Apple, the Bundler
With the world unbundled, Apple bundles up…
“Gentlemen, there’s only two ways I know of to make money: bundling and unbundling.”
You’ve undoubtedly heard the quote before because it’s a great one. It’s from Jim Barksdale the then-CEO of Netscape while he was on the roadshow in London to take the company public. The context was great as well because it was actually in response to a question about the prospects of Microsoft bundling a web browser into Windows. It was a pithy statement to get out of a meeting quickly. But it ended up being much more than that.
“It had the added advantage of being true,” Barksdale would later say in recalling the story. And he’s right. Because we see it over and over again. In many different contexts and industries. And we happen to be in the midst of it happening again, in two very different ways that are ultimately connected.
The Apple Services Bundle
As Mark Gurman scooped today for Bloomberg, Apple is on the verge of rolling out a bundle of their services:
The bundles, dubbed “Apple One” inside the Cupertino, California-based technology giant, are planned to launch as early as October alongside the next iPhone line, the people said. The bundles are designed to encourage customers to subscribe to more Apple services, which will generate more recurring revenue.
There will be different tiers, according to the people, who asked not to be identified discussing private plans. A basic package will include Apple Music and Apple TV+, while a more expensive variation will have those two services and the Apple Arcade gaming service. The next tier will add Apple News+, followed by a pricier bundle with extra iCloud storage for files and photos.
This was flagged for me a few times on Twitter this morning because I’ve written a lot about this topic, for a long time. Apple may not be using the “Apple Prime” moniker (no real surprise there as Amazon all but owns that branding), but this is the official start of such a service.
And it’s exciting because of course Apple should be doing this. If you have any number of Apple products, there’s a strong likelihood you’re paying for at least one of their services, be it Apple Music, or Apple Arcade, or just iCloud storage.¹ And because Apple keeps rolling out new services as part of their push to diversify their revenue away from selling iPhones (though the services narrative is very linked to selling iPhones, of course), it’s becoming a bit unruly, not to mention expensive. Why not make it a more seamless experience to sign up and manage the services, while also offering a discount to those who are using multiple services? That’s Apple One. A no-brainer.²
The far more interesting aspect is in what comes next.³ Namely, does Apple start baking hardware into the bundle as well? Per Gurman:
At first, Apple doesn’t plan to integrate the bundles with services such as AppleCare support or monthly payment plans for hardware like the iPhone or Mac. Earlier this year, as part of the Apple Card, Apple started offering monthly payments with no interest for several of its devices.
“At first” is a tease that is never elaborated upon. But it would seemingly make sense at some point — especially given what Apple is doing with their own iPhone payment plans with Apple Card, of course. Hardware would make a bundle far more expensive but as long as there are tiers — which it seems like there are already going to be at least — one could imagine an ‘Apple One Pro’ plan, where you get a new iPhone every year along with all the services and support. You know the “just inject it right into my veins” option. The one I would sign up for. And would pay Apple for. For the rest of my life. That one.
The Apple Cable Bundle
But wait, there’s more. As in, another scoop from Gurman today, which is getting less play, but is also interesting. This one is about Apple TV:
Starting as early as Monday, Apple TV+ subscribers will be able to access both the CBS and Showtime channels in Apple’s TV app for $9.99 per month combined. CBS All Access and Showtime normally cost $9.99 and $10.99 per month respectively, so the deal would be a significant savings.
This is a good deal! And it’s also not surprising given that we’re living through a period where content is king and yet the throne is continually empty because COVID has shut down production of all the things we want to see. So the race is on to pump in stuff you haven’t seen yet. If you weren’t a subscriber to CBS All Access or Showtime before, now’s a great time to catch up on what you’ve missed for a low-low price.
The question, of course, is what kind of deal Apple must be giving Viacom here to do this. Presumably, they’re not giving up the full 30% bounty when they’re already marking the services down 50%. Because again, this benefits Apple just as much as Viacom. The company has been trying to replicate Amazon’s success with the “Channels” services model, to seemingly middling success. This should lead to better success.
And it should spur more usage of the Apple TV app on Apple TV (yes, this is incredibly confusing). This is Apple’s play at unifying all the disparate content you’re consuming via the various streaming services.⁴ This is the attempt to create a bundle of your bundles, as it were. It makes sense, someone needs to do this. But there’s a problem. And it’s a big one. No Netflix.
Until they play ball (and it’s hard to see how they would cede UI and recommendation controls — you know, what they do — to Apple), we’re going to be stuck hopping between apps for content.
Still, I think this CBS+Showtime mini bundle is a smart thing to try. And I suspect we’ll see more things along these lines. Because we’ve just spent the past several years unbundling, and there are only two ways to make money, after all.
¹ Oh yes, and Apple News+, if it’s bundled, I suppose.
² And it’s even more of a no-brainer with family plans — an aspect of services which doesn’t get a lot of buzz, but Apple has seemingly done a great job with. Per Gurman:
The new bundles will be geared toward families, meaning they will work with Apple’s Family Sharing system that provides access to as many as six people for each service. The offerings are designed to save consumers about $2 to upwards of $5 a month, depending on the package chosen. For example, if a family subscribes today to all of Apple’s major services plus the highest iCloud storage tier, that would cost about $45 a month. A new bundle could knock more than $5 off that.
³ Actually, it sounds like something else might come next, first. Per Gurman:
The company is also developing a new subscription for virtual fitness classes that can be used via an app for the iPhone, iPad and Apple TV, the people said. That service will be offered in a higher-end bundle with the rest of Apple’s services. Codenamed “Seymour,” the workout package would rival virtual classes offered by companies including Peloton Interactive Inc. and Nike Inc., according to the people.
It almost — almost — feels like Apple is launching new services just to troll regulators at this point.
⁴ After giving up on various other strategies. BTW, I still think Apple should put more focus on hardware here…
