Top

Apple's Next Multi-billion Dollar Opportunity: Location

Since the launch of first iPhone almost 12 years ago, Apple has become the world’s most profitable, valuable company and a thriving ecosystem of close to a billion users. These users are spending tens of billions of dollars per quarter on both Apple hardware and services. To understand the scale here, Apple users spent a massive $95 billion in purchasing Apple’s shiny new hardware offerings during the holiday season quarter in 2020. In the same period, Apple’s users spent a record $15.7 billion on software (App store) and a strong portfolio of services (like Apple Care, iCloud, Music, Books, News+ and Arcade). For 2021, the spend on software and services is expected to be more than $70 billion. For some perspective, this is more than twice Tesla’s 2020 revenues and almost 1.5x revenues of the world’s largest cloud services company, AWS.

We have already highlighted the emerging trend of ARPU (and CLV – Customer Lifetime Value) for Apple climbing every quarter as the company introduces more meaningful software, tools and services tightly integrated with its highly differentiated hardware. App Store, Apple Care, iCloud, Music and Books are some of the most lucrative software and services so far with tens of millions of active paid subscribers.

We believe there is huge room for growth with not only current services penetrating further into hundreds of millions of potential paying subscribers but also in terms of new spread of potential. Location-powered offerings have the potential to be the next multi-billion dollar opportunity for the services as well as hardware revenues.

Counterpoint Research - Apple Services Revenues vs iOS User Base Millions

Source: Counterpoint Ecosystem Tracker

Location: The Next Big Revenue Segment

Apple has significantly revamped its location capabilities, working with Apple Maps (which has seen generational shifts over the last eight years) and the sensor and component capabilities in its devices (iPhones, smartwatches, AirPods, etc) to build a “live network” of billions of active devices and users. Apple’s “Find My” app is transforming into a location platform tightly integrated with Apple Maps and its hardware. Apple aims to solve a significant latent problem to track and locate assets using this vast location-based “Find My” network.

Apple AirTags

At its Spring 2021 event, Apple also announced AirTag, an own-branded tiny coin-shaped form-factor tracker device for $29 (pack of four for $99). AirTag is an IP67-rated ruggedized tracker, 32 mm in diameter and equipped with sensors, connectivity tech (Bluetooth/NFC/Apple U1 UWB chip) and a built-in speaker. AirTags can be easily attached to any asset to track and, in cases, locate it using the FindMy network. The beauty of this Apple offering lies in the focus on security and privacy when the tracker communicates with the device, with location data being anonymized and encrypted. Apple is further expanding its “Find My” platform to support even third-party devices and assets designed with Apple’s MFI program.

 

Opportunity

We believe this is a huge opportunity for Apple to deliver high-value service to not only its ecosystem of users but also partners. As the ecosystem expands and users see tremendous value in locating their expensive lost assets, Apple should look to make Find My a “paid subscription” service, possibly at $4.99 per month (or $49.99 annually) or bundled into the Apple Care+ program. This will also drive interest from insurance companies and help Apple alleviate its insurance costs. So, Apple could settle into two primary subscriptions – Apple One (for content services) and Apple Care (for safety and security of devices).

With a combination of Apple AirTag hardware sales and a potential Find My subscription, Apple could clock at least $10 billion in revenue cumulatively over the next five years by reaching 10% penetration of the user base in the fifth year. Obviously, there could be significant upside to this on how Apple expands the ecosystem and generates revenues with a double-sided model for the location-based platform and offerings charging licensing revenues from other third-party hardware players.

In addition, Apple will look to expand and scale the location and mapping capabilities to future projects, from Apple Glasses to Apple Car, driving a new dimension of experiences from spatial computing to mobility, and further upside on how Apple can monetize this platform and hardware across enterprises and also optimize its supply chain. By the end of this decade, location will be one of the key technologies powering multi-billion dollar offerings directly and indirectly for Apple.

Neil is a sought-after frequently-quoted Industry Analyst with a wide spectrum of rich multifunctional experience. He is a knowledgeable, adept, and accomplished strategist. In the last 18 years he has offered expert strategic advice that has been highly regarded across different industries especially in telecom. Prior to Counterpoint, Neil worked at Strategy Analytics as a Senior Analyst (Telecom). Neil also had an opportunity to work with Philips Electronics in multiple roles. He is also an IEEE Certified Wireless Professional with a Master of Science (Telecommunications & Business) from the University of Maryland, College Park, USA.

Apple Snack Pack

PREMIUM

Understanding iPhone

Term of Use and Privacy Policy

Counterpoint Technology Market Research Limited

Registration

In order to access Counterpoint Technology Market Research Limited (Company or We hereafter) Web sites, you may be asked to complete a registration form. You are required to provide contact information which is used to enhance the user experience and determine whether you are a paid subscriber or not.
Personal Information When you register on we ask you for personal information. We use this information to provide you with the best advice and highest-quality service as well as with offers that we think are relevant to you. We may also contact you regarding a Web site problem or other customer service-related issues. We do not sell, share or rent personal information about you collected on Company Web sites.

How to unsubscribe and Termination

You may request to terminate your account or unsubscribe to any email subscriptions or mailing lists at any time. In accessing and using this Website, User agrees to comply with all applicable laws and agrees not to take any action that would compromise the security or viability of this Website. The Company may terminate User’s access to this Website at any time for any reason. The terms hereunder regarding Accuracy of Information and Third Party Rights shall survive termination.

Website Content and Copyright

This Website is the property of Counterpoint and is protected by international copyright law and conventions. We grant users the right to access and use the Website, so long as such use is for internal information purposes, and User does not alter, copy, disseminate, redistribute or republish any content or feature of this Website. User acknowledges that access to and use of this Website is subject to these TERMS OF USE and any expanded access or use must be approved in writing by the Company.
– Passwords are for user’s individual use
– Passwords may not be shared with others
– Users may not store documents in shared folders.
– Users may not redistribute documents to non-users unless otherwise stated in their contract terms.

Changes or Updates to the Website

The Company reserves the right to change, update or discontinue any aspect of this Website at any time without notice. Your continued use of the Website after any such change constitutes your agreement to these TERMS OF USE, as modified.
Accuracy of Information: While the information contained on this Website has been obtained from sources believed to be reliable, We disclaims all warranties as to the accuracy, completeness or adequacy of such information. User assumes sole responsibility for the use it makes of this Website to achieve his/her intended results.

Third Party Links: This Website may contain links to other third party websites, which are provided as additional resources for the convenience of Users. We do not endorse, sponsor or accept any responsibility for these third party websites, User agrees to direct any concerns relating to these third party websites to the relevant website administrator.

Cookies and Tracking

We may monitor how you use our Web sites. It is used solely for purposes of enabling us to provide you with a personalized Web site experience.
This data may also be used in the aggregate, to identify appropriate product offerings and subscription plans.
Cookies may be set in order to identify you and determine your access privileges. Cookies are simply identifiers. You have the ability to delete cookie files from your hard disk drive.