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Apple’s Missing As-A-Service Launch And Lessons For Hardware Companies Looking To Make The Move To Subscriptions

Tien Tzuo
CEO, Zuora

Like many others, I watched Apple’s annual iPhone announcement last week with great expectations. I was hoping, expecting, that the “one more thing” would be the all-inclusive Apple-as-a-Service that I wrote about before.

Sadly, I was disappointed, although I wasn’t the only one. Use your imagination: rather than spending over $1000 on your next phone, your next Macbook, or iMac, you simply paid a monthly fee and always had the latest hardware, services, and all with Apple Care insurance. If this sounds like a good idea, that’s because it is

This would have been the perfect time to launch Apple-as-a-Service. Think about it, if you’re Apple and you already have a diehard fan base that’s going to buy every new device you release, how do you grow from there? You can introduce new products, perhaps the highly rumored Apple Car, but great products simply don’t come along very easily. You can increase prices, but that’s just gatekeeping the number of new customers you can get, especially when people may be worried about the economy. Plus prices are already increasing with inflation. Creating a path for people to access the entire Apple ecosystem for a simple monthly fee surely would increase adoption of the ecosystem overall.

Ultimately, the best reason to offer Apple-as-a-Service should be giving Apple users flexibility, and that should be the goal for any consumer hardware manufacturer today looking to shift to subscriptions. When you pair hardware with services that add value to the user experience, where the maintenance, upgrade and insurance of the hardware is included, and where the subscriber can add and remove features as they please, you get the best of both worlds: “ownership” of the latest and greatest hardware paired with a usership pass to all the best premium services. 

In fact, Apple’s arch rival, Google, is doing exactly this. Their Pixel Pass is in fact, a subscription that gives you a Pixel smartphone of your choice, plus cloud storage, insurance and Google’s premium apps. 

Regardless of when Apple finally takes the final plunge, here are four takeaways that any hardware manufacturer should be thinking about today.

Know your customer, break the “sell a product” mindset

A few months ago, I was having breakfast with the founder and CEO of a high-end audio hardware brand in New York City. He demonstrated a companion mobile app that allowed users to change the listening characteristics and noise-cancellation levels. It sounded useful enough. I asked the CEO if the app provided him and his team insight into their consumer’s behavior, such as how their customers use the headphones and different features within the app. 

To my surprise, his response was that his company doesn’t know anything about how its users interact with their hardware’s different features. This is a missed opportunity, to truly understand the customer and learn how to drive better outcomes for a device that a customer probably uses everyday.

In the case of the audio company I mentioned, they had no idea which features customers are using the most or even dislike. To the companies and leaders still thinking like this, don’t get caught up designing what you want, rather than what your customer wants. Build the companion apps and platforms necessary to better understand their needs and requirements. Gaining that insight drives better decisions, which ultimately can help build better products.

Focus on services, not just the hardware

Although Apple-as-a-Service did not come to be, after the event Verizon did announce an “One Unlimited iPhone” service plan, where a Verizon-connected iPhone comes with all Apple One premium subscription services, plus spots for five other users (a $480 yearly value). That’s a step in the right direction, but fundamentally is not any different from what carriers have offered for decades with subsidized pricing, which is essentially a financing plan. 

The “full pass experience” idea should include the device, apps, maintenance, and insurance. Here are some solid real-world examples of flexible hardware subscriptions that have successfully launched a “full pass experience”: iRobot Select (robot vacuum, maintenance, supplies, and warranty), the Google Pixel Pass (for Pixel smartphones/paid apps/device protection), Caterpillar (safety and maintenance of construction vehicles), Fender Play (instrument tuning and lessons), and Sonos Radio HD (lossless hi-fi audio streaming service for connected speakers). Don’t just sell the hardware itself in an old school rental model. Figure out what digital services can be best paired with the hardware. 

Make it easy. Difficulty managing subscriptions is unappealing 

There’s nothing more cumbersome than a subscription that refuses to let you cancel by hiding the option behind too many steps. Part of what makes usership so appealing is that it’s easy! That thinking shouldn’t change when thinking about subscription management for the customer. Someone who is interested in Google’s Pixel Pass starts off by picking out a phone, storage, color, and if you have an old phone to trade-in. There’s no contract and you can cancel then send the phone back if you don’t like it. Simple! 

If you’re already subscribed to paid Google services while using Pixel Pass, the plan automatically cancels the old subscriptions and even activates the new ones. Afterwards, you’d take your phone to your carrier of choice. A subscription for any hardware should be this simple, if not simpler. Other manufacturers should take notes.

Running Hardware-As-A-Service Must Be An Internal, Not External Effort

This part is nuanced, but also important. If you’re just starting with hardware subscriptions, I would absolutely recommend that the corporate effort to do so is kept in-house. What you don’t want is a scenario like the Apple Card, which is actually a Goldman-Sachs card. This means creating an internal financial department, which Apple has done recently, so you can fully own the subscriber experience. You can freely iterate without having to rely on external forces, while also learning about the customer and keeping their data safe. 

I’m still holding out hope that Apple-as-a-Service will be here one day, perhaps even in time for the holidays. Google has already done this, and Apple isn’t one to let its competitors get away with unique features for very long. Which full pass would you rather have: one to a chocolate factory, or one for your smartphone and all its best apps? I, for one, am excited about subscribing to a full pass for my next device. 

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