Apr 1, 2019 · 28m · a16z
a16z Podcast | How Many Taps in the Apple (Plus) Tree?
0:00 / 0:00
▶ Watch on YouTube →
gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of the a16z Podcast, Steven Sinofsky and Benedict Evans analyze Apple's strategic pivot toward subscription services, examining how offerings like Apple News+, Apple Card, Apple TV+, and Apple Arcade leverage the company's massive installed base and core commitment to user privacy.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. The host holds 2% of the talking time here. How this is scored →
The host as informed peer 5.5 Guest teaching 4.5 Guest disagreement 1.7 The host pushing back 2.0
speaking balance: gold is the host, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 9:02 Jockeying over agenda control
Benedict gently pushes back when Steven tries to slow down the discussion, insisting on laying out all four main announcements before letting Steven return to News+ details.
Hardest push from the host ▶ 12:52 Pushback on TV industry expectationsSteven stops Benedict from rushing ahead, directly challenging the common tech trope that Apple can single-handedly eliminate established television infrastructure.
Biggest teaching moment ▶ 10:15 US vs UK print magazine market contrastBenedict educates the host on international market differences, explaining that US magazine distribution relies on subscriptions while the UK operates through dense retail newsagents.
The host holds their own ▶ 22:00 Jim Barksdale bundling framework analysisSteven demonstrates strong strategic expertise by applying Jim Barksdale's famous business thesis on bundling and unbundling to analyze Apple's service packaging.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The host as informed peer | Guest teaching | Guest disagreement | The host pushing back | Why |
|---|---|---|---|---|---|---|
| Apple's Shift to Services and Global Subscriber Scale | 5 | 4 | 1 | 1 | Steven and Benedict engage in a collaborative peer discussion around Apple's shift toward services, comparing subscriber figures against global telecom operators. Benedict shares an insider anecdote about Apple's news team blocking Apple's own ad unit over tracking restrictions, while Steven draws parallels to enterprise software cloud transitions. | |
| Overview of Event Announcements and Apple News+ Deep Dive | 4 | 5 | 2 | 2 | Benedict outlines the four main event announcements and explains the economic mechanics of Apple News+ and Texture magazine publishers. Steven briefly interjects to slow down the pace before Benedict details how publisher customer ownership trade-offs work. | |
| TV Ecosystem Complexity and Apple's Simplification Strategy | 6 | 5 | 2 | 3 | Benedict contrasts US print subscription habits with UK newsagent retail markets. Steven presses pause on Benedict moving past TV, reframing the unrealistic expectations that Apple can instantly erase existing television distribution infrastructure. | |
| Apple Card, Ecosystem Lock-In, and Premium Customer Focus | 6 | 5 | 2 | 3 | The pair evaluate the Apple Card proposition, with Benedict likening tech critics dismissing Apple Card features to early skeptics calling Dropbox a simple collection of bash scripts. Steven provides domain analysis on luxury customer targeting and complexity reduction over coupon-clearing point maximization. | |
| Apple TV+ and Hollywood Content Strategy | 6 | 4 | 2 | 2 | Benedict highlights key uncertainties around Apple TV+ content volume relative to Netflix's massive annual spend. Steven invokes Jim Barksdale's classic bundling vs unbundling framework to explain why Apple keeps standalone subscriptions separate during early product-market fit discovery. | |
| Integrated Ecosystem Mechanics, Apple Arcade, and Conclusion | 6 | 4 | 1 | 1 | Steven illustrates Apple's progressive strategy revelation using historical examples like Keychain leading to Touch ID and free macOS upgrades. Benedict outlines how Apple Arcade aligns indie developer incentives while reinforcing ecosystem exclusivity. |
Statements from this episode (16)
Sinofsky: Apple has roughly 360 million worldwide subscribers
“And so one thing that's super interesting, just out of the gate, is Apple has three hundred and sixty million or so subscribers worldwide. That's a sort of a vanity number because it includes subscriptions to apps in the App Store, but because Apple gets a cut…”
Evans: No non-telco company matches Apple's global subscriber scale
“Yeah, mobile operators, global mobile operators have got hundreds of millions. Nobody else is this big on a global scale.”
Evans: Consumers will soon pay Apple $100 a month for subscriptions
“You could probably, pretty soon you'll be able to pay Apple a hundred dollars a month in subscriptions.”
Evans: Apple has 800M iPhones and 500M weekly App Store visitors
“Except there's now eight hundred million iPhones and over a billion iOS devices, and I think Apple said five hundred million people open the App Store every week, and so 30% of those purchases has become a real number.”
Sinofsky: Apple's services transition mirrors enterprise software's shift to cloud
“Because I think that this move to services, people are just having trouble getting their heads wrapped around it, and it's a very natural progression for any company when it starts to reach a mature level, which is, okay, are we now effectively, you know, sell…”
Evans: 800M to 900M of Earth's 4B smartphones are iPhones
“There's five and a half billion adults on earth, and four billion or so people have a smartphone, and 809 hundred million of those now are iPhones.”
Evans: Most magazine publishers lack direct customer relationships and never will
“You look at these titles, most of those titles don't have customer ownership and will never get it.”
Benedict Evans: Apple News is an incremental upgrade, not world-changing
“Apple News is, I would say this is a good, solid, incremental upgrade to an interesting, useful product. It's not changing the world.”
Evans: Apple services lock in iPhone users like Amazon Prime locks shoppers
“All of these services are they all bind you into the phone. And so there is a, you know, just as everything Amazon adds to Prime keeps you from cancelling your Prime account, and that drives every, drives all of your purchases through Amazon. All of these thin…”
Sinofsky: Apple Card's true innovation is eliminating backend financial complexity for consumers
“Underneath every, what, there are probably, you know, a very, very small number of people at a very, very smaller number of companies that understand all the complexity that could go into delivering Apple Card. That complexity, Apple is, is erasing.”
Sinofsky: Apple explicitly targets premium phone buyers, not the 5B global smartphone market
“Apple, first Apple off the top is not aiming for all five billion humans. That will have a smartphone. They, they've already said we're gonna only go, we're not making super cheap phones, it's not the app that way.”
Sinofsky: Apple services do not need 900M subscribers each to be successful businesses
“They don't have to get nine hundred million people for every service. And they can aspire to that, and they can measure that But there's some point where it becomes a very good business and a very great value proposition, even for people who don't have them, t…”
Sinofsky: Critics miss Apple Card's true innovations in security and privacy
“I think the credit card is more innovative than people are willing to say, because they focused on sort of the nerd wallet checklist as opposed to the security and the privacy and the money management.”
Sinofsky: Apple will eventually bundle its services into an Apple Prime
“There might be Apple Prime or something down the road that bundles all of these into some thing, but for the time being, they don't need to.”
Sinofsky: Premature bundling hides whether individual products have true product-market fit
“You don't prematurely bundle things, because then you really don't know if you're successful or not.”
Sinofsky: Free OS updates create better ecosystem monetization than paid upgrades
“And again, this was something Apple pioneered very early when they made upgrades to the Mac operating system free. They realize that that turns out to be a better business if you just make owning, being part of the ecosystem great.”