„AaaS“ – Apple as a Service, which drives hardware subscriptions
Thoughts on Apple Car, Part 117
Apple may finally have Wall Street ready for understanding a business model that could fit Apple Car.
Gene Munster summed it up:
We’re referring to it as Apple as a service, and that’s not reflecting their services segment.
Venture capitalist Gene Munster told CNBC on Tuesday that there's been a "paradigm shift" in how investors view Apple.…www.cnbc.com
Investors seem to understand that though the Services business is huge, what lies below it is actually a product-driven hardware cycle that people subscribe to:
„This is a concept that the hardware is actually performing like a subscription,“ he added, noting that Apple consumers often exchange their old iPhones for a newer version about every three years.
What is better suited to an disruptive upgrade cycle for hardware than a car? It is something that has been tied to industry-wide beliefs for decades: How a new car would be introduced, what features it would get, how fast a new generation of cars can be launched, etc.
What Tesla started with overnight software updates, that make your car worth more (rather than less) over time, was just the beginning.
However, things will also not be the same as with iPhone.
But let’s be clear: Apple has been planting the seeds for quite some time now in order to get customers and investors ready for the Car. One example is the iPhone Upgrade program which basically subscribes you to the latest hardware, as soon as it’s available. On the other hand, you can still regularly buy an iPhone, as always.
Expect both ways to be possible for the Car.
You will be able to own or subscribe to Apple Car
As I argued before, I believe in a two-fold way to get hold of an Apple Car: Buy and own, or subscribe and rent.
Indeed, VW has previewed this with the Porsche brand:
However, they did not change anything about the product. It was a surface-level move without any rethinking of what kind of product would fit such a business model.
That doesn’t make sense.
A new product will create new behaviour, that includes new ways of spending time and money. Apple Car pricing will reflect this.
I calculated possible price points and the outlook to the enterprise parts of the business a year ago:
All in all, I think Gene Munster is right about the subscription model Apple is after. To understand Apple Car, though, it’s essential to look beyond iPhone.