Apple to restructure services business to focus more on advertising, streaming
Apple's Eddy Cue is reportedly working to shake up the company's lucrative Services business in order to focus more on streaming and advertising.
Apple Services
Cue, who serves as Apple's senior vice president of Services, is already updating the responsibilities of several key executives in the segment, Business Insider has reported. The company has reportedly identified streaming and advertising as two areas for revenue growth, and one insider with knowledge of the situation says that Apple's ad business is now "big enough to live on its own."
As part of the restructuring, Apple vice president of Services Peter Stern will no longer handle advertising heading forward and will instead focus on video, iCloud, and other services segments. On the flip side, advertising vice president Todd Teresi is said to be taking on more responsibility. He has been reporting directly to Cue since the start of 2022.
As part of its streaming strategy, Apple is also working on expanding its sports portfolio. The company recently launched Friday Night Baseball as an offering, and is working to secure rights to the NFL Sunday Ticket.
Business Insider reports that Apple is also seeking to obtain the rights to air NBA games on its Apple TV+ platform.
Services has been a steady money maker for Apple over the years. In Q2 2022, the segment brought in $19.8 billion, up year-over-year from $17 billion.
Apple is also working on bringing more services to the table, including a potential "buy now, pay later" financial service and an Instacart-style grocery ordering service with an emphasis on nutrition.
Read on AppleInsider
Apple Services
Cue, who serves as Apple's senior vice president of Services, is already updating the responsibilities of several key executives in the segment, Business Insider has reported. The company has reportedly identified streaming and advertising as two areas for revenue growth, and one insider with knowledge of the situation says that Apple's ad business is now "big enough to live on its own."
As part of the restructuring, Apple vice president of Services Peter Stern will no longer handle advertising heading forward and will instead focus on video, iCloud, and other services segments. On the flip side, advertising vice president Todd Teresi is said to be taking on more responsibility. He has been reporting directly to Cue since the start of 2022.
As part of its streaming strategy, Apple is also working on expanding its sports portfolio. The company recently launched Friday Night Baseball as an offering, and is working to secure rights to the NFL Sunday Ticket.
Business Insider reports that Apple is also seeking to obtain the rights to air NBA games on its Apple TV+ platform.
Services has been a steady money maker for Apple over the years. In Q2 2022, the segment brought in $19.8 billion, up year-over-year from $17 billion.
Apple is also working on bringing more services to the table, including a potential "buy now, pay later" financial service and an Instacart-style grocery ordering service with an emphasis on nutrition.
Read on AppleInsider
Comments
Services from financial to ads to streaming will get a far bigger focus from Apple's A-team.
"Services from financial to ads to streaming will get a far bigger focus from Apple's A-team. " => Not just services but also anything AR related as well.
The first is that this is restructuring the Services business unit which has been the fastest growing business unit for years. Apple turned Services into a business unit and started tracking them discretely because of its impact on revenue (important disclosure for investors). Note that Services makes hauls in twice the revenue as Mac hardware:
https://appleinsider.com/articles/22/04/29/examining-apples-solid-9728b-q2-2022-by-the-numbers
in the most recent quarter.
Apple's hardware growth is heavily weighted toward new product categories like Apple Watch, not Mac or iPhone sales. In some markets (like most of the G-7 nations), iPhone is considered a mature market.
If Apple wants to make a ton of more money from existing hardware product lines they need to A.) ship more product, or B.) increase gross margins. Solution A is going to be a bit difficult with current supply chain constraints. There's also the question of whether or not the market is there. Solution B is a delicate balance between making tons of money and pricing your product out of the market. COGS isn't going to go down with current supply issues.
Apple has been gravitating toward streaming for years and unsurprisingly that's where all of the action is happening in some areas like music distribution. Who goes to Target to buy the latest Taylor Swift album on Compact Disc? I assure you that they still sell them.
Advertising is a trickier nut to crack based on Apple's privacy stance. But each time a pair of eyeballs is looking at an Apple-hosted ad, there are not looking at a Facebook nor Google hosted ad. Apple doesn't need to "win" the advertising wars. They just need to make the competition suffer by taking away a significant number of ad impressions. That's doable.
Streaming and advertising go hand in hand. When you have popular content, you'll have more eyeballs and you can command higher advertising rates. Do you know what a 30 second spot during the Super Bowl halftime costs?
Knowing Apple's M.O., we know they won't try to blanket the Internet with ads. They will carefully focus on the high end of the market. They don't need to display the most ads, they just need to make the most margin for the ads they sell.
I'm pretty sure Eddy Cue and his team know what the ad rates are for major sporting events are. As well as other major non-sporting events. Moreover they also know what the online streaming rights for such events cost. Apple will look for maximum margin. That's how they rake in the bucks.
I know it is pretty common to find people on tech site Q&A forums (like AppleInsider as well as similar sites) who think they can run Fortune 5 companies better than the people who actually do but I assure you that Apple has a few people who actually know what they are doing.
I have long been asking if Apple since 2011 has simply been monetizing 'the house that Jobs built'...
Two reasons I would never buy a HomePod - no external offline input and always on Siri. No thanks.
Why do all roads seemingly increasingly link to Apple and or iCloud servers ?
https://discussions.apple.com/thread/253224126
Has a bicycle for the mind become the monetization of the mind...? Does every 'movement' become a business?
'Our data is better, but you must pay/use us because we 'protect' our customer privacy?
Have we become the product simply 'once removed' ?
https://appleinsider.com/inside/icloud
iCloud email apparently remains unencrypted on Apple servers suggesting S/MIME is available...
https://support.apple.com/en-us/HT202303
Yeah, you can build a e-mail system that has higher end-to-end security but sacrifices convenience and compatibility. Protonmail is one. On a computer, you need to access it via a web browser (which is already a security risk). On iPhone, there's a dedicated iOS app. You can't configure standard MUAs to connect directly to the Protonmail service whether it be Apple Mail (macOS or iOS), Outlook, Thunderbird, whatever.
So do you keep IMAP unencrypted for better compatibility or throw IMAP out the window? I signed up for Protonmail in 2015. I haven't sent one actual message with it, just the occasional silly test message. Maybe my e-mail communications aren't that important. That's fine.
I consider e-mail to be about as secure as sending a postcard through the mail even if it goes from a USPS blue collection box to the recipient's locked mailbox.
And yes, I've used S/MIME certificates both in iOS Mail and macOS Mail. It works but let's face it, no typical consumer deals with this. This is why services like Protonmail popped up; despite all of the tutorials, free certs, whatever, only total dorkwads (or NSA whistleblowers which are a subset of the aforementioned) are willing to configure S/MIME or GPG certs for their MUAs.
Got a one-off sensitive something to send? Shove it into a FedEx or UPS Overnight envelope or hand it off in person. It's easier than convincing Joe Consumer to sign up for Protonmail. Remember, most Americans have already sold their online souls to Alphabet and Meta Technologies, they don't care if their e-mail isn't ultratight.
And at least Apple doesn't shove ads down your throat via iCloud Mail.
Perhaps on point https://www.wired.com/story/always-question-default-settings/?
Is it a bit like the challenge of climate change? Will reaction occur once the effects are apparent and the 'horse has left the barn'...?
This isn't a new conundrum in recent years. Steve was aware of all of this when he rejoined Apple in the late Nineties. The first version of OS X was dreadfully late. Many surmise that this was due to some internal mandate that OS X run on Intel-powered Macs (in a lab of course). Steve knew that PowerPC was a dead end.
In the same way, I'm sure he was aware that iPhone would eventually reach saturation in advanced markets like the US. There were rumors of Apple testing "wearables" on their campus YEARS before the Apple Watch launched.
But returning to the original topic, this is about a reorg within the Services division. That division is separate from Apple's hardware divisions. It is reasonable to imagine that Services has different growth expectations for revenue, profit, gross margin than Apple's various hardware divisions. iPad has been dropping over the years as the entire tablet category has been shrinking. It's not like Tim/Luca is going to tell the head of iPad that anything less than 25% YoY growth is insufficient.
Or more likely, in a secure warehouse, there's a 27" Apple Silicon iMac prototype with a sticker that says "Secure Recycle Me". It's next to a 32" Apple Silicon iMac prototype, a 34" Apple Silicon ultrawidescreen iMac prototype. And iMac prototypes with OLED screens.
I'm constantly amused by tech forum participants (here at AI and elsewhere) who seem to think up of Apple designs that no one at Apple ever imagined, even if they are generational derivatives of existing products like a 27" iMac.
But again, you don't get the point. Like S/MIME, PGP/GPG failed. Not because it has major flaws in its encryption technology but because Joe Consumer doesn't find it convenient. There have been MUA extensions like GPGMail for Apple Mail for years. Like I said, only total dorkwads are willing to configure their MUAs to encrypt messages whether it be S/MIME or PGP/GPG. The former is ever slightly more consumer friendly.
TLS support in the MTA? That's been around for 20+ years. You can compile that into the major MTAs (sendmail, postfix, qmail, et al) and set up certs on both ends. I tried it myself way back when I was a Linux nerd in the late Nineties configuring encrypted connections between two mail servers.
Today, mail providers are more focused on secure storage since people no longer use POP3 to retrieve messages to local systems. Everything is stored on the servers.
And e-mail has never been a truly reliable message delivery service. It's improved enormously since the Eighties and Nineties but there are still messages that don't get delivered. At least with a fax, you can set up delivery confirmation, when the receiving device gets the EOM signal from the sending device. Postal mail (certified mail) and FedEx/UPS can do this to which is why legal documents are often sent this way.
For important secure documents, you use things like FedEx or UPS Overnight letters (or even faxes). Or for Joe Consumer, you send an e-mail saying "Please approve this document through DocuSign" (or some similar service). I signed my tax accountant's approval/signature release e-form via DocuSign this year. E-filing tax returns has been around for years.
For shorter secure messages, many companies have opted to create new services that were designed with security at the forefront rather than try to patch up e-mail (which we have seen to be largely unpopular to the consumer user). Two examples are Signal and iMessage. The former runs on more platforms (Mac, iOS, Windows, Android, maybe even Linux although I haven't checked on this last one).
Note that a live in-person telephone conversation in private is still pretty secure. Cellular networks are pretty secure and using a landline is even better.
I mean yeah, all things end. The sun will go cold one day too…But this isn’t a meaningful observation in a discussion of our reality.
More to the point, who doesn’t want to be encouraged, even more than we already are, to find satisfaction in life by what we buy and what we’re told to think? That’s a staple of a stable society! The idea that a society is stable because it’s most foundational group, the family, is stable is naive and outdated. We can only expect good things from our brave leaders to make something work that has never worked in history ever before.