Bundling and Unbundling with Apple

“Gentlemen, there’s only two ways I know of to make money: bundling and unbundling.”

Barksdale

Bundling is the act of adding several individual services or features together in one package. Think of Amazon Prime as the example of bundling. With Prime, you’ll get fast deliver (my experience lately hasn’t exactly matched that), free return, Prime Videos, audiobooks and access to exclusive deals, just to name a few.

Unbundling refers to the act of selling a service/feature separately from an usually bundled service or product. Think of flight tickets as an example. Before low-cost no-frill, flights tickets had many features, but low cost fliers such as Ryan Air were the pioneers of selling only flight tickets and making the other features such as luggage, priority check-ins as add-ons and additional revenue.

With Apple, an example of their bundling is Apple Card/Pay. I have seen quite a bit of criticisms online about the features of the service aren’t anything new. To some extent, yes, that may be true. The thing is that Apple managed to bundle all the following features together to make an attractive product that is yet to be seen elsewhere.

  • Beautifully and elegantly designed titanium card
  • No fees
  • Rewards and immediate cashback
  • Acceptance everywhere (Apple claimed) for Apple Card and 40+ countries for Apple Pay
  • In-app management
  • Security as in that biometric validation is required for payments with both Apple Card and Apple Pay
  • Privacy as in that consumer data won’t be used or shared with advertisers
  • Application process is fairly easy, reportedly, through Apple Wallet, which is loaded on your phone by default
  • Integration between Apple Card and Apple Pay

With regard to unbundling, I think that’s what Apple is doing with their hardware and services. Most services can only be enjoyed on Apple devices, yet such services lure consumers to the luxury devices which have been highly profitable to Apple. On the top of my head, there are three subscription services from Apple that an average consumer may likely use: Apple News+, Apple Music and iCloud. Soon there will be Apple Arcade too. Selling services separately and services from hardware gives users freedom to choose. If Apple bundled everything into, let’s say, $100/month for 1.5 years for the use of a new iPhone and all services, that would make some customers pay for what they didn’t use. Nonetheless, if the usage of paid services is high and consistent, I wonder if Apple will have an optional bundle for services alone for power users.

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