Why Apple is Betting on Selling Security as a Service

The march to subscriptions – everything from streaming services to car features, and now even to your personal well-being continues, with Apple’s recent announcements laying the groundwork for a new type of subscription: Safety as a Service.

The tech company announced Emergency SOS via satellite on September 7, a new feature available on its latest iPhones that connects users to emergency services via a satellite antenna built into the hardware. Apple said the service would be offered for free for two years, but didn’t say how much it would cost after that period. Apple has not responded to a request for future pricing.

Analysts say the company is building on its existing credibility and themes in health and fitness, especially after the success of the Apple Watch as a fitness-focused device. The big question Apple is betting on is whether security alone will be a big enough driver to lure customers into a subscription service. Consumers may eventually be drawn to the array of services available on the iPhone in addition to Emergency SOS.

“We’ve generally seen in our work that consumer upgrades are driven more by a collection of features,” Samik Chatterjee, IT Hardware Analyst at JPMorgan. “If you think about what Apple brings with their ecosystem, there’s a lot of convenience in using the hardware, but also in the services you can use on it, including now security.”

People visit the Apple Store at the Cumberland Mall in Atlanta, Georgia, US, May 3, 2022. REUTERS/Alyssa Pointer

People visit the Apple Store at the Cumberland Mall in Atlanta, Georgia, US, May 3, 2022. REUTERS/Alyssa Pointer

A potential security subscription would sit alongside a number of other wallet-draining offerings from Apple, including Peloton competitor Apple Fitness (which costs $9.99 per month), its own in-house streaming service, Apple TV+ and its curated games subscription, Apple Arcade both. for $4.99 per month. The company also offers a bundled version, the Apple One for $14.95 per month, for the most committed subscribers, and even offers hardware-as-a-subscription through its iPhone Upgrade Program, which promises subscribers the latest iPhone every year. $39.50 per month.

The concept of security subscriptions is not entirely new. Automaker General Motors has long offered its OnStar vehicle service, starting at $24.99 per month, which allows subscribers to call emergency services. And navigation-focused rival Garmin has sold safety call subscriptions for its satellite-enabled devices — complete with an easy-to-activate SOS button. The satellite-based inReach plan currently costs $14.95 per month.

There is obvious overhead for Apple in providing emergency SOS via satellite. At the tech company’s “Far Out” product launch event in the fall, Apple unveiled new iPhones equipped with satellite antennas that can contact emergency services without using a cellular network.

A guest views the new iPhone 14 at an Apple event at their headquarters in Cupertino, California, US Sept. 7, 2022. REUTERS/Carlos Barria

A guest views the new iPhone 14 at an Apple event at their headquarters in Cupertino, California, US Sept. 7, 2022. REUTERS/Carlos Barria

The devices ask users to send a specially formatted text message via satellite to an Apple-staffed center that asks for help on behalf of the user. The service will initially be available to users in the US and Canada from November when the first devices with the new antennas are released.

For Apple, whose previous offerings have all been decidedly more mainstream, a subscription that focuses on the personal safety of its users is still dependent on the user’s buy-in.

“The average consumer, even if it’s an outdoorsman who would go into areas with no cellular service, it’s going to take a while for people to understand this,” said Ryan Reith, VP Consumer Devices at IDC Group.

However, Reith says Apple’s SOS feature could lay the groundwork for a wider use of satellites to communicate beyond emergencies — and use security to convince users to pay for the service once the two-year period is up. . “I see this as the very first step in what they want to do to leverage satellite communications for their device.”

The hook for consumers could be in the trial period. “Two years free makes perfect sense,” Reith says. “Everyone takes everything for free.”

Mike Juang is a Senior Producer at Yahoo Finance. Follow him on Twitter @mikejuangnews.

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