Apple just announced it's launching a credit card, TV app and Netflix-like streaming service.
The iPhone is one of the most popular products ever made. In the first ten years since it was launched in 2007, Apple has sold 1.17 billion of them. That’s more than the best-selling fiction book of all time (Don Quixote; 500 million), the best-selling musician of all time (Elvis; 1 billion song copies) and the best-selling video game console of all time (PlayStation 2; 158 million).
Unfortunately for Apple, there’s only so many people can or want to drop the best part of a grand on a phone, and only so many times those people can or will keep doing so. Apple now seems to have hit that barrier: the number of iPhones being sold is dropping, even as new models are released.
So Apple has come up with a two-pronged strategy to keep its profits up even as it sell less stuff: charge the people still buying iPhones more (the new iPhone X costs 50 percent more than the last iPhone 8) and create new stuff to make money from. What stuff specifically? A credit card, a digital equivalent of a magazine stand, a video games arcade and a TV streaming service. Basically, it wants “to become a Netflix of everything”, according to an analyst called Paolo Pescatore.
In the short term at least, Apple getting into all these things could make all versions of them cheaper to buy. That’s because companies, especially rich ones like Apple and Netflix, will often try to win or keep customers by giving them a better deal than their competitor. Of course, if one company ‘wins’ by forcing rivals out of business, it could then jack up prices knowing customers have nowhere else to go.
Read our explainer on: competition and monopoly.