As the development of its AR glasses nears the release of v.1, Apple’s innovation engine continues to grow – and now the company is investing in content to drive service revenue in what is expected to be a challenging macroeconomic environment.
Dance nimble, dance light
Apple’s teams of economists, accountants, lobbyists and managers send information from all over the planet, which is why the company knows that to survive in the coming years, it must continue to diversify its business.
Yes, it can’t produce Macs and iPads fast enough, and yes, while it works to start manufacturing products outside of China, the company is terribly exposed to the continued decline in the global order. But that doesn’t mean Apple can’t think laterally about how to proceed generate good business in a difficult environment. The company has been doing this for years. Its focus on services – which accounted for 23.6% of its net revenue in the quarter just gone – is part of that, and it’s an approach every business should explore.
But building a new feature requires thought, time, effort and investment, which is potentially why Apple spends more on content. Think aggressively investing in sports content for TV+, striking deals with MLB and MLS, with others, such as the NFL, also hot tips. Also consider the tens movies and shows reported in just the last two weeks and the status of some of the stars he works with. None of these things come cheap, but once the filming is done, the content created becomes an Apple product, just like everything else it invests in.
Apple still doesn’t seem to be satisfied. Most recently, we learned that he has struck a deal with podcast creator Futuro. This deal reflects the company’s drive to find and capture new TV+ shows as it seeks to improve content sales to its nearly 860 million existing service subscribers. An apple gets first chance to turn any podcast into a movie or TV show under this deal. It clearly intends to build a very large collection of high-quality, watchable and repeatable content.
How to build your digital business
I know you didn’t come Computer world to examine Apple’s long list of successful media content deals, but this activity represents at least three important traits that every digital business can learn from, especially since every business today is digital.
- Think laterally: Apple quickly realized that if people were using its platforms to offer their own products, it could start using those same platforms to offer its own solutions as well. Ever since iTunes, the company has understood the value of content; now it provides its own. Apple’s ability to scale to media is a bit unique, but every business has some digital services it can provide – it’s just a matter of exploring nature, data and customers to identify where you can develop something that might have meaning. One example of this that I like is John Deere TractorPlus app, giving farmers easy access to frequently accessed information about their machinery. The business plan may not be obvious, although ordering components and providing service within the application becomes a convenience that reaches customers, as well as a chance to build customer loyalty.
- Build iteratively: It’s hard to imagine how important Apple’s investment in Cassady & Greene’s Soundjam MP app turned out to be; it was perhaps almost as seminal as the purchase of the PA Semi. Consider this: Soundjam spawned iTunes, which itself enabled the iPod and eventually evolved into the services Apple now offers, generating nearly a quarter of the giant company’s revenue. This journey was not easy, it took years where each platform and each evolution was in some way built on the previous one. This constant iteration is at the heart of Apple’s services today, and it’s reasonable to think that almost every company has its own unique advantages, such as data, knowledge or experience, that can be reconfigured to become a new business opportunity. Technology can help identify such chances. Data analytics helps big companies, including Adidas, NBA, Tesco and others, monitor existing business and customer experiences and identify opportunities. If they can do this, your business can also build new lines of business on top of what you already do. “Pull the string to see where it goes,” as Apple CEO Tim Cook likes to say.
- Know yourself, know your customer: We all know that Apple customers tend to be a bit more affluent, which means they’re also more likely to take a chance on subscriptions and less likely to abandon them once they do. With its foundations exploring the intersection of technology and the liberal arts, Apple also recognizes that its core audience remains creative professionals with an interest in creativity and the arts. It was because he knew this that the company saved itself with the iMac, the iBook, the iPod and iTunes. That was the information that informed the company as it worked to bring Quark, Adobe and (actually, in a piece of news that meant a huge amount at the time) Maya to OS X. Apple used its strengths, its core market and built from there. It focuses on what customers need. It still does – even recently with the high quality creative apps comes to Apple Silicon. But don’t underestimate the importance of the company’s services segment. After all, if it is profitable critics’ choice awards with its TV shows and movies today, just imagine the response it will get when it offers this content in highly immersive, near-realistic 3D. Which, of course, it will ultimately do in support of the next iterative innovation it’s about to introduce in the form of the AR glasses everyone’s talking about. After all, Apple’s 154,000 employees love to iterate on the world of tomorrow.
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