax and without any interest for a service offering like this. I would suppose if Apple adds Apple Care and other support coverages, it would be even more. On the other hand, there might be discounts and various other factors, which could reduce sum considerably. Anyway, a conceivable Apple as a Service subscription service might come down to something of a medium 3 digit amount of $$$ per month easily, even with just a moderate Apple outfit. Just consider a creative professional using an upscale iMac or Mac Pro outfit with some additional peripherals.
Taking Apple’s huge profit margin into consideration (up from 1.23% in 2003 to 21.60 % in 2015), Apple might in fact be able to offer services like this for a select group of customers and could provide products in advance, collecting its revenue over the installment of the service.
In any case, it was kind of shocking to sum up the amount of money I spend on Apple products each year. Compared to any other subscriptions I have, this is definitely the most expensive one. But still, I wouldn’t want to miss out on any part of it.