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Apple One free with every iPhone: The services strategy to destroy Android


This week, on September 15, at Apple’s “Time Flies” event, the company is expected to announce its yearly refresh of the Apple Watch, as well as updates to the iPad Air and, potentially, the iPad Mini. 

The iPhone 12 series of mobile devices are not expected to make an appearance at this event. Instead, they will have their own product launch, presumably in October, where additional hardware products may also appear, such as a long-awaited Apple TV, as well as the delayed AirTags.

However, the most exciting, and perhaps most critical product release for Apple for the coming year is not even a product in the traditional sense  — it’s a service, or rather, a bundle of services. And now, due to recent code decompilation of a beta release binary of Apple Music for Android, we know what it is called — Apple One.

Speculation of the composition and pricing of Apple’s services bundle has been brewing for as long as a year. We’ve even devoted some space to it here on ZDNet.

Apple currently offers eight services as part of its portfolio —  iTunes, Music, iCloud, TV Plus, Arcade, Books, News Plus, and Apple Card.

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The current Apple services portfolio.


Image: ZDNet

If you were to buy all these services a la carte, you would likely spend between $25 and $40 per month for just the services alone — not counting piecemeal content purchases for books and videos that could easily add up to another $50 to $100, depending on your consumption habits. This of course, also does not include other subscription services you likely use, such as Netflix, Hulu, Disney, and our own CBS All Access platform if you like Star Trek. (ZDNet is a ViacomCBS company.)

Apple has recently offered a reduced cost bundle for both CBS and Showtime just $9.99 per month for Apple TV Plus subscribers.

Which services will be included and how much is Apple One going to cost? Nobody knows. Exactly when will it appear? Also not yet known. However, given the appearance of the product in recent application code, it’s likely that Apple One will be introduced with the launch of the new iPhones and new Apple TV device — or it may be introduced this week. 

But for the service bundle to be popular, the price is going to need to be attractive. Very attractive.

Services is one of the few markets in which Apple can potentially expand and acquire new customers, particularly during a pandemic where attendance at public entertainment venues such as movie theaters is suffering. Device sales of Apple’s traditional products such as iPhone and iPad have flattened. There’s a replacement cycle, but new customer acquisition has been difficult. So it will be critical to the launch of Apple One not only that new customers are acquired by making the pricing highly attractive but that these customers are retained — permanently.

Cupertino could make the Apple One service extremely attractive by making it cost as little at $25 a month, along with 2TB of storage, a large number of free Apple Books titles (a la Kindle Unlimited), and a generous amount of video content on iTunes (like Amazon Prime Video). That would certainly make it nearly a no-brainer for existing Apple customers, such as myself, to switch their existing piecemeal services billing over to this model. But it won’t necessarily steal customers away from other platforms, especially Android and Google Services. Or Amazon Prime.

To make Apple One an unqualified success, and to completely disrupt its competitors, the company needs to do something drastic. It needs to give the service away for free.

Now, I am not suggesting Apple lose money on its services because it costs the company a lot of money to run them. What I am suggesting is that the company offers Apple One as an incentive to buy new Apple devices and to retain customers in their ecosystem, indefinitely.

What if Apple offered Apple One for free, for a year, to any customer that signs up with Apple Card and buys a qualifying new iPhone? I would also include any existing Apple Card customers that spend a minimum amount of money per year (say, $3,000), and also pay for the Apple Upgrade Program with their Apple Card. 

That would more than make up for any potential service revenue losses by giving a base level of service away for free. Then the company has the ability to up-charge for premiums, such as direct to iTunes first-run movies, higher levels of cloud storage, etc.

The key to making Apple One successful is to ensure that customers never want to leave, or that the benefits of the bundled service justify switching away from Android to use an iPhone instead. That’s essentially the premise of existing reward systems like Amazon Prime — the benefits are so substantial that every perk ads up to significant value, so continued membership is ensured, as is continued purchases on Amazon. 

And like Amazon with Prime, Apple is going to need to introduce more services to sweeten the incentives continually. What kinds of services? For example, it could launch a cloud service that integrates Apple Watch, via gamification of exercise activity with friends, or tying into health providers and practitioners for proactive health monitoring. The more the company brings to the table with services, and the more the value of the services is demonstrated, the more it makes sense to continue upgrading the iPhone every year.

Right now, upgrading my iPhone using the Upgrade Program every single year feels like an obligation, a burden, or a chore. It’s a recurring monthly payment that never ends. If I weren’t covering the platform professionally with my writing on ZDNet, I would not be getting enough new benefits to justify that premium, especially now when times are tight. But if the value of the services and ecosystem overwhelmingly justified that new device, then it would be a non-issue. The new iPhone has to become a perceived perk of Apple One and Apple Card membership, not the other way around.

What would it take to get you as an Apple Customer to move to Apple One? And as an Android and Google services customer, what would it take, in terms of perceived value, to switch to Apple’s platform? Talk Back and Let Me Know.



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