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Why Apple is taking a bet on selling safety as a service

·Producer
·4 min read

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

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

Analysts say the company is leaning into its existing credibility and themes in health and fitness, particularly after the Apple Watch’s success as a fitness-focused device. The big question Apple is betting on: is whether safety alone will be a large enough driver to attract customers to a subscription-type service. Consumers may end up being drawn in by the array of services available on the iPhone, in addition to Emergency SOS.

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

People visit the Apple store at the Cumberland Mall in Atlanta, Georgia, U.S., May 3, 2022. REUTERS/Alyssa Pointer
People visit the Apple store at the Cumberland Mall in Atlanta, Georgia, U.S., May 3, 2022. REUTERS/Alyssa Pointer

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

The concept of safety 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 up emergency services. And navigation-focused rival Garmin has been selling safety-calling subscriptions for its satellite-capable devices — come complete with an easy-to-trigger SOS button. Garmin’s satellite-based inReach Subscription Plan currently costs $14.95 per month.

There is a clear overhead cost for Apple in providing Emergency SOS via satellite. During the tech company’s “Far Out” fall product launch event, Apple unveiled new iPhones equipped with satellite antennas that could contact 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, U.S. September 7, 2022. REUTERS/Carlos Barria
A guest looks at the new iPhone 14 at an Apple event at their headquarters in Cupertino, California, U.S. September 7, 2022. REUTERS/Carlos Barria

The devices prompt users to send a specially formatted text message via satellite to an Apple-staffed center that calls for help on the user’s behalf. The service will be available initially to users in the U.S. and Canada starting in 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 still relies on user buy-in.

“The average consumer, even if it’s an outdoorsy person that would go to areas without cell service, it’s going to take a little bit of time for people to understand this,” says Ryan Reith, VP 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 safety to convince users to pay for the service once the two-year period expires. “I look at this as the very first step in what they’re looking to do to leverage satellite communications for their device.”

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

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

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