Apple Card Out Shopping Itself?
Curious timing on this press release from Apple about their Apple Card product. First and foremost, it's not only the same week they're shipping the Vision Pro, so one would presume it's "all hands on deck", certainly on the PR-front, for that, but it was also the very day which the embargoed reviews of said Vision Pro were released. They couldn't have waited a day or a week or a few weeks to do this?
Especially since the "news" here would seem to be that "Users earned more than $1 billion in Daily Cash from spending on Apple Card last year". And sure, $1 billion is a nice round number. But even that is only the sub-headline here. That headline calls out that "Apple Card is helping more than 12 million cardholders live healthier financial lives". 12 million is a nice number, but not a particularly meaningful one. Again, why now?1
The answer, presumably, is because Apple is still looking for a partner to take on to help them manage the card. This is because, as has been widely reported, Goldman wants out of the business. Despite – and maybe because of – the strong numbers from Apple, Goldman is losing a ton of money on these types of products and is pulling back from such spaces more generally. But that also makes the following quote in the press release weird:
“Since the launch of Apple Card, the customer response has been excellent, and we are pleased that we continue to see users incorporate the innovative tools and features into their financial lives,” said Bill Johnson, Goldman Sachs’s CEO of Enterprise Partnerships in Platform Solutions. “We are committed to continuing to deliver an excellent experience for Apple Card customers.”
Did Apple just cut out the rest of the quote which read "for the next few months, or until we can offload this burden"? As far as I know, Goldman has not commented on not being fully committed here, and in fact, has said a few times how "committed" they are, such as above. Of course, they may be just as "committed" as many politicians are to staying in the race amidst mounting losses.
All of that is to say, it reads like Apple wanted to tout some numbers for Apple Card as they haven't yet been able to entice a new partner to take it on.2 And they're making Goldman say the right things publicly about loving this "excellent" (used twice in the quote above) partnership. It's weird timing, but maybe Apple is just feeling some pressure to find a solution here?
And I hope they do because the Apple Card really is an excellent product. It's by far the most simple and seamless credit card I've ever had. Ditto for the newer Savings product. It's all so simple compared to traditional bank offerings that it feels almost too simple, in some ways. As if you trick your brain into thinking you need to jump through more laborious hoops in order to have a "real" banking product.
I'm still waiting for Apple to become a bank itself. They're apparently doing some of their own banking products off their own balance sheets (with the "buy now, pay later" offering). But going deeper down that money pit obviously opens the doors to new risks (both financially and regulatory) that perhaps they'd rather not deal with amidst all the other headaches.
Still, in the never-ending search for revenue growth – I can't believe I wrote this nine years ago – Apple is running out of things which can move the needle. Their new actual product, the aforementioned Vision Pro, isn't likely to do that anytime soon. Not because it's a bad business – it's already an impressive one in many ways, just with the pre-orders alone – but because Apple's other businesses, notably the iPhone, are so massive. Not much can possibly move those needles. But you know what can? Becoming a bank.
1 And they mention multiple times how it has been five years since the partnership began, almost as if that's the rationale here. But it hasn't actually been five years yet. That will be in August.
2 Chase would have been the logical partner, or so it seemed. While AMEX was likely a more willing one. But AMEX, which I love, comes with issues related to international acceptance and (related to that) fee structure. So who else? Citi? Capital One? No one seems to be exactly jumping at this opportunity...