Apple is focusing on expanding its revenue in the institutional sector of music, over-the-top (OTT) video services, and application advertising. As revenue from iPhones, which account for half of total sales, has entered a declining trend, the company has turned its attention to discovering new sources of revenue.
According to the industry on the 2nd, Apple has been developing a healthcare-specific artificial intelligence (AI) agent since this month. Apple is expected to launch this service through the iOS 19.4 update. The AI agent is designed to provide personalized feedback based on users' health data and will be applied to Apple Watch, iPhone, and AirPods. Apple is also considering producing expert video content related to sleep and mental health. For instance, if an abnormal heart rate is detected, users can receive video guidance from a doctor within the app.
Apple applied a curator function to its classical music streaming service, "Apple Music Classical," last month. This service provides information on the instruments used, composers, era, genre, etc., when a specific song is played, and continuously recommends similar songs. Apple Music Classical has also been released in a web version, allowing users to access the service through their desktops. Previously, Apple Music Classical was only available on mobile devices.
It has been reported that Apple has been considering inserting advertisements into its map app since February. This includes displaying restaurants that pay for advertising at the top of search results. At the same time, Apple expanded the scope of its OTT service, "Apple TV+," to Android devices. Since its launch in 2019, Apple TV+ was only available on iOS devices. Apple is actively promoting the service, including offering a one-week free trial period for new subscribers of Apple TV+.
In the fourth quarter of last year, Apple's iPhone revenue was $69.1 billion (approximately 101.3 trillion won), a decrease of 0.8% compared to the previous year. The share of iPhone revenue exceeds half of the total sales ($124.3 billion). The revenue from services, which accounts for the next highest share after iPhones, increased by 13.9% year-on-year to $26.3 billion (approximately 38.5 trillion won).
However, there are expectations that Apple’s expansion of service revenue may not be easy. It is reported that Apple is facing an annual loss of around 1 trillion won due to the operation of Apple TV+. Analysts suggest that the loss has increased as the company has focused solely on original content production without diversifying its content through external contracts. On the 31st of last month, French regulatory authorities imposed a fine of $162 million on Apple for forcibly collecting users' activity information. It is known that Apple collected this information to strengthen its advertising business.
Nam Sang-wook, a senior researcher at the Korea Institute for Industrial Economics and Trade, noted, "Apple is expanding its service scope, even at the cost of opening its operating system, because the demand growth for IT devices is slowing, including in the U.S.," explaining that "the company is shifting its focus to expanding service businesses, including subscription services, to overcome the situation."