Tim Cook on Apple Watch, iPhone 6S, cars and privacy

20 Oct 2015 | Author: | No comments yet »

A ‘massive change’ is coming to the car industry, says Tim Cook.

The likelihood of the Apple Car is becoming a bit more probable, as Apple CEO Tim Cook said he believes a “massive change” is coming to the automotive industry. Speaking with the Wall Street Journal on Monday night, Cook said, “When I look at the automobile, what I see is that software becomes an increasingly important part of the car of the future,” adding, “I do think that industry is at an inflection point for massive change, not just evolutionary change.” Granted, Cook was lead into this statement while speaking of self-driving car technology and Apple’s CarPlay, saying he wants people have an “iPhone experience” in their car.

But according to Apple Chief Executive Tim Cook, 6.5 million users have stuck around and maintained paid subscriptions. “It’s going really well,” Cook said at the WSJD Live conference Monday. “We are now over 6.5 million paid users and 8.3 million people in the trial. The service, launched this summer (somewhat prematurely according to critics), was expected to stoke some initial interest from iPhone owners but ultimately to remain dwarfed by other music streaming companies.

Over 15 million people are using Apple Music.” Apple set a goal of 100 million users before launching the service, which would surpass competitor Spotify’s 20 million paid subscriptions. However, Spotify offers users a free option for streaming music, while all of Apple Music’s entry-level access begins at $9.99/month, which gets you the full library, expert recommendations, and unlimited skips on Apple Music’s radio stations. Released in June, Apple Music is the company’s attempt to carry its dominance of digital music through its iTunes store into the era of music streaming pioneered by Spotify and others. At a starting price of $9.99 a month, the paying-subscriber figure amounts to at least $65 million in revenue—or about 0.3% of the $20 billion in total iTunes service revenue Apple is expected to report for its fiscal year ended Sept. 27.

Apple Music also hosted a music festival in London last month — formerly Apple’s iTunes Festival — with headliners including One Direction, Pharrell Williams, and Florence + The Machine. Though Spotify is usually thought to offer a better service for the same price, new music streamers unfamiliar with Spotify might be lured to Apple for its brand, suggests Edison Investment Research analyst Richard Windsor. Therein lies the problem for Apple’s stock, which has underperformed the Nasdaq over the past three months: It is so dependent on that single product.

A new version of the set-top box featuring apps and expanded search features will be released later this month, but the product does not include a streaming TV service, which industry executives say the company is exploring. “There are very few content owners that believe that the existing model will last forever,” Cook said. “I think the most forward-thinking ones are looking and saying, ‘I’d rather have the first-mover advantage.’” Cook did not publicly acknowledge efforts by Apple to build an electric vehicle, which sources tell Reuters are under way. It also repeatedly pushed the free trial on its users, many of whom already have credit card information stored in Apple’s system for easy payment collection. Given that, there is worry the new iPhone 6s won’t live up to the success of its predecessor, which drove an estimated 37% gain in unit sales for the fiscal year. The growing streaming music market right now is big enough for many competing services. “Interestingly, it appears that Apple Music has expanded the market for paid subscription music [instead of] taking share from Spotify,” Rich Greenfield, an analyst at BTIG, tells Quartz.

Earlier this month, for example, Morgan Stanley raised its iPhone unit-sales forecast for the current fiscal year to 7% growth from 3%, citing a mix of early upgrade programs at U.S. carriers and market share gains in China. It should be noted that when Apple Music went live in late June, it offered three months of free trial—so it’s possible that many people are being counted as paying users when they simply haven’t remembered to cancel their service yet.

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