I’m not sure how Apple content on other people’s hardware sells more Apple hardware.
I have to agree. One thing that Apple content being on 3rd party hardware does influence, if my Apple Music usage is any indication, is keeping me locked into my content subscription and service provider, i.e., Apple Music, iTunes Match, etc. I do have a HomePod in my kitchen because I spend a lot of time in there and I want great music delivery when I'm cooking. However, just about every other room of my house has an Amazon Echo device of some sort because they are cheap and work well for alarms, timers, reminders, intercoms, listening to radio broadcasts, podcasts, etc., but rarely did I use them for music. Until now. Since Apple and Amazon got together around Apple Music I now have my Apple Music library setup as the default music source on all of my Echo devices. A couple of these are now paired with bluetooth speakers (that I already owned) so I now have decent sound in a few more places. What Apple gets out of it is my Apple Music and iTunes Match subscription, which is roughly what it costs to purchase four (4) Echo Dots. I'll be paying Apple for the subscription every year for years to come but I doubt that I'll be buying new Dots every year. It's a win-win for me. No complaints whatsoever.
As I posted in another thread...
How much money is Amazon making off original content? People keep talking about growing services revenues. Apple doesn’t break down the components of services revenue but it’s a good bet the majority of it comes from the cut Apple takes on IAP. Secondarily would probably be things like iCloud storage, MFI licensing fees, Apple Care. All of those are tied to hardware. We’ve never heard in the past that iTunes was much of a money making business. Maybe Apple has these grand video plans that will blow everyone out of the water and be hugely profitable but I’m skeptical.
I know Wall Street is obsessed with the services narrative but what good are services (as a stand alone product) for Apple if they’re not very profitable (if at all). Looking at Netflix’s last quarterly earnings filing their net profit was around $400M. And that’s off of a subscriber base of around 137M. What would Apple have to charge for its video service to pull in decent profits?
Well, the video will cost what it costs to generate. Putting it in front of a larger user-base paying for it, by opening it up to non-Apple hardware is logical.
The magnitude of it remains to be seen, of course.
Content helps sell hardware. Amazon creates content to generate interest in their platform and hardware. Apple wants a video streaming service to increase the value of their ecosystem, thereby increasing the value proposition of their hardware in order to sell more. Adding their app to Samsung and LG TVs makes sense to reach a larger customer base, much as they did with iTunes back in the early aughts. They figure it will increase the reach of their services and broaden the customer base.
I’m not sure how Apple content on other people’s hardware sells more Apple hardware.
I think Apple realizes that a high-dollar cost media service restricted to only Apple hardware won't be the best way to monetize it.
This piece is confusing. Was there another story announcing this? Linking to it in the first sent nice or paragraph would provide clarity and context.
You mean, one before the second paragraph of the story?
That's the sort of info that belongs in the first paragraph, as even that doesn't make sense with out it. Re-reading the first para multiple times and not seeing it I scrolled right past the image and then gave up, as I was "below the fold" at that point.
As I posted in another thread...
How much money is Amazon making off original content? People keep talking about growing services revenues. Apple doesn’t break down the components of services revenue but it’s a good bet the majority of it comes from the cut Apple takes on IAP. Secondarily would probably be things like iCloud storage, MFI licensing fees, Apple Care. All of those are tied to hardware. We’ve never heard in the past that iTunes was much of a money making business. Maybe Apple has these grand video plans that will blow everyone out of the water and be hugely profitable but I’m skeptical.
I know Wall Street is obsessed with the services narrative but what good are services (as a stand alone product) for Apple if they’re not very profitable (if at all). Looking at Netflix’s last quarterly earnings filing their net profit was around $400M. And that’s off of a subscriber base of around 137M. What would Apple have to charge for its video service to pull in decent profits?
Well, the video will cost what it costs to generate. Putting it in front of a larger user-base paying for it, by opening it up to non-Apple hardware is logical.
The magnitude of it remains to be seen, of course.
Content helps sell hardware. Amazon creates content to generate interest in their platform and hardware. Apple wants a video streaming service to increase the value of their ecosystem, thereby increasing the value proposition of their hardware in order to sell more. Adding their app to Samsung and LG TVs makes sense to reach a larger customer base, much as they did with iTunes back in the early aughts. They figure it will increase the reach of their services and broaden the customer base.
I’m not sure how Apple content on other people’s hardware sells more Apple hardware.
I think Apple realizes that a high-dollar cost media service restricted to only Apple hardware won't be the best way to monetize it.
I’m not convinced that that media/video will be a highly profitable space for Apple. I’ve listened to podcasts where they discuss all the things Apple could turn into a service ala Microsoft or Adobe. Maybe but Apple’s not set up as a company that way. And outside of maybe Logic or Final Cut is there any Apple software people would pay a monthly subscription for? I use Apple News every now and then but I wouldn’t pay a monthly fee for it. Apple is just not set up the same way Microsoft is. To become a software as a service company I think they’d really need to invest heavily in more software engineers. And there would need to be a huge culture change at the company. Also are customers really excited at the prospect of Apple turning all these things into services they can charge you $5 or $10 a month for? Maybe that’s the way the company will need to go but I still think it might be an overreaction to hardware cycles lengthening. And if it comes across as Apple just trying to extract more money out of existing customers it might turn people off. Bottom line though if this is the route Apple is going they need to really up their software and services game.
As I posted in another thread...
How much money is Amazon making off original content? People keep talking about growing services revenues. Apple doesn’t break down the components of services revenue but it’s a good bet the majority of it comes from the cut Apple takes on IAP. Secondarily would probably be things like iCloud storage, MFI licensing fees, Apple Care. All of those are tied to hardware. We’ve never heard in the past that iTunes was much of a money making business. Maybe Apple has these grand video plans that will blow everyone out of the water and be hugely profitable but I’m skeptical.
I know Wall Street is obsessed with the services narrative but what good are services (as a stand alone product) for Apple if they’re not very profitable (if at all). Looking at Netflix’s last quarterly earnings filing their net profit was around $400M. And that’s off of a subscriber base of around 137M. What would Apple have to charge for its video service to pull in decent profits?
I continue to believe original content is wrong. Disney will launch their Streaming Services soon. Then there is Netflix, HBO, Amazon. Time will tell.
When the playing field gets overpopulated, convergence usually ensues. I wonder if we are nearing that point and if we are, who will eat who.
This piece is confusing. Was there another story announcing this? Linking to it in the first sent nice or paragraph would provide clarity and context.
You mean, one before the second paragraph of the story?
That's the sort of info that belongs in the first paragraph, as even that doesn't make sense with out it. Re-reading the first para multiple times and not seeing it I scrolled right past the image and then gave up.
We don't write for the forums, we write for the homepage. For years and years, if not a full decade, we don't post links on the ledes. There may have been a clue to what the story was about in the second half of the first sentence.
As I posted in another thread...
How much money is Amazon making off original content? People keep talking about growing services revenues. Apple doesn’t break down the components of services revenue but it’s a good bet the majority of it comes from the cut Apple takes on IAP. Secondarily would probably be things like iCloud storage, MFI licensing fees, Apple Care. All of those are tied to hardware. We’ve never heard in the past that iTunes was much of a money making business. Maybe Apple has these grand video plans that will blow everyone out of the water and be hugely profitable but I’m skeptical.
I know Wall Street is obsessed with the services narrative but what good are services (as a stand alone product) for Apple if they’re not very profitable (if at all). Looking at Netflix’s last quarterly earnings filing their net profit was around $400M. And that’s off of a subscriber base of around 137M. What would Apple have to charge for its video service to pull in decent profits?
Well, the video will cost what it costs to generate. Putting it in front of a larger user-base paying for it, by opening it up to non-Apple hardware is logical.
The magnitude of it remains to be seen, of course.
Content helps sell hardware. Amazon creates content to generate interest in their platform and hardware. Apple wants a video streaming service to increase the value of their ecosystem, thereby increasing the value proposition of their hardware in order to sell more. Adding their app to Samsung and LG TVs makes sense to reach a larger customer base, much as they did with iTunes back in the early aughts. They figure it will increase the reach of their services and broaden the customer base.
I’m not sure how Apple content on other people’s hardware sells more Apple hardware.
I think Apple realizes that a high-dollar cost media service restricted to only Apple hardware won't be the best way to monetize it.
I’m not convinced that that media/video will be a highly profitable space for Apple. I’ve listened to podcasts where they discuss all the things Apple could turn into a service ala Microsoft or Adobe. Maybe but Apple’s not set up as a company that way. And outside of maybe Logic or Final Cut is there any Apple software people would pay a monthly subscription for? I use Apple News every now and then but I wouldn’t pay a monthly fee for it. Apple is just not set up the same way Microsoft is. To become a software as a service company I think they’d really need to invest heavily in more software engineers. And there would need to be a huge culture change at the company. Also are customers really excited at the prospect of Apple turning all these things into services they can charge you $5 or $10 a month for? Maybe that’s the way the company will need to go but I still think it might be an overreaction to hardware cycles lengthening. And if it comes across as Apple just trying to extract more money out of existing customers it might turn people off. Bottom line though if this is the route Apple is going they need to really up their software and services game.
Maybe that's an avenue Apple may need to look at => strategically porting services to platforms where it makes sense. Take for example Windows. As great of a sales momentum the Mac has had over the past few years, Windows still represents at least 85% of the desktop / laptop market. Porting services like FaceTime, iMessage, Siri to Windows to improve the integration between iOS & Windows devices would be a great idea. In an ideal world, Apple would love everyone to use all Apple products all of the time but in reality that won't happen so it will have to bring its services to where the eyeballs are in a manner that will not undermine its own platforms.
As I posted in another thread...
How much money is Amazon making off original content? People keep talking about growing services revenues. Apple doesn’t break down the components of services revenue but it’s a good bet the majority of it comes from the cut Apple takes on IAP. Secondarily would probably be things like iCloud storage, MFI licensing fees, Apple Care. All of those are tied to hardware. We’ve never heard in the past that iTunes was much of a money making business. Maybe Apple has these grand video plans that will blow everyone out of the water and be hugely profitable but I’m skeptical.
I know Wall Street is obsessed with the services narrative but what good are services (as a stand alone product) for Apple if they’re not very profitable (if at all). Looking at Netflix’s last quarterly earnings filing their net profit was around $400M. And that’s off of a subscriber base of around 137M. What would Apple have to charge for its video service to pull in decent profits?
Well, the video will cost what it costs to generate. Putting it in front of a larger user-base paying for it, by opening it up to non-Apple hardware is logical.
The magnitude of it remains to be seen, of course.
Content helps sell hardware. Amazon creates content to generate interest in their platform and hardware. Apple wants a video streaming service to increase the value of their ecosystem, thereby increasing the value proposition of their hardware in order to sell more. Adding their app to Samsung and LG TVs makes sense to reach a larger customer base, much as they did with iTunes back in the early aughts. They figure it will increase the reach of their services and broaden the customer base.
I’m not sure how Apple content on other people’s hardware sells more Apple hardware.
I think Apple realizes that a high-dollar cost media service restricted to only Apple hardware won't be the best way to monetize it.
I’m not convinced that that media/video will be a highly profitable space for Apple. I’ve listened to podcasts where they discuss all the things Apple could turn into a service ala Microsoft or Adobe. Maybe but Apple’s not set up as a company that way. And outside of maybe Logic or Final Cut is there any Apple software people would pay a monthly subscription for? I use Apple News every now and then but I wouldn’t pay a monthly fee for it. Apple is just not set up the same way Microsoft is. To become a software as a service company I think they’d really need to invest heavily in more software engineers. And there would need to be a huge culture change at the company. Also are customers really excited at the prospect of Apple turning all these things into services they can charge you $5 or $10 a month for? Maybe that’s the way the company will need to go but I still think it might be an overreaction to hardware cycles lengthening. And if it comes across as Apple just trying to extract more money out of existing customers it might turn people off. Bottom line though if this is the route Apple is going they need to really up their software and services game.
Maybe that's an avenue Apple may need to look at => strategically porting services to platforms where it makes sense. Take for example Windows. As great of a sales momentum the Mac has had over the past few years, Windows still represents at least 85% of the desktop / laptop market. Porting services like FaceTime, iMessage, Siri to Windows to improve the integration between iOS & Windows devices would be a great idea. In an ideal world, Apple would love everyone to use all Apple products all of the time but in reality that won't happen so it will have to bring its services to where the eyeballs are in a manner that will not undermine its own platforms.
Well that’s a completely different business model that I’m not sure Apple is equipt for or the markets have thought through. Just a few years ago Apple started making some of its software free. They discontinued Aperture and told people to go Adobe. I think most people would agree that the iWork suite is not competitive enough with Office or Google Docs. I think some have overreacted to the elongating hardware upgrade cycles by suggesting Apple now must become some sort of software as a service company. That’s really not in Apple’s DNA. They’ve always been about the whole widget. I’d rather see Apple expand its ‘other’ products category than put its software or exclusive features on everyone else’s product. Maybe Apple should make first party HomeKit devices. Maybe they shouldn’t have gotten out of the first party router business. Go back to making first party displays, maybe buy a company like Vizio and start producing TV sets that tun tvOS and offer Siri, FaceTime and HomeKit integration. Things like that.
As I posted in another thread...
How much money is Amazon making off original content? People keep talking about growing services revenues. Apple doesn’t break down the components of services revenue but it’s a good bet the majority of it comes from the cut Apple takes on IAP. Secondarily would probably be things like iCloud storage, MFI licensing fees, Apple Care. All of those are tied to hardware. We’ve never heard in the past that iTunes was much of a money making business. Maybe Apple has these grand video plans that will blow everyone out of the water and be hugely profitable but I’m skeptical.
I know Wall Street is obsessed with the services narrative but what good are services (as a stand alone product) for Apple if they’re not very profitable (if at all). Looking at Netflix’s last quarterly earnings filing their net profit was around $400M. And that’s off of a subscriber base of around 137M. What would Apple have to charge for its video service to pull in decent profits?
Well, the video will cost what it costs to generate. Putting it in front of a larger user-base paying for it, by opening it up to non-Apple hardware is logical.
The magnitude of it remains to be seen, of course.
Content helps sell hardware. Amazon creates content to generate interest in their platform and hardware. Apple wants a video streaming service to increase the value of their ecosystem, thereby increasing the value proposition of their hardware in order to sell more. Adding their app to Samsung and LG TVs makes sense to reach a larger customer base, much as they did with iTunes back in the early aughts. They figure it will increase the reach of their services and broaden the customer base.
I’m not sure how Apple content on other people’s hardware sells more Apple hardware.
The following got buried on page 6 of the Samsung announcement story, so I’ll repeat it here with minor edits. I agree with Ne1 above. I’ll expand on it.
It seems a number of readers may not have been around when Apple put iTunes on Windows computers and the then negative comments by many Apple fans. And this was prior to the iPod coming out. It did subsequently sell a ton of hardware and content–i.e. iPods, and music. That was a huge development that changed the music business and Apple. That enabled subsequent revenue/profits funding development that led to today’s Apple, and the iPhone in particular.
Q: “iTunes movies and TV shows, and AirPlay 2 compatibility” on Samsung, Sony, LG, Vizeo and others to come, has you wondering how that would expand hardware sales and possibly negate some hardware sales.
New comment: A: Apple ruled the music content world and that growth fueled the R&D that brought profitable hardware. They were not first to the music sales business nor to the player business. But they did it right. They are much further behind on the video/movie content distribution and creation business than they were in music (which was just distribution/sales). They cannot afford to be left out of video/movie content delivery and adding creation is part of the competition due to competitors not wanting Apple to get their cut like they did in music.
A: It’s my opinion that folks will want an Apple TV controller (a stand-alone new one to come to market) for interfacing with Apple TV embedded on new TVs to navigate iTunes movies and TV shows. Or a keyboard input device like an iPhone or iPad. Either way, a hardware sale. Revenue with high margin — check!
I hate, hate, hate current TV box text entry letter by letter—Give me a keyboard! Like on my iPhone or iPad—i.e. the “Apple TV App” software on a hardware controller: an iOS or TV OS device that fits in my pocket. Voice recognition doesn’t always work well, with Bixby at the back of the pack, and non-existent on Sony. Siri doesn’t always work well. So give me a keyboard that fits in my pocket, that I always have. And that convenience will likely have to be an Apple keyboard device e.g. iPhone, to work with embedded AppleTV in non-Apple TV sets.
A: Don’t forget content sales, both original AND sell-through. Revenue with high margin — check!
Apple is a design company—a better description than only one of the following: hardware, software, services or content company. Apple is all those because of a focus on design of an ecosystem—with more to come yet.
AR in video content is something I can’t fully comprehend, but could Apple figure it out and make content for those vaporware AR glasses? Just musing. Apple has surprised us before, about every 3 to 6 years. BTW— it’s no small deal that Adobe is releasing software for creating AR content, with a file format created in partnership with Apple and Pixar (.usdz).
Services and content are expanding much faster than hardware. Services alone would be a Fortune 100 company. In my opinion, Apple has been planning this for a long time and are prepared to scale to the needs of this expansion to other platforms of access to content. Plus a little hardware to boot.
Comments
I agree with Ne1 above. I’ll expand on it.
It seems a number of readers may not have been around when Apple put iTunes on Windows computers and the then negative comments by many Apple fans. And this was prior to the iPod coming out. It did subsequently sell a ton of hardware and content–i.e. iPods, and music. That was a huge development that changed the music business and Apple. That enabled subsequent revenue/profits funding development that led to today’s Apple, and the iPhone in particular.
Q: “iTunes movies and TV shows, and AirPlay 2 compatibility” on Samsung, Sony, LG, Vizeo and others to come, has you wondering how that would expand hardware sales and possibly negate some hardware sales.
New comment:
A: Apple ruled the music content world and that growth fueled the R&D that brought profitable hardware. They were not first to the music sales business nor to the player business. But they did it right. They are much further behind on the video/movie content distribution and creation business than they were in music (which was just distribution/sales). They cannot afford to be left out of video/movie content delivery and adding creation is part of the competition due to competitors not wanting Apple to get their cut like they did in music.
A: It’s my opinion that folks will want an Apple TV controller (a stand-alone new one to come to market) for interfacing with Apple TV embedded on new TVs to navigate iTunes movies and TV shows. Or a keyboard input device like an iPhone or iPad. Either way, a hardware sale.
Revenue with high margin — check!
I hate, hate, hate current TV box text entry letter by letter—Give me a keyboard! Like on my iPhone or iPad—i.e. the “Apple TV App” software on a hardware controller: an iOS or TV OS device that fits in my pocket. Voice recognition doesn’t always work well, with Bixby at the back of the pack, and non-existent on Sony. Siri doesn’t always work well.
So give me a keyboard that fits in my pocket, that I always have. And that convenience will likely have to be an Apple keyboard device e.g. iPhone, to work with embedded AppleTV in non-Apple TV sets.
A: Don’t forget content sales, both original AND sell-through.
Revenue with high margin — check!
Apple is a design company—a better description than only one of the following: hardware, software, services or content company.
Apple is all those because of a focus on design of an ecosystem—with more to come yet.
AR in video content is something I can’t fully comprehend, but could Apple figure it out and make content for those vaporware AR glasses? Just musing. Apple has surprised us before, about every 3 to 6 years. BTW— it’s no small deal that Adobe is releasing software for creating AR content, with a file format created in partnership with Apple and Pixar (.usdz).
Services and content are expanding much faster than hardware. Services alone would be a Fortune 100 company.
In my opinion, Apple has been planning this for a long time and are prepared to scale to the needs of this expansion to other platforms of access to content. Plus a little hardware to boot.