Apple’s New Star

Apple has entered the streaming war with Apple TV+.

Tim Cook announced the pivot to services in March this year and introduced their new streaming service.

Apple is absolutely taking a big risk here. They’re competing against rivals with a decade long headstart and a bunch of popular award-winning shows.

So how will Apple succeed?

By leveraging their ecosystem.

Apple has always focused on vertical integration. They build great hardware, own the core software and finally control the selling experience through their own retail stores.

Now to win the streaming war, Apple is going to leverage this ecosystem.

If you buy a new Apple device, Apple TV+ is free. If you’re a student paying for Apple Music, Apple TV+ is free. And, if you aren’t eligible for any of the above, $4.99/month is the cheapest plan out there.

Basically, Apple is playing the Amazon game. Like Amazon Prime, Apple will also launch a subscription bundle including streaming, news, gaming, music, cloud storage and all of its services under one price tag.

They might also add Apple devices in the bundle. Some consumers have already created a virtual subscription by upgrading their iPhones every year. However, that’s unpredictable revenue for the company.

If Apple can offer a bundle that evens out expenses for consumers while assuring them the latest phone (along with services such as Apple TV+), that should appeal to consumers.

Daniel B. Kline

So why is Apple switching things up?

It’s because of the iPhone.

Remember all the articles about how the new iPhone is no more exciting and how Apple is no more innovative.

Yep! Apple really took it to heart.

Actually no. Its because iPhone is struggling and that’s where Apple makes most of its revenue from.

There are many reasons for the revenue decline: The smartphone market is stagnant, US-China trade war, the rise of budget smartphones and the emerging second-hand market.This was inevitable. If we look at the Growth-Share Matrix, iPhone – which was once a Star for Apple is now the Cash Cow.

Growth Share Matrix - BCG

(Star is high growth, high market share. Cash Cow is low growth, high market share.)

Apple knew this was coming. They had to create new revenue streams by investing profits from their Cash Cow while they can.

Thus, they invested over $5 Billion in Apple TV+, which they believe has the potential to become the next Star.

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