“Just think about the long term value of Apple and where they’re going,”  says Chegg CEO Dan Rosensweig. “They were a phone company, they were an ecommerce company, and now they’re trying to be a subscription company. You see that in their services and their service numbers. They have the largest distribution system on the planet probably other than Google. If they commit to it there is no reason they can’t be successful.”

Dan Rosensweig, President and CEO of Chegg, discusses how Apple has pivoted and is trying to become a subscription company selling services, leveraging its huge distribution system, in an interview on CNBC:

Apple Is Trying To Be A Subscription Company

Where Apple wants to make (their products) is where it’s cheapest and where they can make the best quality. They’re playing the game now sort of whack-a-mole which is watching the tariffs and all these things. Just think about the long term value of Apple and where they’re going. They were a phone company, they were an ecommerce company, and now they’re trying to be a subscription company. You see that in their services and their service numbers. The supply chain is a thing to talk about over the quarter but in the long term that is all going to be resolved. They’ll be wherever they need to be.

They have the largest distribution system on the planet probably other than Google. They have been selling other people things through the iTunes store and through the app store. They bought companies in order to be able to sell news and other things and they sell their iCloud. They really have not gotten into content that they own in any significant way. Unless they commit to it they’re not going to be successful. But if they commit to it there is no reason they can’t be successful. 

Most Of Apple’s Subscription Profit Is Coming From the iCloud

If you ask what is it that Apple owns proprietarily and offers to their consumer in terms of content other than the iCloud itself, you really can’t come up with anything. Whereas, Adobe has all these software and services and Microsoft has these things. They’re sort of in the content area. They’re in the music subscription area. But even in the music subscription area, they don’t own the content. So it’s hard to make those things as profitable. Although, you can sign up a lot of people. 

I would estimate that most of their profit from that is coming from just the iCloud. It’s selling storage that everybody needs because your phone is your home base. 

Apple Is Well-Positioned In Wearables

I think the iPhone is cyclical. There hasn’t been a big breakthrough. Everything has gotten a little smaller, a little better, a little cleaner, a little faster, and a little bit more secure. I don’t know what the next breakthrough is. What I do know is the need for mobility is endless. The kinds of things that are going to attach to our bodies seem to be endless. I think Apple is well-positioned to be that player. 

Just in default mode, if you are a user of Apple products you prefer to use Apple products because it’s just easier. The payments there. The clicks there. The operating system is there. It’s just too familiar for you. They chose the highest-priced model. The highest-priced model is generally the smallest group and it ends quicker. The question is can they come up with lower-priced models and then make a lot of their money on subscription services.