What’s Inside Apple’s Fitness One?
Carrying a price tag of $9.99 per month ($79 per year), Apple’s Fitness Plus offers access to a bundle of fitness resources. The product gives users access to recorded video workout sessions, and since Fitness Plus is linked to the Apple Watch, it can also recommend workouts based on your health data points. Additionally, consumers can buy the Fitness Plus subscription as part of the Apple One subscription.
Ways Apple Uses Services to Sell More Hardware
The close link between Apple’s Fitness Plus and the Apple Watch is more than technology — it also extends to marketing. As of September 2020, Apple is giving new Apple Watch buyers three months of free access to Apple Fitness Plus. Using hardware to sell software is a strategy we see with other Apple products. Buyers of Apple TV are invited to use Apple’s TV streaming service. Adding 90 days of free access to a subscription may entice recession-weary subscribers to open their wallets for a digital watch that comes with a $399 price tag.
Apple’s desire to produce its products for the health market has been years in the making. In 2015, the company launched the Apple Watch. The Mercury News estimates that Apple sold over 30 million Apple Watches during 2019. All of those Apple Watch buyers are now potential customers for the Fitness Plus service. If just 10% of Apple Watch owners sign up for fitness plus, Apple could stand to earn more than $100 million per year in additional revenue.
This Isn’t Apple’s First Entry Into the Fitness Market
Those skeptical about Apple’s move into the digital health market should keep in mind the company’s history. Fitness and health have been part of Apple’s mobile devices for years. In 2006, Apple started to enter the fitness market by partnering with Nike to launch Nike+iPod products; however, the partnership didn’t align with Apple’s long-term strategy of building and operating its product ecosystem.
Aside from the partnership with Nike, Apple has also made several acquisitions of health-related startups over the years. In 2019, the company acquired Tueo Health, a company that produces asthma detection. Since an estimated 25 million Americans have asthma, this acquisition could pay off in a big way in the future if Apple offers a compelling asthma health product or app. The company’s earlier health-related acquisitions include the 2016 acquisition of Gliimpse (a personal health data platform) and the 2017 acquisition of Beddit (a sleep monitor).
Ending Reliance on iPhones: The Business Driver for Apple?
For more than a decade, Apple has made billions of dollars by selling iPhones and other hardware. In 2019, Apple earned approximately 54% of its revenues from the iPhone alone. Unfortunately, there are limits to how many iPhones the world can buy. Apple estimates that there are more than 900 million Apple iPhones in circulation already. In contrast, there are more than 2.5 billion active Android devices in the world as of 2019. It’s important to note that Android devices come in a much wider variety of styles and price points.
While Apple is continuing to sell the iPhone, it is no surprise that the company is looking to diversify. It’s risky to earn more than half of your revenue from a single product category.
Will Mass-Market Products Hurt Apple’s Cult Following?
Apple’s move toward fitness and accessibly priced subscription services carries some risks. Historically, the company was known for offering relatively high-priced products like smartphones costing more than $500. Those higher prices, along with exceptional product quality, contributed to Apple’s status as a luxury brand. That luxury brand image may slip, but if the company acquires enough new customers at low price points, a loss in luxury prestige may not be a problem.
Will Nike and Peloton Survive?
Market demand for at-home fitness products and services is booming in 2020 as a result of the pandemic. Nike may not suffer that much in the short term because of its long-standing partnerships with Apple, including the co-branded Apple Watch. On the other hand, Peloton should be worried. A home fitness enthusiast could buy an Apple Watch, an Apple TV, and more for less than the cost of Peloton’s exercise equipment.
About the Author
Bruce Harpham is an author and marketing consultant based in Canada. His first book "Project Managers At Work" shared real-world success lessons from NASA, Google, and other organizations. His articles have been published in CIO.com, InfoWorld, Canadian Business, and other organizations. Visit BruceHarpham.com for articles, interviews with tech leaders, and updates on future books.