Apple’s Services Pivot: From Hardware to Attention

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Tim Cook announced a new era for Apple on Monday unveiling a streaming video service, news subscriptions, game subscriptions, and an apple credit card. Cook is trying to change the story we tell about Apple. Notice the event announced no new actual things that you can hold in your hand. This is a major pivot for apple: a product company transforming into a services company

Wall Street responded with a “meh, maybe not” this week, the stock actually declining in value. The challenge you can see. Apple has become a phone company. That giant red ball. After years of killing it in hardware, Macs, iPods, iPads. iWatch, iPhone – all of these products are stagnating. It turns out there is a limit to our desire to tithe our income for Apple. Sales of iPhones plummeted in China at the end of last year, the gleam and signal gone.

So now the pressure is on. What you see here- the services that Apple currently provides; App Store, Tunes, Apple payments – this ball is the bet on the future.

(Thank you Paulina Aldaba Hernandez for your deep historical financial analysis on Apple). 


2019 – 2020. The height represents market cap or total value of the firm, based on analyst consensus estimates. They aren’t expecting much, and this week did nothing to encourage those analysts to increase their expectations. Which can be a good thing. Dan Ives, an analyst at Wedbush Securities, asks if Apple be able to turn 1.4 billion active Apple devices into streams of ever growing revenue. His assumption is based on near flawless execution and massive content acquisition,  translating to 100 mm subscriptions within 3-5 years, and $7-10 billion in revenue.


But this future may be harder to predict for apple. As Warren Buffet said this week – the market for streaming services is “not an easy game to predict, because you have very smart people with lots of resources trying to figure out how to grab another hour of your time. I wouldn’t want to play in that game myself.”

If you’re in publishing, gaming, consumer finance, or streaming content, you may feel differently. Let us know how you’re preparing to respond to Apple’s moves.

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