05 Apr Another bite of the Apple
Last week Apple announced that it is shifting focus from handsets to services, in what is Tim Cook’s biggest move since taking over the reins of Apple. Essentially, they are using their powerful customer base to unlock new revenue streams as their core product growth plateau’s. This shift in focus should send shivers down the spine of every media owner in the world. Apple are aiming to disrupt a number of industries with the announcement of their new services, including a video-subscription service, an Apple credit card, a news app covering newspapers and magazines and a gaming subscription service.
With a 1.4 billion active installed base, they have an impressive media ecosystem that is ripe for growth and further development. Of this 1.4 billion, Apple has over 360 million subscribers to its services. This subscriber base brought in revenues of US$10.9 billion last quarter. Their stated objective for 2020 is over half a billion subscribers and US$14 billion in revenues per quarter. And they’ve barely opened the valve on media and advertising revenues. The only service that currently has advertising is gaming, which allows developers to pay for a search listing of their game.
Apple is demonstrating two things very clearly:
- Customer attention equals value and
- What’s non-core to a business today is the core of tomorrow
Many Australian business could take a leaf from Apple’s book and look at their customer base in a different way. Attention equals value and, as many businesses struggle to maintain growth, now is the perfect time to unlock hidden revenue streams. Owned media leverage is just one of those hidden opportunities.
As a client of ours recently said, using the excuse that something is non-core and therefore should not be pursued is verging on irresponsible in todays business climate. Non-core is where the new growth resides. Apple is demonstrating they have the courage to find new value rather than simply trying to squeeze every bit of value from their core. It’s not to say they won’t be bringing out highly desirable, innovative product. I’m sure they’ll still do that, they just won’t rely on it for all their growth.
Apple is demonstrating that it can harvest the value of its customers attention and focus on what many would consider non-core services. There’s clearly no rot in this Apple core!