By Jason Snell
March 31, 2019 2:22 PM PT
Us as a Service
For years now, Apple has been telling every Wall Street analyst that would listen about its increased focus on growing revenue from ongoing services. As iPhone sales growth has slowed, it’s been a source of growth—and that’s very important to investors.
It makes sense. Apple has built a customer base that is deeply connected with its ecosystem, and it’s a customer base that is willing to pay for good tech products. And yet, for a lot of people, it’s a bit disturbing to see Apple pivot to selling subscriptions to video services and news services and game services rather than focusing on what it does best, which is the combination of hardware and software.
As John Siracusa said on the Accidental Tech Podcast this week, if you’ve followed Apple for a long time, it’s not a surprise to see Apple change itself. Apple is, if anything, a company of constant reinvention. While this seems like a huge stretch from what Apple’s done in the past, though, it’s also a function of the times we live in. Even if Apple didn’t want to get into services, it would probably have to—because its competitors are doing it, and if it does nothing it risks getting left behind.
I’m sympathetic to Tim Cook’s suggestion that Apple is now about a synthesis of not just hardware and software, but services. The mere existence of the Internet as a connecting factor means that Apple hasn’t been able to just focus on hardware and software for years now. Apple’s first attempt at Internet services were almost laughable, but it keeps getting better. And the App Store and Apple Pay have been pretty successful. If Apple can find a way to bring its entire ecosystem—hardware, software, and services—together to create great experiences, people will happily pay for them.
But I am a bit concerned about what the growth of services does to the wallets of the people who use Apple’s products. I can put this all in the context of Wall Street demanding growth, which is true, but another way to view it is that Apple isn’t satisfied with you paying it every few years for a new Mac and a new iPhone—it wants your money every single month. So, by the way, do streaming services and cable companies and wireless companies and pretty much everyone else.
I’m not surprised we’ve gotten to this point. Pat McGovern, the founder of IDG (my old employer) used to talk about recurring subscription revenue all the time. He felt like the future of the media business was getting people to give you their credit card so you could charge them monthly. And Pat was right.
I also write this as someone who made his own foray into subscription services (of a sort) a few years ago. This newsletter is, of course, a benefit to people who have provided their credit card numbers and signed up for monthly or annual recurring payments. (Thank you! I’m happy to provide you this service.)
But as someone who relies on the monthly recurring support of others, the rise of so many different voices attempting to get your money does give me pause. While some might argue we are simply changing where our money goes, it’s hard not to think that this is all additive, and that at some point people will reach a breaking point. (It’s probably already starting.) Certainly few people will be able to subscribe to more than a couple of video-streaming services, but there will be a half-dozen major players in that space in the next year. They all can’t make it, can they?
In any event, as someone who is part of a subscription service, I want to thank you for subscribing. I appreciate that you’re the kind of person who finds it valuable to be a part of our community—newsletter, secret podcast, and Slack group—as well as wanting to support the work that Dan and I do as independent tech writers. Subscription services aren’t just for the big guys to pad their bank accounts. They’re also away for the little guys to find ways to make a living through memberships and Patreons. Thank you for being a part of this corner of the 21st century economy.