Apple builds slowly, thinks laterally, knows its customers

As development of its AR glasses inches toward the release of v.1, Apple’s innovation engine continues to churn — and now the company is investing in content to drive services revenue in what is expected to be a challenging macro-economic environment.

Dance nimble, dance light

Apple’s teams of economists, accountants, lobbyists, and managers are feeding back insights from across the planet, which is why the company knows that to make it through the coming years it needs to continue to diversify its business.

Yes, it can’t make Macs and iPads fast enough, and yes, as it works to begin product manufacturing outside of China, the company is horribly exposed to the continued decline in global order. But that doesn’t mean Apple can’t think laterally about how to continue to generate good business in a difficult environment. The company has been working at it for years. Its pivot to services — which accounted for 23.6% of its net revenue in the just gone quarter — is part of this, and it’s an approach any business should explore.

But building a new opportunity takes thought, time, effort, and investment, which is potentially why Apple is spending more on content. Consider how it is aggressively investing in sports content for TV+, reaching deals with MLB and MLS, with others such as the NFL also hotly tipped. Consider, too, the dozens of films and shows reported in the last two weeks alone, and the status of some of the stars it is working with. None of these things come cheap, but once filming ends the content created becomes an Apple product, just like everything else it invests in.

Apple doesn’t seem to be satisfied, yet. Most recently, we learned that it has reached a deal with podcast creator Futuro. That deal reflects the company’s quest to find and film new TV+ shows as it seeks to upsell content to its nearly 860 million existing services subscribers. Apple gains first chance to turn any podcast into a film or TV show under that deal. It clearly intends on building a very large collection of high-quality, watchable, repeatable content.

How to build your digital business

I know you’ve not come to Computerworld to explore a long hit list of Apple’s media content deals, but this activity represents at least three important traits any digital business can learn from, particularly as every business today is digital.

For example:

1. Think laterally: Apple was swift to recognize that if people used its platforms to offer their own products it could begin to use the same platforms to offer its own solutions, too. Ever since iTunes, the company has understood the value of content; now it provides its own. Apple’s opportunity to scale to media is a little unique, but every business has some digital services it can provide – it’s just a matter of exploring the nature, the data, and the customers to identify where you can develop something that may make a difference. One example of this I like is the John Deere TractorPlus app, which gives farmers easy access to frequently accessed information about their machines. The business plan may not be obvious, though components ordering and servicing provision within the app become a convenience that reaches customers, as is the chance to build customer loyalty.
2. Build iteratively: It’s difficult to imagine just how important Apple’s investment in Cassady & Greene’s Soundjam MP application turned out to be; it was perhaps almost as foundational as the PA Semi purchase. Think about it: Soundjam begat iTunes, which itself enabled iPod and eventually morphed into the services offer Apple now provides, generating almost a quarter of the vast company’s revenue. That journey wasn’t a simple one, it took years in which each platform and each evolution was in some way built on the one before. That constant iteration underpins Apple’s services pivot today, and it’s  reasonable to think that almost every company has its own unique advantages, such as data, knowledge, or experience, that could be reconfigured to become a new business opportunity. Technology can help identify such chances. Data analytics helps big companies, including Adidas, NBA, Tesco, and others monitor existing business and customer experiences and identify opportunities. If they can do this, your business can, too, building new strands of business on top of what you already do. “Pull the string to see where it goes,” as Apple CEO Tim Cook is wont to say.
3. Know yourself, know your customer: We all know Apple’s customers skew toward being a little wealthier, which means they also tend to be more willing to take a chance on subscriptions and less likely to abandon them once they do. With its foundations exploring the intersection between technology and the liberal arts, Apple also recognizes that its core audience remains comprised of creative professionals with an interest in creativity and the arts. It was because it knew this that the company saved itself with the iMac, iBook, iPod, and iTunes. It was this that informed the company when it worked to bring Quark, Adobe, and (indeed, in a piece of news that meant a huge amount at the time it emerged) Maya to OS X. Apple played to its existing strengths, its core market, and built out from there. It focused on what its customers needed. It still does — even recently with the high quality creative apps coming to Apple Silicon. But don’t underestimate the importance of the company’s services segment. After all, if it is winning critic’s choice awards with its TV shows and movies today, just imagine how much of a response it’s going to get when it offers up this content in highly immersive, near realistic 3D. Which of course it will eventually do in support of the next iterative innovation it’s about to introduce in the form of those AR goggles everyone is talking about. Apple’s 154,000 employees do like to iterate into tomorrow’s world, after all.

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