A Different Kind of Apple

By Tien Tzuo September 13, 2019

If you’re an Apple fan, or even just a casual observer, you’ve probably noticed that their keynotes are different these days. There’s rarely any new stand-alone product announcements — it’s usually just a long list of upgrades and enhancements. This week their keynote felt like a room full of people clapping about increased pixel resolution and bigger diagonal screen sizes and new efficiencies in CPU processing.

Look, I get it. I know that there have always been hard-core Apple fans going wild for super geeky stuff like folder functions and haptic gestures and clock rates, but this week’s keynote didn’t feel very consequential. It was actually pretty boring at times.

Some people think this is a sign that Apple is losing its edge, that it’s losing its ability to innovate. But I think there’s something else going on.

One of the ideas in my book Subscribed that really resonated with people is the “Always In Beta” mindset. The original definition of a “beta” was that it was a precursor, a minimum viable product intended to garner early customer feedback, before the final product got frozen and shipped. Then you threw a big splashy launch party (Windows 95, anyone?), and got back to work on next year’s product.

But that’s just not how successful service models work today. Look at how Spotify is constantly tweaking and customizing its playlists. The goal is to offer up small, happy surprises on a continual basis. To make every day a launch day. In fact, big product launches can actually be a recipe for burnout, resulting in unhealthy peaks and troughs of productivity and inspiration (not to mention revenue!).

This is the kind of company Apple is turning into — a proactive service provider. It’s not news that the global PC and cell phone markets are saturated, so they are looking for growth through subscriptions. They’re also hoping to smooth out their finances and get away from boom-or-bust iPhone launches.

And in order to do that, they’re going to stay in perpetual Beta mode — constantly iterating, tweaking, making incremental updates. All of these hundreds of minor product upgrades are in service of maximizing customer lifetime value and locking in retention.

Sure, the folks in Cupertino would probably prefer it if you bought a new iPhone every year like clockwork, but their main priority is to make sure you stick with the service. To stay an Apple user. I’m increasingly convinced that these days they’re less concerned about how many devices they sell every year, and more focused on how much revenue they can maximize per user.

Which also explains why instead of jumping into all the new iPhone features this week, Tim Cook kicked off the keynote by talking about Jennifer Aniston and Steve Carell and Jason Momoa. And Frogger. And another game featuring a woman flying through space that I didn’t really understand.

Apple wanted to make sure it highlighted its new streaming media services, Apple TV+ and Apple Arcade, both for just $4.99 a month (“for the entire family!”). These new offerings aren’t going to make them much money at first, and Apple knows it’s never going to be content juggernauts like Netflix or Steam, but that’s fine with them.

They’re going to wrap these shiny new services around their devices in order to maximize upsell and cross-sell opportunities, the same way that Amazon is putting together a new Lord of the Rings franchise so that you’ll buy more toilet paper. As I’ve said before, engagement is the new gold standard metric.

At the end of the day, Apple’s fine if you don’t buy a new phone every year. They know that most people don’t. But they are very serious about all the small stuff, the little tweaks, the happy surprises. Apple wants you to stay subscribed to Apple.

 

For more insights from Zuora CEO Tien Tzuo, sign up to receive the Subscribed Weekly here. The opinions expressed in the Subscribed Weekly are his own, not those of the company. The companies mentioned in this newsletter are not necessarily Zuora customers.

And check out his book SUBSCRIBED: Why the Subscription Model Will be Your Company’s Future – and What to Do About It.