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Why Is Apple Launching a Streaming Service?

Apple Streaming Services Part of Shifting Corporate Strategy

It seems that every day a television network, movie studio or multimedia company is launching its own streaming service. It should not come as a big surprise that Apple is the latest entity to announce its own streaming services.

It may seem at first glance that the company is just trying to get its piece of the market share already dominated by Netflix, Hulu and Amazon Prime. Or it’s looking to compete against CBS, Disney, DC Comics and other media properties that have launched their own streaming services or plan to soon.

The launch of streaming services is part of a broader strategy. Apple may soon be seen primarily as the company behind the latest iPhone or iPad. Instead, it’s part of a shift away from products to become a company that’s focused on providing valuable services.

How Are Apple Streaming Services Part of a Change in its Business Model?

In its latest earnings release, Apple continued to demonstrate its success, earning $83.3 billion. However, a closer look at the numbers reveals some interesting clues.

Sales for iPhones dropped by 15 percent for the quarter compared to the same time period in 2018. Apple CEO cited customers holding on to older iPhones longer as a key reason behind the dip. What’s more, the phone and tablet markets appear to be saturated, with little room to add new customers in new sectors.

The company is investing heavily in its existing and new services designed to simplify peoples’ lives. Among those investments are a commitment to smart homes, a focus on AI and improvements to its voice assistant, Siri, which has fallen behind competitors like Amazon’s Alexa.

What Will Be in the Apple Streaming Services?

The company plans to launch two different services later in 2019. Launching subscription services — entertainment and news — later this year. The entertainment service will package content from existing services such as CBS All Access, Showtime and Starz on iPads and iPhones. It will also produce its own content with content from Steven Spielberg, Oprah Winfrey and Reese Witherspoon.

Is Apple Making Money off Services?

Yes. In its recent earnings report, services accounted for $10.9 billion in revenue, a 19 percent year-over-year increase. Consider the number of services Apple offers:

  • Apple Music
  • App Store
  • iTunes
  • Apple Books
  • Apple Pay
  • AppleCare+

That list doesn’t include services such as Siri, Maps and iCloud which are free but are bundled into hardware purchases.

There will always be a place for innovative products, and Apple will certainly not abandon that side of its business, but a service orientation makes sense for the tech giant.

When you need help with your business technology, turn to the Alvarez Technology Group. We offer strategic IT consultingmanaged IT servicescloud solutions and system security. Schedule a free initial consultation to see how our team can solve your greatest IT challenges.

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