Opinion: How you will access Apple products in future

The news:

Apple may be selling fewer iPhones as consumers try to get more time out of their existing devices and seek out lower-priced second user devices.

The reality:

The hype machine today seems focused on the startling realization that at a time of intense international, political and financial uncertainty (eg. Trump, Russia, Brexit and increasingly frequent extreme weather events) consumers become less interested in buying things.

I guess realising that information takes a seriously long time for well-paid media commentators who don’t have to worry about rent, utility or medical payments. For the rest of us…

The puzzle:

How will Apple’s management successfully figure out how to:

  • Maintain revenue in key markets as economies slow?
  • Do so without playing the ‘race to the bottom’ price game?
  • Continue to deliver products that ‘surprise and delight’?
  • Develop business in emerging economies to compensate for the vast structural changes we’re inevitably going to see in mature ones?
  • And continue to achieve customer satisfaction levels that would make almost any journalist’s heart sing?

The answer:

We already know the answer. Apple isn’t unique in aiming for it. I’ve been talking about it for years. I think Apple’s senior management have been quietly building up to it for longer. I’ll sum it up in one word and five sentences:

* Word: Services

  • Sentence #1: All Apple’s existing services will be nurtured and made available across a wide array of platforms and devices, including wearables.
  • Sentence #2: Apple will supplement its existing services with others that might build good, strong revenues – health, movies and a la carte entertainment, SaaS, use your imagination.
  • Sentence #3: Apple will look across its business for components and solutions it can build better/reduce outgoings, and for new opportunities it can develop, such as the insurance business it is entering with Cisco, extensions to its financial services and further extension of its enterprise pitch.
  • Sentence #4: Some products will logically become more expensive as there will always be some people willing to spend a lot of money to use the best available solutions for professional work or pleasure – the plan is not either/or, but both.
  • Sentence #5: As service income grows it becomes more and more probable the company will look to deliver new subscription packages that allow customers to have access (but not ownership) of the Apple solutions they want, coupled with use of specific services.

Some thoughts

Apple isn’t alone in moving in this direction. The trend toward predictable, repeating income spans everyone from Netflix to Microsoft Office and beyond. Every business wants to create this kind of income.

Changing times demand changing business models. Think about it – it won’t be too long before you won’t even need to (or want to) own a car. And given that some projections imagine as many as 40 percent of current employment opportunities may in future be automated, a dwindling number of people will be able to afford to own things. (Which I’m not at all happy about, but don’t shoot the messenger).

Apple will still maintain a huge community of active users of its cutting-edge products, it will just charge for them differently (and recycle every precious gram of component material as devices reach EOL).  Things will, however, be very difficult for hardware manufacturers that find themselves unable to create engaged loyal communities. Box-shifters are history, though they’ll have a place at the low-end.

I see Apple Retail’s focus on meeting the needs of Apple’s evolving community as a reflection of this strategy. All are welcome in the Town Square. Communities matter.

I can see how this future could be built, but that doesn’t mean it will turn out precisely as I describe. All the same, such models of access within scarcity seem likely to proliferate, particularly as new generations that prize access over ownership become the world’s primary  money earners and old ownership models quietly retire.

Jonny Evans

Watching Apple since 1999. I don't say what they should do. I say what they might do. They sometimes do.

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