Apple’s Services division is growing rapidly, but according to analyst Gene Munster it is still leaving billions of dollars on the table by failing to monetize its software in the way that it could.
Munster says that Apple should be following other high tech companies by charging monthly subscription fees for Pro Apps, aimed at audio and visual professionals. These apps include Final Cut Pro, Logic Pro X, Motion, Compressor and MainStage 3, each of which Apple currently sells for a one-off fee.
“I don’t know why it hasn’t happened yet,” Munster told CNBC. He continued that converting Apple’s Pro Apps into subscription services would be “very logical.” This something that other companies such as Adobe and Microsoft have already embraced.
Apple doesn’t release the exact usage figures for its Pro Apps, but it does occasionally share numbers. For example, last year it noted that Final Cut Pro had 2 million users, many of whom would be willing to pay on a recurring basis for the app.
While this would give Apple less money up-front, over the long term it could provide a consistent revenue stream.
At present, around 30 percent of Apple’s business comes from subscription services like iCloud and Apple Music. That equates to roughly $40 billion in annual revenue. With uncertainty about global smartphone sales continuing to build over time, Services are viewed as a way to give Apple another driver of growth over the long run.
Good for Apple, not so good for customers?
The question, of course, is what this would mean for customers. I’ve got no doubt that many AV professionals would indeed pay monthly for Pro Apps in the same way that people pay for Microsoft Office 365 or Adobe Photoshop. Still, from a personal perspective I’m really not a fan of the subscription-based business model in all cases since… well, who wants yet another thing to shell out for every few weeks?
Interestingly, the biggest shift Apple made to software distribution is the decision to give so much of it away for free. As I’ve written plenty of times in “Today in Apple history,” Apple used to charge a fat fee for its macOS software and, early on, iOS as well. For example, in 1997 when Apple introduced macOS 8 it charged a one-off $99 fee for it. Apple also charged iPod touch users $10 for early iOS updates.
In recent years, Apple has given away both macOS and iOS for free: something that has plenty of advantages for Apple as a strategy in its own right. If Apple really wanted to raise more money, though, charging a small fee to use each of those would certainly drum up extra cash from users. But let’s not give Apple (or, more appropriately, analysts or activist investors) any ideas!
What are your thoughts on subscription-based app payments? Let us know in the comments below.