Here are 10 reasons why Apple might buy Snap Inc. (owner of Snapchat):
1. Apple has been expanding its services offerings in order to increase profits and profit margins. While Apple could not, necessarily, charge customers just for the Snapchat service, Apple could bundle Snapchat together with other fee-based services, making those services more attractive to new and existing customers.
2. Snapchat is a form of communication that requires a delivery system (smartphone or computer); Apple sells communications delivery hardware (iPhones, Macs, iPads)- a good match. Apple products transmit voice, email, and text communications- why not add a wildly popular and proprietary video communications service to those offerings?
3. Snapchat is a popular and sticky proprietary communication service that Apple can use to further hook users into its ecosystem by making Snapchat exclusive to Apple products.
4. Snapchat has a young user demographic. Apple can use the highly popular Snapchat service to attract young users to the Apple ecosystem early-on and hook them forever.
5. The numbers suggest that Snapchat user-growth is slowing. Once in the Apple ecosystem, user-growth would immediately explode (as Apple puts its own marketing muscle behind it), rendering that slowing statistic moot.
6. Snap Inc. has high operational costs causing large losses. Apple would alleviate these costs by offering Snap Inc. operational economies of scale. Under such a scenario, advertising revenues from Snapchat could turn profitable far sooner than analysts and investors presently calculate.
7. While most everyone is looking at Facebook and Google as potential Snap Inc. acquirers, Apple is more of a hardware company, and, at this stage, would be more inclined than Facebook or Google to buy vs. internally develop a new service like Snap Inc.’s Snapchat.
8. Snapchat video is a form of human communication. Forms of human communication are “finite” and new forms of human communication are nearly impossible to create. Snapchat would be Apple’s proprietary form of human communication, and Apple has the hardware-based communications infrastructure necessary to profit from it (consumers who want Snapchat would have to buy an Apple device, which provides a clearer path to the profitable monetization of Snapchat than a pure advertising model offers).
9. It would cost hundreds of millions of dollars for Apple to internally develop a new communications service with the goal of having it adopted by millions of young users. It is not even a money issue; enjoyment and wide service adoption by young users of a new form of communication would be impossible to plan or predict, and any such internally-contrived service could easily fail.
10. Snap Inc. has wearable hardware- “Spectacles” – a space in which Apple wants to be and in which it has not had the success which it hoped for to date with the Apple Watch. (Google also has so far failed to achieve its goals in this space with its Google Glass product.)
By acquiring Snap Inc., Apple would own Snapchat, a popular proprietary communication service loved by young people which would add to Apple’s services offerings and provide an additional good reason for people to select the iPhone over other phones and operating systems (and to select the Mac over the PC and the iPad over the Surface Pro), and, due to the user-growth and operational economies of scale that an Apple acquisition would bring to the Snapchat service, Snapchat could rapidly become a profitable advertising platform for Apple. And don’t forget about Spectacles…..
_ _ _ _ _ _
About the Author
Neil Siskind is: President of The Siskind Law Firm, focused on product investments, trademark licensing, product distribution, and real estate; Founder & Chairman of The Fatherhood Assignment™, a think tank and advocate for children with absentee fathers; Founder of the global charity marketing initiative, Caring is Free®; Founder of National Fatherhood Day™; Owner & Conservator of The Neil S. Siskind Nature Preserve, over 7 acres of conserved waterfront land along New York’s majestic Hudson River; and Author of The Complete Guide To The Ways To Manufacture & Sell Your Products.
Other Recent Articles by Neil S. Siskind:
- New JonBenet DNA Test: A Farce
- Food Investing: When Taste Matters More Than Sales
- The Complete Guide To The Ways To Manufacture & Sell Your Products
- Romney vs. Trump: Does Mitt Romney Respect the Value of Business Branding?
- To “Loan” is not to “Own”
- How the Sharks……Tank
- Is Licensing a Trademark Worth it?
- Distribution is King
- Why the “Affluenza” Defense is So Dangerous
- A Shark, a Chicken, and a Trademark
- Celebrities “and” Brands; Celebrities “as” Brands