In the good old days of a moment ago, Apple helpfully noted that when you use free services that mine your data to sell it for a profit, you become the product. But Apple’s new strategy means most of its users are also becoming commodities, albeit with an Apple twist.
I’m talking about average revenue per user.
The beautiful game from Apple
Play a smooth game like that of England women’s team (*Look down), Apple has recognized that its hardware products are a platform with a unique audience. The characteristics of this audience allow the company to build engagement, customer retention and growth (important for a huge multinational corporation doomed with the task of seeking constant growth in a global economy facing existential transformation).
In “interesting times,” growth is impossible unless you develop towards certain characteristics, which Apple already enjoys. In a recent email shared with me, Julia AskForrester Research vice president and principal analyst, emphasized several of these traits:
- Apple’s customers tend to be wealthier than those on competing platforms. I have seen claims that the median income of an Android owner in the US is $69,647, while an iPhone user earns $88,256.
- Additionally, 35% of Apple’s iOS owners have household incomes of more than $100,000 a year. Additionally, an iPhone user is three times more likely than an Android owner to have a total household income of more than $300,000 a year. (Note: This doesn’t apply to Apple reporters, by the way.)
- 18% of Apple users only own Apple devices.
Add to this the company’s recent statement that customer satisfaction and loyalty reached an all-time high across all major product categories across all geographic segments in the most recent quarter. He also told us that nearly half of those who buy a Mac or iPad and more than two-thirds of those who buy an Apple Watch were new to those products.
What is the effect of all this?
It means, rain or shine…
…Apple is weatherproof
While the macroeconomic climate looks bleak, Apple management told us this the company can’t make enough iPads or Macs to meet demand, and hasn’t seen any noticeable impact of the wider darkness on iPhone sales.
Apple’s best-selling product, the iPhone, generates about 49% of the company’s net revenue, though interestingly, services now account for 23.6% of net revenue, according to the most recent statement.
At its root, of course, as I’ll keep saying, Apple’s pivot to services (issues like CSAM scanning and App Store ads notwithstanding) is based on high quality and strong personal privacy. These fundamental principles are best highlighted by the hundreds of award nominations won by Apple’s TV+ service this year and its many commitments to user privacy.
The thing about the services that the company provides is that it knows its audience. He knows his customers are loyal, happy, and have a high degree of confidence in the company’s ability to do the right thing (with exceptions). What else does audience know about him? They tend to be affluent with a high representation of creatives and knowledge workers.
That’s why when the company tells us it now has 860 million paid subscriptions to services on its platform, it’s telling us that, even in an economy depressed by hardware sales, it has an edge.
It has huge opportunities to turn those customers into products, or to be much fairer, turn them into the high quality services that it provides.
Apple attracts five new subscribers every second
Apple’s trajectory remains quite visible. Over the past 12 months, the company has attracted a staggering 438,000 new subscription customers every single day. To explain this, the 160 million new subscribers Apple has attracted to its services over the past year means it is currently attracting five new subscribers every second of every single day.
Apple has at least one service-based edge $1 trillion dollarsaccording to Morgan Stanley.
- Take Apple Pay. Apple Pay usage in the US rose from 12% in 2020 to 21% in 2022, and growth was even faster elsewhere. Nearly one in five adults in the United States uses Apple Pay today, and about one in 10 adults use the service in Europe.
- Subscriptions are catching on. Forrester Research tells me that 76% of online adults in the US use at least one music or video streaming service. They adopt them to save time, to get good deals or save money; they turn them down because they want to avoid high fees or long-term commitments, analysts said.
The difference between Apple’s business plan and so many others in Silicon Valley is that while others offer hacked products for free to transform you into the product, Apple charges you for the products you use. However, as the data shows, its solutions remain just as compelling. You’re still the product, but that blend of privacy and agency is Apple’s unique twist.
Did I mention the England women’s team. The world watched that match. Over half were applauded when the women achieved what the males had failed to do for 60 years and bring the trophy to the UK. We know Apple is invest in sports entertainment. We also know that the United States is going to go soccer crazy in the next few years as the World Cup looms. Apple is buying the rights to stream some of those games. Someone needs to have a word Eddie Cue: In a changing world, women’s football can become the fastest growing new sporting opportunity and if the company wants to grow its TV+ service while defending its values, investing in sports rights for women’s football tournaments seems like an smart bet.
Faceto say I know, but maybe Sarina Wiegmann it’s the new Ted Lasso…
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