Why Apple is betting on selling security as a service

The march toward subscription — everything from streaming services to in-car features, and even now to your personal well-being — continues, with recent Apple announcements paving the way for a new type of subscription: security as a service.

On September 7, the tech company announced Emergency Satellite SOS, a new feature available on its latest iPhones that connects users to emergency services through a satellite antenna built into the device. Apple said the service would be free for two years, but did not say how much the service would cost after that period. Apple did not respond to a request asking about future pricing.

Analysts say the company is leaning on its current credibility and its 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 safety alone will be a big enough driver to lure customers into a subscription-type service. Consumers may end up being drawn to the range of services available on the iPhone, as well as the emergency SOS.

“We’ve generally seen in our work that consumer upgrades are more driven by a range of features,” said Samik Chatterjee, IT hardware analyst at JPMorgan. “When you think about what Apple offers with its ecosystem, there is a lot of convenience in using the hardware but also the services that you can take advantage of, including now security.”

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

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

The potential security subscription will sit alongside a variety of other wallet-draining offerings from Apple, including Peloton competitor Apple Fitness (which runs at $9.99 per month), its streaming service, Apple TV+ and curated gaming subscription, Apple Arcade is both at $4.99 a month. The company is also offering a bundle version, Apple One at $14.95 a month, to its most dedicated subscribers, and is even offering the devices as a subscription through the iPhone Upgrade Program, which promises subscribers the latest iPhone every year for $39.50 a month. .

The concept of security subscriptions is not entirely new. Automaker General Motors has long offered its OnStar service for vehicles, starting at $24.99 a month, that allows subscribers to call emergency services. Navigation-focused rival Garmin sells security calling subscriptions for satellite-enabled devices—complete with an easy-to-operate SOS button. Garmin’s satellite-based inReach subscription plan currently costs $14.95 per month.

There is a clear overhead cost to Apple in providing emergency SOS via satellite. During the tech company’s “Far Out” product launch event, Apple unveiled new iPhones with satellite antennas that can call emergency services without using a cellular network.

A guest looks at the new iPhone 14 at an Apple event at their headquarters in Cupertino, California, US, September 7, 2022. REUTERS/Carlos Parilla

A guest looks at the new iPhone 14 at an Apple event at their headquarters in Cupertino, California, US, September 7, 2022. REUTERS/Carlos Parilla

Devices require users to send a specially formatted text message via satellite to an Apple staffed center requesting assistance on the user’s behalf. The service will initially be available to users in the US and Canada from November when the first devices are released with the new antennas.

For Apple, all of whose previous offerings are becoming more and more prevalent, a subscription that focuses on the personal safety of its users still depends on the user’s subscription.

“The average consumer, even if someone outdoors is going to areas without cellular service, it will take some time for people to understand that,” says Ryan Reith, vice president of consumer devices at IDC Group.

However, Reith says Apple’s SOS feature could lay the groundwork for wider use of satellites to communicate beyond just emergencies — and use security to convince users to pay for service once the two-year period is over. “I’m looking at this as the first step in what they’re looking to do to take advantage of the satellite connections of their devices.”

The hook may be for consumers in the trial period. “Spending two years for free makes perfect sense,” says Reith. “Anyone will take anything for free.”

Mike Guang is a Senior Producer at Yahoo Finance. Follow him on Twitter at Tweet embed.

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