Growth-starved, Apple hustles

Apple is finally getting real. With its most important product category not growing anymore, Apple Inc. on Tuesday confronted its changing circumstances by doing two unusual things: hustling hard and displaying a willingness to change its business model.

The hustle is all about Apple’s willingness to do something against its nature: go wide in the number of devices and internet-tethered products it offers. The company used to brag that all its products could fit on a single table. It was a symbol of Apple’s focus on a small number of devices that it could make obsessively perfect, along with software and apps that made them more useful.

Hustling is more in Apple’s bag of tricks these days. The company’s annual iPhone extravaganza on Tuesday showed starkly that the table of Apple products would need to be the size of a convention centre. Apple now has at least three different iPhone models, a dizzying number of iPad and Mac versions, many flavours of computers for the wrist, multiple headphones, a voice-activated speaker, smartphone cases, iPad keyboards, and a growing number of online

collections of video entertainment, video games, news and much more.

The potential downside of this explosion of products is that some of them may not be very good or in demand. The HomePod speaker, for example, doesn’t seem to have sold well, and Apple executives barely mention the sixmonth-old Apple News+ subscription service other than to acknowledge that it exists.

The pragmatic impact of more products that Apple tweaks frequently is that they deliver more revenue and (usually) profits. Apple’s revenue from its shining star, the iPhone, has slid 15 per cent this year, and the company has run out of pricing tricks and other tweaks to prop up its smartphone growth. Apple’s willingness to rapidly expand its product lineup reflects that harsh reality. With its headline act not delivering, Apple needs a larger supporting cast to pick up the slack.

It’s utterly pragmatic, but also surprising, that Apple is willing to shake up its plain vanilla product-pricing approach and actually — clutch your pearls, everyone — drop its prices.

Apple said at its event that it would include a oneyear subscription to its new streaming-video service, Apple TV+, for customers who buy iPhones, Mac computers, iPads or the Apple TV media player. It is baby steps, but this is a version of the “iBundles” — a single price for hardware products plus internet add-ons — that people have been urging Apple to try.

A free Apple TV+ subscription may persuade people who are on the fence about buying an iPhone or iPad to take the plunge. And it gives Apple a chance to hook customers on TV+ who then decide to keep paying — or forget to unsubscribe — after the year is up. This is an old business tactic, but it’s a departure for Apple.

I should say that with Apple giving up on potential direct subscription sales for TV+, and with a low monthly price of US$4.99, its online video service isn’t likely to be the profit-lifting engine that investors are expecting from the company’s software and internet offerings. Strange times demand a departure from old tactics.