• Kong

From hardware to software, from iPhone to Apple One

Apple's launch of the new iPhones saw the wiping of $100 billion from Apple's stock market value. At the same time, Apple released Apple One subscription bundle allowing Apple users to pay one monthly price for Apple Music, Apple TV+, Apple Arcade, iCloud, and select other services starting at a competitive $14,95 per month. With already 585 million paying subscribers across platforms will this mean a shift to streaming services as Apples new flagship product?

Apple stock (AAPL) dropped nearly 13 percent in October, including a more than $15 falloff between its month-high closing price ($124.40, on the 12th) and its closing price on Friday ($108.86). Now, many investors and fans are asking what brought about the decline.

Since 2013, Apple has delivered new iPhones each September like clockwork. But due to the pandemic, delays pushed the announcement of the new iPhone back a month with some devices still yet to ship. CEO Tim Cook didn’t mince words when discussing his company’s supply constrained status amid the coronavirus crisis, stating:

“But if you look at iPhone, we are constrained today, and that’s not a surprise, we are at the front end of the ramp, if you will. And how long we will be supply constrained, it’s hard to predict.”

In an interview with Reuters, Cook said he was "optimistic" about the iPhone 12 cycle based on the first five days of shipping. Next to that he said;

"5g is a once-in-a-decade kind of opportunity. And we could not be more excited to hit the market exactly when he did"

continuing that;

"At least in the U.S. the carriers are being very agressive"

Cook doesn't seem worried about the decline of the iPhone or even the possible prospect. This is because Apple has offset volatile iPhone sales in recent years with steady growth in its services segment, which includes streaming music and television. Services revenue even rose 16.3% to $14.5 billion, half a billion more than analysts estimated.

Cook told Reuters that Apple has 585 million paying subscribers across platforms, up from 550 million than previous quarter and closer to the goal of 600 million subscribers that the company set out for the end of calendar 2020.

Next to that, chief financial officer Luca Maestri said revenue from services and non-iPhone products would grow by double-digit percentages in the first fiscal quarter. Showing much confidence in Apple's new services.

Apple's shares have soared in the past two years as it has diversified its revenue streams to lessen its dependance on the iPhone. But the share tumble last Thursday raises the question of whether Apple is still more dependant on the iPhone and whether Apple can make it within the streaming realm with their latest product, the bundled subscription; Apple One.

The new bundled subscription allows Apple users to pay one monthly price for Apple Music, Apple TV+, Apple Arcade, iCloud, and select other services, with a big plus that subscribing to Apple One does save a pretty penny if you’re already using several services. Next to that Netflix and YouTube TV are hiking prices this year, making it an interesting offer.

Cook also commented that Apple One exists because Apple’s customers asked for it. He told investors during the earnings call;

“We had customers coming to us and asking for an easier way to buy all of our services. And we wanted to provide that, and we’re looking forward to tomorrow to getting Apple One out there,”

While demand seems to be plenty, many old and new players have shown how hard it can be to create engaging content. But it seems that Apple is tactically claiming market share through music streaming.

Still, Apple already started investing in Apple Original video content for its services, making it look like they are also getting more ready for the streaming wars. They'll have the benefit of being a major hardware provider for many consumers and have cult like brand recognition, so it will be interesting to see how Apple will develop in this space as they are searching for their new flagship product.



  • https://www.digitalmusicnews.com/2020/10/30/apple-one-subscription-how-to-sign-up/

  • https://www.digitalmusicnews.com/2020/11/01/apple-stock-october-analysis/

  • https://www.reuters.com/article/idUSKBN27E3G3

  • https://www.apple.com/tv-pr/originals/

  • https://www.fool.com/earnings/call-transcripts/2020/10/30/apple-aapl-q4-2020-earnings-call-transcript/