By this point, people are accustomed to every new product from Apple being described as the “next iPhone.” Now Apple is making a pivot to build its services business, announcing new streaming TV, gaming, magazines, and credit card products at an event yesterday. Can services ever be the “next iPhone?” Tripp Mickle reports on Apple’s new strategy for The Wall Street Journal:
The iPhone is running out of juice. To go beyond the device that made Apple Inc.AAPL 1.38% a global colossus, Tim Cook is betting on a suite of services—marking the company’s biggest shift in more than a decade.
The chief executive’s strategy, years in the making, takes Apple out of its comfort zone into areas where it has failed in the past, and that today are replete with risks and competition. Apple will take a giant leap toward its goal on Monday, when it plans to announce video- and news-subscription services that it hopes will generate billions of dollars in new annual revenue and deepen ties between iPhone users and the company.
In some ways, Apple helped create its own predicament when it launched the app industry a decade ago. The goal was to make the iPhone more powerful.
Over time, though, apps and services, from Spotify to Netflix to China’s WeChat , have often become more important to users than the devices that run them. That allows consumers to hold on to phones longer or switch to less expensive versions. In January, Apple reported its first decline in revenue and profit for a holiday quarter in over a decade.
By contrast, revenue from the services business grew 33% last year, to nearly $40 billion—accounting for about 15% of the company’s total of $265.6 billion.
The company’s ambition in video is to become an alternative to cable, combining original series with shows from other networks to create a new entertainment service that can reach more than 100 markets world-wide. It is the tech giant’s latest attempt to reinvent television, something it has tried to do for about a decade with limited success.
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