Apple’s Subscription Bundles Don’t Move the Needle Enough

(Bloomberg Opinion) -- It looks as if the long-awaited Apple Inc. subscription bundles are finally going to happen. But while it is a solid step in the right direction, the smartphone giant needs to do far more to change the game..Bloomberg News reported Thursday that Apple is preparing to launch several bundles, internally named “Apple One,” as soon as October. There will be multiple tiers — including a low-end package with Apple Music and Apple TV+, along with higher-end offerings that incorporate its Apple Arcade gaming service, Apple News+ and more iCloud storage. Further, the company is developing a new virtual fitness-class subscription that will compete with offerings from Peloton Interactive Inc. and Nike Inc.Wall Street has been clamoring for years for Apple to do more on subscription bundles, citing the success of Amazon.com Inc.’s Prime service. Although these bundles seem like a decent start at first blush, they are too incremental and tentative. The problem is, with the exception of Apple Music, none of these other subscriptions have gained much traction with the general public. So the bundles are essentially just a price reduction for Apple’s current array of mixed and generally underperforming products. Bloomberg’s Mark Gurman reported that they will work with Apple’s Family Sharing system and could save customers $2 to $5 a month in the aggregate compared with current pricing.So, what should Apple do instead? The company needs to be much bolder. At a bare minimum, Apple should combine its hardware and software products into a larger monthly subscription. Already, Apple has its iPhone Upgrade Program, which enables annual smartphone upgrades and includes the AppleCare+ service. Combining this offering with the new subscription bundles is a no-brainer.In addition, Apple needs to follow the lead of its two other giant tech competitors. For example, Amazon’s Prime offers dozens of disparate features and consumer benefits from fast shipping, music, books and video to exclusive deals and discounts. And Microsoft Inc. has added similar deals in its latest 365 subscription plans, which now include additional free promotions worth hundreds of dollars from outside software and app makers like Adobe Inc. There is no reason Apple can’t do similar things.Frankly, it’s befuddling that Apple hasn’t taken advantage of its biggest asset — an avid, passionate base of more than a billion active customers. The tech giant should expand aggressively into financial services, commerce and retail, either by creating its own services or partnering with other companies. With the power of its huge scale, it shouldn’t be difficult to add a larger array of discounts and promotions, too..And nothing would engender more loyalty than creating a truly “must-have” comprehensive subscription for hardware, software and everyday lifestyle services. An offering that provides amazing value would be great for Apple’s customers and the company’s business..This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners..Tae Kim is a Bloomberg Opinion columnist covering technology. He previously covered technology for Barron's, following an earlier career as an equity analyst..©2020 Bloomberg L.P.

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Apple’s Subscription Bundles Don’t Move the Needle Enough

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