Apple's new bite

It is eyeing TV and gaming as new areas of growth

Apple has tweaked its focus and marketing strategy in its bid to seek new revenue streams and markets. The trillion-dollar company this week announced the launch of many new products, such as several models of the much-anticipated iPhone11 — including a high-end, four-camera Pro version — a redesigned iPad, the Apple Watch 5 and so on. It also revealed details about its new streaming TV and gaming services. The gaming services will be launched on September 19.

It is evident that the company is now pricing many of its offers more competitively, rather than simply targeting high-end customers with premium products. It also seems to be laying renewed emphasis on India as a market, with special prices and rapid rollouts. It has already started diversifying its supply chain with India being a new production hub as iPhones are now being put together in the country. Apple’s revenues in the last quarter (April-June 2019) indicated that it was no longer tying its fortunes completely to the iPhone, though that device remains its most iconic product and the largest revenue contributor. Overall, revenues and market capitalisation increased, even though iPhone sales dropped by 12 per cent in the quarter. Revenues from the wearable division (AirPods, Apple Watch, and headphones) increased by 48 per cent, while services revenues rose by 13 per cent. As Apple TV and gaming take off in the next few months, a surge expected from these products.

The streaming services for gaming and TV are very competitively priced with subscriptions set substantially lower than those charged by competitors. It has announced a new video streaming service, Apple TV+, priced at Rs 99 a month in India, making it cheaper than the cheapest plan offered by its rivals in India. Apple may have had no choice here, given that it is a newcomer with a far smaller video library, compared to Netflix or Amazon Prime. Apple TV will launch in November, only a week or 10 days before Disney (which has more content than everyone else) also launches its streaming service.

Apple’s suite of proprietary games and its new TV content will have to gain enough traction to give it a foothold in these crowded markets. Apart from charging lower subscriptions, it is also offering a bundled deal with 12 months’ free subscription. Clearly, it is hoping to convert those users into loyal long-term customers. The basic versions of the devices have also been priced competitively, compared to similar offers from competitors. In some sense, Apple may be playing catch-up here because it is offering several features (such as multi-cameras) that are already available in competing devices.

However, its new chip, the Bionic A13, has 8.5 billion transistors — that’s a huge update compared to the A12 Bionic, which had 6.9 billion transistors, offering unprecedented power and a much longer battery life. The AI-driven features of that chip will allow the 4-camera Pro model to zoom out and in, take slow selfies, record from all four cameras simultaneously, and process those images or videos. In essence, this would be like a hand-held TV studio, carrying the potential to disrupt the business of visual content creation. The change in direction makes sense as global smartphone sales have been plateauing and new revenue streams are needed. It is to be seen if the changed mindset on pricing allied to the unmatched power of the Apple brand can help the company muscle into these new areas successfully.