April 6, 2020
Why Apple Is No Longer a Tech Company (And Doesn’t Want To Be)

Why Apple Is No Longer a Tech Company (And Doesn’t Want To Be)

Apple: the largest publicly-traded company
in the world. Notice what I didn’t say here: I didn’t
label Apple as a tech company because, arguably, it isn’t one and it definitely doesn’t
want to be. With its Keynote event in March 2019, Apple
made clear that it’s setting course for a new future, one following in the footsteps
of Disney, Netflix and, especially, Amazon. In this video we’ll see how Apple plans
on breaking out from its history as a hardware seller and on transforming into a digital
services company. This video is brought to you by Skillshare,
where you can watch my two classes on how the stock market works. In January 2019, Apple CEO Tim Cook sent a
letter to Apple investors, in which he addressed what was clearly a very disappointing quarter
for the company. Apple’s largest hardware markets— that’s
smartphones, personal computers, and tablets— are all stagnating, and while Apple is compensating
to some extent by constantly increasing the price of everything, at the end of the day
there’s only so much people are willing to pay for an iPhone. This is not to say that Apple’s hardware
division is going out of business, no: Apple will continue selling hundreds of millions
of iPhones, in addition to wearables and iMacs. However, it has become clear that hardware
alone isn’t enough to keep Apple on top, at least not like it has done for the past
two decades. Apple needs to branch out into new markets—
not geographically, but digitally, and the frontier they’ve chosen to attack is the
service business. Now, this might not sound particularly innovative,
and that’s true: going into services seems to be the trend nowadays, with Amazon, of
course, being the most notable example as it continues to expand the full range of its
services under Amazon Prime. Unlike Amazon, Apple’s offerings are much
more disjointed, even though it is Apple that has the hardware ecosystem to keep everything
under the same roof. Let’s look at the current state of Apple’s
services: you have AppleCare warranties, iCloud storage for when your phone runs out of space,
which it definitely will, and then you have Apple Music, which even though it reportedly
has 50 million subscribers, it’s still nothing really revolutionary compared to its competition. All these services reflect Apple’s nature
as a hardware-oriented business, a nature that Tim Cook is doing his best to outgrow. So, how is he gonna do it? Luckily for Tim, he has a great example to
go by: Jeff Bezos was the true vanguard in the services space at that scale with Amazon
Prime. Originally, Prime began as a simple extension
of the Amazon marketplace: you pay a subscription and you get cheaper and faster shipping. This core function is still at the heart of
Amazon Prime, even after Bezos added free streaming, music, photo storage, e-books and
everything else to it. If Tim Cook wants Apple to become a service
company, he needs to find a cornerstone around which to base the entire service offering
and interestingly enough, he already has the answer. In 2015, Apple launched the iPhone Upgrade
Program, where customers pay a monthly fee in exchange for having the newest iPhone every
year. This program transforms the iPhone itself
into a service, by moving away from device ownership and towards device leasing. With this program serving as the foundation,
we can easily imagine Apple Prime, where you get the iPhone and the full-range of Apple’s
services in a single package. Now, at present, there aren’t enough services
Apple provides to warrant such a drastic move, but Tim Cook is doing his best to fix this. In the March Keynote Event he announced a
bunch of new services that would make Apple Prime a much more lucrative proposition. Perhaps the biggest one is Apple’s original
content service, called Apple TV+. While to an outsider this might seem like
a declaration of war on Netflix and Disney, who by the way are also setting up a service
of their own in Disney+, in reality Apple doesn’t have to compete at all. Apple TV+ has the significant advantage of
being bankrolled by a company with very deep pockets, meaning that Apple TV+ doesn’t
have to become profitable, ever, as long as it produces enough value for Apple Prime. Although Apple TV+ content doesn’t roll
out until late 2019, we already know that it will be pre-installed on Apple’s base
of 1.4 billion active devices, giving it a huge advantage over streaming services that
don’t have devices of their own. The biggest tip-off, however, that Apple Prime
is coming is Apple’s seemingly out-of-nowhere decision to also offer a credit card. The aptly named Apple Card shows Tim Cook’s
intentions: he not only wants to sell you services, but also wants to offer and monitor
your means to buy them. That’s why the card comes with no annual
fees, not late payment charges and a lower than average interest rate: it’s purpose
isn’t to make money, but to make your entry into the upcoming Apple service system much
more difficult to reverse. The Apple Card after all, doesn’t have a
card number, signature or CVV code and its whole idea is to be used as part of Apple
Pay. When exactly will Tim Cook formally announce
Apple Prime is anyone’s guess, but the building blocks are already in place. Service revenue has only been going up these
past few years, so it’s probably a safe bet that Apple Prime isn’t too far off. Now, if you’re curious about Apple’s revenues
and margins, and really wanna dive deep into their upcoming transition to a service company,
you’ll probably enjoy learning how to analyze companies from my two courses on Skillshare. They’re gonna teach you all about how companies
work and how the stock market values them, including a few examples with Apple itself. You can watch my classes for free right now
if you’re one of the first 500 people to register with the link in the description,
which will give you access to Skillshare’s vast selection of courses on virtually any
topic you might have an interest in. Once you’ve signed up there you should also
follow me on Instagram to watch the awesome teasers I post for every upcoming video. We’re gonna hear each again in two weeks,
and until then: stay smart.

100 thoughts on “Why Apple Is No Longer a Tech Company (And Doesn’t Want To Be)

  1. Make sure to follow me on Instagram folks, I post teasers on there for future videos: https://www.instagram.com/business.casual_official/

  2. Not a tech company? That’s idiotic. Web services are categorized as tech including those streaming service…

  3. Not a tech company? That’s idiotic. Web services are categorized as tech including those streaming service…

  4. Not a tech company? That’s idiotic. Web services are categorized as tech including those streaming service…

  5. This video is incorrect. The entire premise of it is purely incorrect.

    Why? (You may ask)

    Apple is a tech company, and they still want to continue developing hardware. Having just one showtime event doesn't make Apple not a tech company, that's plain foolish.
    Apple develops their own SoCs, they develop their own OS', and they still continue making sizeable improvements on their iPhone lineup.

    Apple testing the waters with some new services =! they're no longer a tech/hardware tech company.

  6. Just because they announced a few services doesn’t mean they will be entirely focused on services. They will not stop their hardware sales

  7. With their highly priced products like the Apple Watch Hermès and the iPhone Xs, I have the impression that they tend to become a premium company.

  8. AT FIRST this guys voice annoyed me but then I seen his face in another video and thought "Oh, he's cool" now enjoying it. I have a friend in Norway named Eddie. Great dude.

  9. apple needs to get into healthcare and insurance services. if i see any inkling towards this i will buy apple shares. otherwise short this stock

  10. This is interesting since how much Microsoft is trying to fill the void!VS Code and Microsoft upgrading to a Linux shell!!!!!! They are finally trying to be a tech company again

  11. Hey. I truly like your vidéos but (In my opinion) the background music is slightly too loud or maybe too orchestral (A lil bit too much random epic movie ost). If would be great If the whole thing were more conversational.

    Anyway, it's still great content.

  12. "We see our future as a media and services company" is business-speak for "We are completely out of ideas, so we're clumsily chasing Netflix and Amazon way too late and without their ability to innovate." Steve Job's megalomania doomed Apple, because he eliminated anyone he suspected was competent to replace him.

  13. In other words they've finally accepted that they haven't had any good ideas since Steve Jobs passed away and are just doing whatever they can to make money.

  14. You only have to watch this infomercial to see how fucked Apple actually is. I guarantee you that I, at 54 will outlast these shysters. "Service provider". Don't make me fucking laugh. Services provided by an old fruit and a legion of Yes Men and Women, and of course a few "Its, Maybe's, Zee's", etc. I hate these fucking people and their fucking vampire corporation, but I'm forced, on account of having three decades worth of work formatted in Pages, to continue to play along with their collective lunacy. Jobs was a psychopathic loon with good intentions, these charlatans are just common garden, money grabbing cunts. Hopefully I'll outlast Cook, and still be in shape to piss on the fuckers grave.

  15. Apple is diversifying from selling hardwares to selling services to make more money and keep the stock price high.

  16. Apple has never had a revolutionary product. It has always been something that existed before. The branding gives it an air of glamour because Apple fans don't know shit about tech.

  17. Apple just tries to create as many avenues of income from its main source. If it sold tables, you'd only be able to get it if you buy the plates, food, legs, napkins, and everything else.

  18. Make the whole story short it’s all about, and if you already have money it’s about control. The good news in the US. There are enough check and balances to give a chance anyone and everyone to achieve his or her American Dream

  19. Because it’s easier to outright scam people – and no one is better than Apple at ripping people off

  20. Apple fan people will probably use these services but it really just seems like a cash grab by a huge company to me. Amazon being the first gave it a pass because prime is cheap, really cheap and it adds a lot like you said. It almost seemed like the richest person in the world was like "eh we can give a little back, with apple its more like "how can we bleed every last dollar from our customers?"

  21. Whoever thought Apple was going to remain on top as a hardware company doesn't understand the law of Demand and Supply.
    Apple products are good but their high prices mean that more people will be buying alternative products that are cheaper than the expensive ones. No matter how dedicated their fans remain, the world is filled with majority poor or mid class people and not wealthy people. A $1000 product is the equivalent of 3 months salary of so many people around this world.
    And Apple's biggest international market which is China, are having tonnes of fast rising alternative companies to turn to, whose products are cheaper too.
    So applied move to switch to service provision is not only taking advantage of the future but also saving itself from an inevitable crash. It's a brilliant move.

  22. Sadly today Apple = Snakeoil
    I recognize the original Apple intent no more. The spirit of the awesome DTP machine is long dead. It is time for Apple to Rest in Peace!, he's a horrible mess, an abomination! Who knew! The market is so divided that Tim's team take such a desperate measures. Apple has becomed an incredibly greedy company. I hope that the new Chinese ripoffs will punish them, badly!

  23. JFC…. this is really a huge step toward being a MegaCorp…. and that's not good….

    We need these companies reduced to component parts which can interoperate via a trade organization (with open membership), or we'll see some seriously fucked up shit happen….

    Apple Toilet Paper…..

  24. Business idea; replace old phones with new ones by charging only half of the normal price and paying the new phone in 6 installments!🤔 Ask users

  25. This could be due to the falling in the sales, and rise in the costs. Probably Apple is looking for many diverse revenue streams.

  26. But please don't make shitty hardware on a big name. You really disappoint the cult follower like me…

  27. You know those Sci-Fi movies with corporations are the government. This is it right here. First and get the own you. Anyone get in this subscription is submitting their life to Financial servitude

  28. these hopeless ivy league MBAs are going to run down another great american(wink wink) company same way they did gm and ge

  29. Even with other diversified businesses there is a good possibility that 🍎 Apple will not prosper.
    They ripped open their customers' pockets for their products and services being unjustified and expensive, not a good value for money. I know as an ex-Apple fan and will keep away from Apple in future.

  30. Tim Cook is just trying to bake APPLE BIGGER

    He wants to expand APPLE and make it the main source of technology and entertainment

    I understand what he’s doing

    Tim wants APPLE to take over the world

    What will APPLE THEME PARK or APPLE MARKET or APPLE STUDIO be like? Tim is trying to expand the APPLE IMAGE

    Wants to be different from Steve

  31. Who in their right mind, with any smarts in tech in general, would want to LEASE a damn phone or anything that tracks your every move? Some people are straight up idiots and this is why digital distribution, DLCs in games, micro-transactions, and taking away something that was once free, and giving it back to you for a price, is the new thing. O_o

    If your at all smarter then a rock, you would not be thinking that is a good idea. EVER.

  32. What if peopels want hardware, not service? Its just illusion. I buy lot of tech stuff from china whitout amazon or iphone. I dont need anyone to wipe my ass.

  33. Steve jobs once said, if you want to innovate dont look at the mainstream but at the fringe, Tim is doing the opposite

  34. I wish Steve jobs was still alive, apple would be so much more successful right now. I can already imagine the iPhone X being released at $600

  35. They are slowly realising that their devices are not going to sell as they are selling peace of crap hardware? To be honest, they would do much better by licensing their OS. But now, they are so sure that someone will purchase 1000$ monitor stand, or services which they are planning to release…

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