Data privacy and security are at the top of many consumers' minds, thanks in part to a flurry of recent data privacy scandals that have made headlines. Apple (NASDAQ:AAPL) sought to make privacy a point of differentiation years ago, hoping that the stark contrast with how its advertising-oriented peers approached privacy would help sell more iPhones. It's unclear if the effort has worked, but it has certainly set Apple apart philosophically from other tech giants.

On the consumer side, managing passwords is one of the more important -- and daunting -- tasks.

Person logging into an account on an iPhone

Image source: Getty Images.

A test drive?

BGR reports that Apple is preparing to deploy popular password manager 1Password, made by developer AgileBits, internally to all 123,000 of its employees over the next couple of months, including corporate as well as retail employees. As part of the internal enterprise deployment, Apple expectedly scored generous terms from AgileBits to support the flood of new users, according to the report. The contract represents a major windfall for AgileBits, which is a fairly small company.

Perhaps more interesting, Apple is said to be in talks to scoop up AgileBits (though 1Password has denied it in a tweet). The deployment could essentially be Apple taking 1Password for a test drive.

Despite iCloud Keychain, 1Password is still a market leader

The news is intriguing for several reasons. For starters, it suggests that Apple realizes that iCloud Keychain is not competitive with 1Password. iCloud Keychain was launched nearly five years ago as Apple's own cloud-based password management app. That introduction was a threat to password manager developers, as Apple's offering enjoyed deep integration across its devices.

Yet AgileBits was able to defend its leadership position in the market alongside peers like LastPass (which was acquired by LogMeIn for $110 million in 2015), in part because it has a broad set of third-party integrations with other apps and services. As a small private company, it's unclear how many users 1Password has beyond it simply saying it has "millions."

Apple is big on subscription services these days

Another reason why a potential acquisition is interesting is that AgileBits started pivoting to a subscription model in 2016. 1Password had previously been sold as a one-time license (and price). On the consumer side, the company currently offers an individual plan for $3 per month and a family plan for $5 per month. There are also enterprise plans available for business customers, of which the company says it has over 30,000.

You may have heard by now that Apple is working hard to grow its services business, primarily through various types of subscriptions offered to its massive and loyal user base. Acquiring AgileBits and offering a subscription-based, cloud-based password management service could fit right into that mold, and it's clear that there is considerable demand for such a paid offering.

Alternatively, Apple could acquire AgileBits only to bolster iCloud Keychain, which is free. Or Apple could offer both a free and paid version, with more features included with a paid subscription. There are plenty of strategic options here, and if the price is right, Apple should seal the deal.