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US iPhone users spent, on average, $79 on apps last year, up 36% from 2017 – TechCrunch

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US iPhone users spent, on average, $79 on apps last year, up 36% from 2017 – TechCrunch

Apple’s push to get developers to build subscription-based apps is now having a notable impact on App Store revenues. According to a new report from Sensor Tower due out later this week, revenue generated per U.S. iPhone grew 36 percent, from $58 in 2017 to $79 last year. As is typical, much of that increase can be attributed to mobile gaming, which accounted for more than half of this per-device average. However, more substantial growth took place in the categories outside of gaming — including those categories where subscription-based apps tend to rule the top charts, the firm found.

According to the report’s findings, per-device app spending in the U.S. grew more over the past year than it did in 2017.

From 2017 to 2018, iPhone users spent an average of $21 or more on in-app purchases and paid app downloads — a 36 percent increase compared with the 23 percent increase from 2016 to 2017, when revenue per device grew from $47 to $58.

However, 2018’s figure was slightly lower than the 42 percent increase in average per-device spending seen between 2015 and 2016, when revenue grew from $33 to $47, noted Sensor Tower.

As usual, mobile gaming continued to play a large role in iPhone spending. In 2018, gaming accounted for nearly 56 percent of the average consumer spend — or $44 out of the total $79 spent per iPhone.

But what’s more interesting is how the non-gaming categories fared this past year.

Some categories — including those where subscription-based apps dominate the top charts — saw even higher year-over-year growth in 2018, the firm found.

For example, Entertainment apps grew their spend per device increase by 82 percent to $8 of the total in 2018. Lifestyle apps increased by 86 percent to reach $3.90, up from $2.10.

And though it didn’t make the top five, Health & Fitness apps also grew 75 percent year-over-year to account for an average of $2.70, up from $1.60 in 2017.

Other categories in the top five included Music and Social Networking apps, which both grew by 22 percent.

This data indicates that subscription apps are playing a significant role in helping drive iPhone consumer spending higher.

The news comes at a time when Apple has reported slowing iPhone sales, which is pushing the company to lean more on services to continue to boost its revenue. This includes not just App Store subscriptions, but also things like Apple Music, Apple Pay, iCloud, App Store Search ads, AppleCare and more.

As subscriptions become more popular, Apple will need to remain vigilant against those who would abuse the system.

For example, a number of sneaky subscription apps were found plaguing the App Store in recent weeks. They were duping users into paid memberships with tricky buttons, hidden text, instant trials that converted in days and the use of other misleading tactics.

Apple later cracked down by removing some of the apps, and updated its developer guidelines with stricter rules about how subscriptions should both look and operate.

A failure to properly police the App Store or set boundaries to prevent the overuse of subscriptions could end up turning users off from downloading new apps altogether — especially if users begin to think that every app is after a long-term financial commitment.

Developers will need to be clever to convert users and retain subscribers amid this shift away from paid apps to those that come with a monthly bill. App makers will need to properly market their subscription’s benefits, and even consider offering bundles to increase the value.

But in the near-term, the big takeaway for developers is that there is still good money to be made on the App Store, even if iPhone sales are slowing.

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SoftBank and Mubadala grow closer – TechCrunch

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SoftBank and Mubadala grow closer – TechCrunch

The Japanese conglomerate SoftBank and Mubadala, the Abu Dhabi state investment company, have a closely intertwined relationship, and it’s one that the two are further cementing. According to the Financial Times, SoftBank has just committed half the capital for a new $400 million fund from Mubadala that aims to back European startups.

Industry observers might remember that Mubadala committed $15 billion to SoftBank’s massive Vision Fund as it was first being put together in 2017. Soon after, Mubadala opened a San Francisco office, as well as structured a $400 million fund designed to invest in early-stage startups to which SoftBank committed some capital.

The pact was understandable, including because Mubadala’s early-stage fund could theoretically provide SoftBank with a better idea of what’s happening at companies that are earlier in their trajectories than SoftBank typically sees. The move was also meant to better enable Mubadala to oversee the money it committed to SoftBank.

The newer fund appears to be raising questions, however.  At least, the FT notes that the timing is “unusual” given that SoftBank is currently saddled with $154 billion in gross debt. The new fund also “raises the prospect that Mubadala’s influence with the Vision Fund will only grow by allowing it to shape SoftBank’s tech investments,” as suggest the FT’s sources.

Yet SoftBank may not have much choice but to work increasingly closely with Abu Dhabi. As the company’s CEO, Masayoshi Son, said earlier this month, the Vision Fund has spent about $50 billion of its approximately $99 billion in capital. Given the rate at which it has been investing (it just plugged nearly $1 billion into a company last week), its remaining funds might not last through 2020.

Meanwhile, it isn’t clear whether SoftBank enjoys the solid relationship that it once did with the Vision Fund’s biggest anchor investor, the kingdom of Saudi Arabia, which provided SoftBank with a $45 billion commitment for its current fund and that SoftBank was largely counting on to be its biggest backer in a second Vision Fund.

On October 3rd of last year, Bloomberg journalists talked with Saudi Arabia’s Crown Prince Mohammed bin Salman (or MBS), and he said he planned to invest a further $45 billion in SoftBank. Yet what few knew then was that five days earlier, journalist and Saudi regime critic Jamal Khashoggi had vanished after going into the Saudi consulate in Istanbul. As questions, and concern, began to spread over MBS’s involvement in the disappearance, many business executives canceled plans to visit Riyadh, where Saudi Arabia hosted an investment conference in the middle of October. Son was among them, even as he tried hedging his bets by visiting privately with MBS in Riyadh the night before the event began.

Whether that move angered MBS remains to be seen. It also isn’t clear whether the CIA’s eventual findings that MBS ordered Khashoggi’s murder, or the unflattering attention paid to Saudi Arabia because of that murder, is impacting where SoftBank is able to invest its capital.

Son, for his part, declined to say earlier this month whether he would consider taking more money from Saudi sources — which is perhaps telling in itself.

In the meantime, it’s barreling ahead with Mubadala, which will reportedly use its new fund to write checks to European startups of between $5 million and $30 million.

As with Mubadala’s San Francisco-based team, the idea appears to be to act as a funnel for SoftBank’s Vision Fund, steering it deals that Mubadala’s team sees as the most promising in its portfolio.

Mubadala’s European venture fund will be run out of a new office in London, which is expected to open this spring. The Vision Fund is currently also headquartered in London, with another office in San Francisco and soon, offices expected in Shanghai, Beijing and Hong Kong.

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The superfans behind the Instant Pot hype

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The superfans behind the Instant Pot hype

As Fox raced around Naples, Florida, two other Instant Pots cooked away on her counter, perfecting brown rice and broccoli, respectively. A fourth “spare IP in the original box” squatted in the garage, in case of an emergency. “I should own stock in brown basmati, bone broth and sauce packets by Frontera,” she quipped.

Meanwhile, in Portland, Oregon, 42-year-old Andrea Evans had just branched out from cheesecakes to cannabis-infused coconut oil. Besides being an ingredient in muffins, she says she utilizes the oil for “massaging muscles, and as a sex lube,” proving that you really can use the Instant Pot for anything.

Both Fox and Evans are part of a Facebook group called “Best F*cking Instant Pot Recipes Ever,” which features a photoshopped picture of Beyoncé clutching the stainless steel kitchen contraption. It numbers almost 5,000 members, which, in the scheme of IP groups, is a drop in the pressure cooker.

The official Instant Pot group has 1.8 million members, and Facebook boasts hundreds run by the community, including my favorite, “”Dump and Push Start” Easy Instant Pot Recipes,” with 86,000 members. The device is listed as No. 4 in Amazon’s best-sellers in kitchen and dining, but other appliances don’t garner this level of online devotion.

In fact, the other items in Amazon’s top 10 list have an average of only 4,000 reviews each, and the IP has garnered more than 28,000. People love their Instant Pots so much they buy 3D-printed dragon steam vents for them, make birthday cakes in the shape of them, and even dress up as them for Halloween. Last November, Alexandria Ocasio-Cortez, who at 29-years-old had just been elected to the House of Representatives, made mac and cheese in her Instant Pot for a group of several hundred thousand viewers on Instagram Live.

In other words, Instant Pot users are fanatical, intensely devoted to their devices. Some have even called it a cult. Who are the acolytes using the IP, and why does it mean so much to them?

The Instant Pot is not that different from Grandma’s traditional pressure cooker. The big change? It uses electricity, not the stovetop, and it has self-regulating safety features. In other words, it’s not going to blow up your batch of Bolognese.

The Instant Pot — which can also be a slow cooker, steamer and yogurt maker among other functions — has been around for about a decade, though its popularity skyrocketed in the past two years. In 2008, former Nortel engineer Robert J. Wang realized how hard it was to cook healthy meals for his two young children and set about creating a gadget to solve this. He spent 18 months and more than $300,000 of his own personal savings working with a team of “telecom engineers” — according to Inc — to create the Instant Pot.

After the co-sign of influencers like Jill Nussinow and Michelle Tam followed by a 2016 Amazon Prime Day promotion, the Instant Pot got gushing coverage from both The New York Times and home cooks like like Brittany Williams. (Williams lost over a hundred pounds cooking with her IP, her Instant Loss Cookbook is a national best-seller and her Facebook community has 97.8k members).

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Apple could be looking for its next big revenue model – TechCrunch

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Apple could be looking for its next big revenue model – TechCrunch

Apple has always been an evolving company. While it never really invented any product categories, it always seemed to make those product categories work better and smarter. It also found a way to make us want them, even when they were more expensive. Today, the WSJ reports, Apple is trying to find its way to a future without the iPhone at the center of its revenue model.

This shift happens as Apple reported lower revenue for the first time in years against a backdrop of flagging iPhone demand. Part of the problem is a shifting Chinese market, but it’s also due to people simply taking longer to refresh their phones. As that happens, and the price of iPhones soared to more than $1,000, there has been a decline in sales.

With iPhone sales down 15 percent, this was not a typical Apple earnings report, but it was something the company had anticipated when it announced lower Q1 guidance at the beginning of the year. If The Wall Street Journal story is accurate, Apple is already trying to take steps to move the company into its next phase, possibly as a services business.

If that’s the case, it would mark a radical departure from the company’s history in which it has redesigned various types of hardware, bucking popular design trends along the way. Back in the 1970s and 1980s when it was called Apple Computer, Steve Jobs and Steve Wozniak made computers with a GUI when most people were working from the DOS prompt.

In the early 2000s, Apple came out with an MP3 player called the iPod and opened a music store called iTunes. By 2006, the year before it would introduce the iPhone, Apple had sold more than 42 million units and 850 million songs. It was a combination of hardware and services that helped transform a flagging company into a powerhouse.

In 2007, when Apple introduced the iPhone, it knew that it would begin to eat into iPod sales, and it eventually did, but it didn’t matter because it was the next logical step forward. When it introduced the App Store in 2008, the iPhone became more than a standalone piece of hardware. It was a new kind of hardware-service model and it would generate incredible wealth for the company.

The iPad came along in 2009 and the Apple Watch five years later, in 2014. While each has done reasonably well, nothing has touched the success of the iPhone. Keep in mind that analysts estimated that Apple sold 71 million iPhones last quarter, and this was in a quarter in which sales declined. It’s hard to sell 71 million units of anything in a three-month period and have it be a down quarter.

What comes next is probably some combination of entertainment/content and making use of advancing technologies like AR/VR, driverless cars and artificial intelligence. It’s unclear which direction Apple will take in these areas, but we do know that recent hires and acquisitions point in these directions.

There has long been speculation that Apple could make a splashy acquisition in the content area. When Eddie Cue, Apple senior vice president of internet software and services was interviewed by CNN’s Dylan Buyers at South by Southwest last year, Buyers specifically asked Cue about buying a property like Netflix or Disney. He implied that it was about taking the Apple TV and combining that with a big-name content production company.

Cue indicated that the two companies were great partners for Apple TV, but he wasn’t ready to commit to anything along those lines. “Generally, in the history of Apple, we haven’t made huge acquisitions.” He went on to explain, from Apple’s perspective, it wants to figure out where the future is and to build something to get it there, rather than buying something that is working for the current state of affairs.

It’s worth noting that Apple TV has not matched the huge success of its other devices, but service revenue has been growing steadily. In the most recent earnings report, Apple reported services revenue of $10.9 billion, up 19 percent year over year. That’s still a small percentage of the overall $84.3 billion the company reported for the quarter, but it is growing.

Regardless, nobody can know if Apple can approach the success with any product that it has had with the iPhone. But it knows that in spite of its vast riches, it’s dangerous for any company to rest on its past success. So it looks ahead and hires new blood and looks for a future with less dependence on the iPhone because it knows, as the Grateful Dead once sang, “You can’t go back and you can’t stand still. If the thunder won’t get you, then the lightning will.” Apple is hoping to avoid that fate, and perhaps it is some new combination of hardware, content and services that could lead the way.

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