On Monday, Apple announced something altogether different from its typical new products that consumers can touch and feel: An entertainment service that in some ways resembles Amazon Prime and will include Apple’s own films and television shows with Hollywood stars including Reese Witherspoon, Jennifer Aniston and Steven Spielberg.
At an event at its campus in Cupertino, California, Apple said it was launching a raft of new services, from news to video games and a credit card. Its biggest initiative is entertainment streaming service Apple TV+, which, in an effort to attract a wider audience than just Apple customers, will be available on smart TVs.
Apple didn’t announce a price for the streaming service or when it will launch.
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Apple CEO Tim Cook kicked off the event, in the Steve Jobs Theater, after a short opening movie that paid homage to Apple’s products, from the iPhone to Siri. “We’ve also been creating a collection of world class services, and that is what today is all about,” Cook said.
Cook highlighted what the company has already been doing in the services realm, such as iCloud information storage, and touted the way they work across a myriad of Apple’s devices, all the while keeping users’ information “private and secure,” a line that drew big applause.
Usually, when Apple holds big, splashy press events, it unveils a new product like the iPhone or the MacBook. For years, Apple’s business has centered around the iPhone, but sales of that once-revolutionary but now commonplace device have slowed. And the entire world of computers has been flipped on its head. Apple has been diversifying beyond hardware, selling iCloud storage to its customers, a $10 a month music streaming service and movies and television shows through iTunes.
But Monday’s anticipated announcement takes that diversification to a whole new level.
First, Cook unveiled a new service called Apple News +, a $10 a month subscription service that will include magazines like Sports Illustrated and The New Yorker. The service costs $12.99 a month in Canada.
“Quality journalism matters,” Apple said in a short video touting the magazines it would include in the new service.
What Apple didn’t talk about in its presentation is that it had largely failed to convince some of the largest newspapers, including The New York Times and The Washington Post, to participate in the service. Though it briefly featured The Wall Street Journal and the Los Angeles Times during the presentation, it more or less focused on magazines.
The design of the paid news app downplayed the publications behind individual articles. Articles about Costa Rica from several publications were mashed together into one place. That might be good for readers, but it takes away the power of distribution from the publishers of the magazines and hands it to Apple, much like what happened to the music industry when Apple launched 99 cent songs on iTunes in the early 2000s.
Another selling point for its news service: Apple uses “on-device” intelligence to make recommendations, so that the company doesn’t actually know what you read and the data can’t be used to target advertisements, the company said.
Apple also announced Apple Card, which builds on the popularity of its Apple Pay service that allows people to pay for products using their phones and watches. Offering its own credit card, with the backing of Goldman Sachs and Mastercard, allows Apple to cut out some of the middlemen in payment transactions. Apple is offering consumers competitive cash back and no late fees.
Apple Card requires Touch ID or some other form of authentication for payments to reduce fraud, and it said it won’t collect purchase data. It said Goldman Sachs won’t sell or share data with third parties, which implies Goldman would be able to get some data on users. Apple didn’t say whether it would pass on late payment information to credit agencies.
As far as Apple’s bottom line is concerned, its announcement of a credit card may one day turn out to be the most significant announcement of the day. It puts Apple one step closer to placing itself in the middle of a large swath of consumer transactions. By combining this with the company’s vast number of customers who carry around its devices, its payments services have the potential of giving Apple a massive, low overhead revenue stream.
Cook said iOS has become the largest gaming platform in the world, with roughly 300,000 games on the platform. With its new gaming subscription service called Apple Arcade, the company says it has created a way to help game developers monetize their games.
Apple Arcade appears positioned to compete in some ways with Google’s new “Stadia” service, which was announced last week. Google will sell a game controller that will allow people to pay high quality videogames on any screen, from televisions to tablets, without an expensive gaming PC. Apple Arcade and Google Stadia both still have not named a price.
Apple is expected to invest many billions a year, according to analysts, on making video content to compete in a crowded market that includes Amazon, Netflix, Hulu and Disney. It’s a gamble with no guarantee of success, which signals just how important these new businesses are to Apple.
Last week, as hype around Monday’s event steadily built up in the media, Apple made three hardware announcements, with upgrades to its iMac Pro, iPad Mini and AirPods. There was no news conference devoted to those announcements. It was unusual, because it showed Apple’s hardware taking a back seat to its new services-oriented businesses. Wall Street liked what it saw, rewarding Apple with a stock bump that boosted the company’s market cap above $900 billion. It had fallen below $700 million in January after news of slowing iPhone sales.
The real magic in consumer technology is happening less and less inside the devices people carry around and more and more in server farms scattered around the world, where massive amounts of data get processed and then transmitted to gadgets like the Amazon Echo or Google Home.
In essence, the gadgets people are excited about buying are becoming vessels for sending and receiving data. And in that area, Apple has fallen behind companies like Google, Amazon and Microsoft, which now pull in significant revenue from selling cloud services, which is a fancy term for data centre usage and storage.
The invite Apple sent to invitees said simply, “It’s show time.” The question now is whether Apple can break a leg.