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Apple is using free media services to keep customers in the iOS ecosystem — and lure in new ones (AAPL)

Apple is using free media services to keep customers in the iOS ecosystem — and lure in new ones (AAPL)

Apple unveiled the newest iterations of its most popular devices at its annual September event, which took place yesterday in Cupertino, California. Here's an overview of the three biggest hardware announcements from the event:

Business Insider Intelligence

  • iPhone. The new iPhone 11 Pro (starting at $999) and 11 Pro Max (starting at $1,099) are improved versions of last year's XS and XS Max, while the iPhone 11 (starting at $699) is a lower-cost alternative that's an upgrade to the XR. The most important updates are under the hood: The phones come with the new A13 Bionic chip, which boasts 20% faster CPU performance than its predecessor, and 40% faster graphics performance.
  • Apple Watch. The new Apple Watch Series 5 (starting at $399) has a few updates that will improve the functionality, but possibly the highlight of the device was its health features. It boasts new location features, from a built-in compass to current elevation, which could appeal to fitness enthusiasts; health-tracking apps like cycle tracking and activity trends; and international emergency calling with the LTE version.
  • iPad. The seventh-generation iPad (starting at $329) features a larger 10.2-inch Retina display, advanced cameras and sensors, and introduces new ways to multitask. It comes with the A10 fusion chip, which Apple says has two-times faster performance than the top-selling Windows PC in the first half of 2019. The LTE version of the iPad ($459) delivers three-times faster cellular data connections than the previous generation iPad.

The highlight of the event was Apple's unveiling of its new media services, which the company appears to be using to restore demand for its hardware products as revenue slips. The tech giant's new ad-free subscription gaming offering, Apple Arcade, and its streaming video service, Apple TV+, each start at $4.99 per month for a family subscription (up to 6 members), undercutting existing services on the market.

For instance, Netflix starts at $12.99, Amazon Prime $8.99, and Hulu $7.99. However, Apple's low prices to incentivize adoption isn't the biggest highlight — the company is also offering its media services for free for one year with a new hardware purchase.

The low price points and one-year promotion for Apple's new media services highlight how the company is positioning content as a marketing vehicle, deepening the overall appeal of the Apple brand to not only keep customers in the iOS ecosystem, but also entice new ones. Should it be successful, it will be able to earn even more revenue from its services.


BI Intelligence
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