Feb 19, 2019

Apple pivots to media as iPhone sales fall

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Data: Company earnings reports; Chart: Axios Visuals

As iPhone sales have tapered off, Apple has been putting increasing focus on growing its services business.

Why it matters: What started out as cloud storage and extended support contracts, Apples' "services" revenue sector has expanded to include Apple Music and will soon likely expand further to news, video and gaming.

The details: Apple has made an aggressive push into media and entertainment over the past year, which has sparked rumors that it could one day sell a bundled subscription, where consumers could potentially pay one fee for an array of entertainment and media services.

  • News: Apple is set to debut a news subscription business at a March 25 media event, even though publishers are balking at the terms Apple is offering, mostly objecting to Apple's reported take of almost half the revenue and limits on their access to customer data.
  • Video: The company is also looking to debut a new video streaming product in April, CNBC reports. The service will include free original content for Apple device owners and a the ability subscribe to other video services.
  • Gaming: Apple is planning a subscription service for games, Cheddar reported last month. The service would act like a Netflix for gaming, giving users access to many different games under one subscription payment.
  • Music: In a push to gain more subscribers, Apple Music sent notices to subscribers last week that they can now give a month's worth of free access to a friend with their referral. The week before it offered lapsed users three months of free access for resubscribing.

The big picture: Apple has pledged that, by 2020, its services business will be double what it was in 2017. However, hardware in general — and the iPhone in particular— still dominate companywide revenue.

What's next: The Wall Street journal reports that the tech giant is "shaking up leadership and reordering priorities across its services, artificial intelligence, hardware and retail divisions as it works to reduce the company’s reliance on iPhone sales."

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