Subscribe to iPhone, Cook’s Apple 3.0
Don’t want to sell apple article | technology new knowledge, or at the end of this year will launch a month the iPhone.Apple Inc is preparing to offer a hardware subscription service that could launch as soon as the end of this year, bloomberg reported, citing market sources familiar with the matter.The service could bundle Star Apple hardware products like the iPhone and iPad with pre-existing Services like Apple Care+ or Streaming services like Apple TV, iCloud and Apple Music, depending on the device model, the report said.This means that subscribers can pay a certain service fee every month to get the latest iPhone, similar to the way of renting a car, so it is also mocked by many netizens as monthly rent iPhone.In the consumer market, it’s not unusual for consumers to be able to rent an iPhone for another month.After all, the iPhone has offered 24 interest-free installments of financial services in the past, just like the monthly iPhone, in order to reduce the barrier to use of expensive iphones.But for the consumer technology industry, the introduction of hardware subscriptions is emblematic of a change in Apple’s business model.Why is Apple introducing hardware subscriptions?What are the benefits of hardware subscriptions for Apple?Is it really cheaper for consumers to rent an iPhone a month?Complete Cook’s Apple 3.0?After The death of Jobs, Apple’s performance growth methodology under the leadership of Cook mainly experienced three distinct stages: the early 1.0 stage, which came from the innovative hardware development of smart wearable products such as watches and earphones led by Cook.The 2.0 phase is built on Apple’s complete ecosystem of smart hardware.Cook held a hardware-free event in 2019, laying out apple’s future as a hardware technology company and a subscription-based business.After that, although Apple’s service revenue grew rapidly over the years, hardware, as the basic soil of Apple’s service revenue, obviously could not be lost. Therefore, consolidating the ecological advantages of hardware soil became the main goal of the later 3.0 stage.To that end, Cook has taken two main steps, led by the iPhone star.One is on the supply chain. The extremely optimized inventory management has reduced Apple’s inventory from 7 days in the early days to 2-3 days.The other is the expansion of product price band, starting from the iPhone X series to break the 5000 mark, the main digital series to explore the price of ten thousand yuan market;At the same time, update the small screen iPhone SE series products, and bring apple’s price down to below 5,000 yuan, covering the 3,000 yuan model market.After a series of hardware strategies, according to the latest market data, iPhone market share has significantly expanded.But a Damocles sword hangs over Cook’s head as to whether the iPhone, which has plenty to sell, will face a slowdown.Different from traditional hardware manufacturers, unsalable, can often be judged by inventory.For Apple, which emphasizes zero inventory management, there is almost no inventory problem of unsalable products because of its high turnover rate and immediate adjustment of market expectations.Therefore, apple’s new hardware tends to produce a contradictory market phenomenon.On the one hand, due to the impact of global supply chain logistics, iPhone products are out of stock in the consumer market.But on the other hand, demand is not as good as expected, Apple on the supply side of the company is constantly reducing orders.These two contradictory phenomena make it an unverifiable false proposition whether Apple’s new hardware products really sell well.Take the latest products of iPhone13 series released in September last year as an example. After weakening the strong brand premium that cook has been implementing, it gained good market feedback under the hot comments of “increasing quantity without increasing price” and “thirteen incense”.But only a month after its launch, its 2021 forecast of 90 million units was reduced to 80 million.The market reasons behind the reduction of 10 million units are not so uniform. Some market analysts believe that the production reduction is caused by insufficient capacity due to the impact of the supply chain under the epidemic.Some analysts, however, said the iPhone 13 was a disappointing product.In an interview with Economic Observer, Sun Yanbiao, chairman of Sunrise Big Data, disagreed with production cuts.He believes that once the iPhone13 was released, the iPhone8 broke, that is, fell into the market conclusion of lack of innovation, which led to the shortening of the market hot selling cycle.That means production cuts after the iPhone 8 are inevitable because of the hardware innovation cycle.The Japanese sankei Shimbun reported on Wednesday that the new iPhone SE, which was released just three weeks ago, will also face a production cut of 2 million to 3 million units due to market conditions.Apple also cut the number of AirPods orders it expects to receive for 2022 by more than 10 million.Demand for a range of hardware products has fallen short of expectations, and phase 3.0, cook’s attempt to stabilize the hardware landscape, has clearly fallen short.After supply chain management and price band expansion, hardware subscriptions may be the final ground to fill out Apple’s 3.0 phase under Cook.How can subscriptions change Apple?As for hardware subscriptions, Cook has long hoped.On Apple’s 2019 conference call, When AB Bernstein technology analyst Toni Sacconaghi asked if Apple could launch a hardware subscription solution to generate recurring revenue, Cook didn’t deny it.Cook said he was already working on similar plans and realized that a lot of users wanted to have a regular payment plan like this and get new products at some standard.So they’re working to make it easier every day.Cook’s claim that “it’s getting easier every day” can be better understood if you look at Apple’s approach to subscription payments.When it comes to hardware subscriptions, Apple is taking baby steps.First, in 2015, Apple started letting people buy iphones in installments, offering warranties and upgrades to test the habit of regular payments on a small scale.Second, there are multiple plans to incentivize users to upgrade, which is actually similar to the concept of continuous upgrade in hardware subscriptions.For example, the iPhone upgrade plan launched in 2016 and the trade-in program promoted in recent years emphasize the realization of continuous hardware upgrade at a certain cost.In 2019 Luca Maestri, Apple’s chief financial officer, noted that the size of the trade-in program had grown fivefold compared with the same period last year.Since then, Apple has fully transformed itself into a service company, promoting app subscription services to make more consumers dependent on the Apple ecosystem.As of December 2021, Apple had 785 million paid subscribers for its various services, up 165 million over the past 12 months, according to its most recent annual report, making subscription a major new source of revenue for apple.Therefore, the market for Apple hardware subscription model speculation, the main hardware and apple has previously launched subscription services.Subscription services, such as iCloud storage and Apple TV+, come together for a fixed monthly fee to shift from a transaction model of hardware sales to a subscription model.It’s also clear that apple could benefit from a hardware subscription service.On the one hand, it has solved the product cycle problem of technology hardware companies for a long time.Because of the periodicity of scientific and technological innovation, the innovation of hardware products will often show a periodicity trend of product sales at the market end.For example, the epoch-making iPhone4s, iPhone6 and other products make Apple hardware product sales reach a peak at the same time, the subsequent release of less innovative iPhone 8, iPhone 13 and other products will also reach the bottom of a cycle.The relatively stable and predictable hardware subscription system can avoid the product cycle of hardware by relying on users to continuously upgrade hardware.At present, the industry is trapped in the mobile phone hardware product update without major innovation, so that Apple hardware products from the business model to get out of the innovation dilemma, improve the regular income, naturally worthy of expectation.On the other hand, the introduction of the monthly iPhone may also further expand the iPhone’s market share in the second tier of emerging developing countries such as India.According to current figures, the expensive iPhone has only 4% market share in emerging markets such as India.In addition to boosting sales, the launch of a hardware subscription service, if fully successful and expanded, could further accelerate Apple’s transition from a hardware technology company to a hardware services company.What’s good for Apple is not so good for consumers.Is it cheaper or more expensive to rent an iPhone monthly?As a way to supplement innovative sales, hardware subscriptions could be good for Apple.For consumers, however, a monthly iPhone on a subscription basis may not be so satisfying.On the psychological side, Kahneman and Tversky’s classic 1979 paper showed that people are naturally lose-averse, in which the pain of losing something is far greater than the pleasure of gaining it.Unlike traditional hardware buy-out ownership, hardware subscription model is the experience of increasing psychological loss aversion.Access for a certain period of time through a hardware subscription means that when the subscription expires, the consumer no longer has access.This means, in part, that without automatic subscriptions by default, each expiration is a repeat of lose-and-gain disgust.In practice, whether each default subscription can get a better service upgrade depends mainly on whether the brand really pays attention to the service.Not only that, but if hardware product upgrades slow down, hardware subscriptions will become more and more expensive over the longer life of a piece of hardware.In the case of smart cars, which have a longer life cycle than mobile phones, subscriptions cost users more than a buyout.”If you pay by service and on a monthly basis, the total price is actually higher than a one-off buyout,” He Xiaopeng, founder of Xiaopeng, said in an earnings call.At the same time, he said xiaopeng is considering adding other forms of payment for service.Therefore, for Apple, although it is only a change in payment mode, whether it can launch hardware subscription service that is accepted by more consumers is essentially whether its business model can change from the traditional hardware technology company selling as the end, to selling is not the end, but just the beginning.Apple inc beat Netflix to the streaming crown at the Academy Awards on Sunday, with the movie “Listen Girl” winning best picture of the year, following speculation that it might launch a hardware subscription service.Cook could not believe what he was seeing. Instead of standing up and applauding, he sat down and blinked.The rise of Netflix is one sign of the booming subscription streaming economy.Apple, which is currently beating Netflix at the Oscars, is wondering if It can extend Cook’s incredible good fortune to hardware subscriptions.After all, before Apple, there were many hardware sales companies that transformed into hardware service companies, but both Toyota and BMW failed in the end.