NEW YORK (Reuters Breakingviews) - Apple has one big challenge – create new revenue streams – and many less than convincing solutions. Chief Executive Tim Cook unveiled a dizzying array of new subscription services on Monday that cover news, television and gaming. The $880 billion tech firm introduced a credit card too. The offerings ranged from confusing to mildly innovative.
The bar for Apple launches was set high more than a decade ago by the iPhone. It was revolutionary and destructive. Nearly all the leading handset makers at the time – Blackberry, Nokia, Motorola – saw their businesses upended.
The slowdown in iPhone sales justifies switching from device sales – which still make up almost $9 of every $10 Apple makes – to subscriptions. That’s where the new products come in. News Plus offers 300 magazine titles like People and Cosmopolitan and a smattering of newspapers for some $10 a month. Nice, but hardly comprehensive. The New York Times and the Washington Post are notably absent. Separately, Apple is also getting into gaming.
Where Cook has his work cut out is in taking on Netflix, the video streaming company. After 10 years of tinkering, Apple has now gone all-in with a service endorsed by Hollywood stars like Oprah Winfrey and Steven Spielberg. But Apple TV Plus is a mashup of different tiers, channels and partnerships – far from simple.
More promising is the Goldman Sachs-backed credit card. Apple is touting ease, security, convenience and cash incentives to lure in customers. It comes with novelties like having no card number. It could at least push entrenched financial players JPMorgan, Capital One, Bank of America and Citigroup to up their game. But it’s hardly industry-changing, or likely to unseat the oligopoly. Those four already have more than half the U.S. market, according to Accenture data.
The trouble is nothing that was revealed in Cook’s two-hour event on Monday was a must-have for consumers. That’s reflected in the market response – neither Apple’s shares, nor those of targets like Walt Disney, Netflix or the big banks, moved much. Compare that with the day Amazon bought retail chain Whole Foods in 2017, wiping some $38 billion in market value from the retail sector in a single day, according to Citi. Apple used to strike fear but this time, Cook is paving a trail of mediocrity.
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