Chief Executive Tim Cook was on stage at Steve Jobs Theater in Cupertino, California, and last week the bets could not be higher. Investors, users and reporters have been waiting for evidence that Apple's transformation into business services is finally on its way.
So, did Apple (teaker: AAPL) succeed? Not exactly. Cook, who recently joined Tim Apple's successor, sounded more like Timid Apple while revealing a vague range of streaming TV shows along with new efforts in news, credit cards and games. Apple's fuss is a problem because the excitement of the new service strategy is what led to 30% rally in its stock after its low in January.
With Wall Street's two-digit decline in iPhone sales this year, Apple has made concerted efforts to highlight the history of its services. In January, the company announced that there are 900 million active iPhone and 1.4 billion active devices. The disclosures were designed to direct investors to Apple's vast, yet untapped monetization capability.
But on Monday Apple unveiled a number of half-steps, additional services that disappointed even Apple's fiery fans. is one of Apple's weaker events in terms of presentation and story, "said ARK Invest analyst James Wong, whose company runs $ 6 billion and owns Apple shares, told me in a telephone interview Tuesday. "None of these services is supercompetent and differentiated from competitors."
Maybe the biggest disappointment was the small and vague details of Apple TV + video offering. Apple met the celebrity parade on the stage, but there was little up-to-date content to show, and there was no cost to the service.
Goldman Sachs analyst Rod Hall looked confused by the lack of progress and the overall time of the event.
"Apple's services are significantly different than expected," he wrote in a note Monday. "We were surprised that Apple announced the launch of a video service this fall, not earlier, with no event price information."
Apple has already spent more than $ 1 billion, the New York Times reported, and there are probably about ten shows ready to be released by the end of the year. With other estimates of only up to $ 2 billion in total content costs, Apple just is not in the same universe as the market leader
(NFLX). America's Merrill Lynch estimates that Netflix's total Netflix account could reach $ 15 billion this year, while Netflix's website lists more than 900 original shows.
This is what challenges – what's Apple afraid of? Slowly and cautiously, he will not move the company needle with a market capitalization of 900 billion dollars. With $ 130 billion in net cash (cash-less debt) on the balance sheet and an annual profit of $ 50 billion, Apple has huge financial resources to compete.
Apple did not respond to a request for comment on its content costs or questions about the size of its investments.
Apple's indecision was also revealed with its new gaming initiative, Apple Arcade. The subscription service will offer access to about 100 games, which are mostly smaller, budget, independent, and independent. The basic idea is that the platform will offer games that you can eat, unlike the now popular in-game transaction model. "Apple Arcade will most likely be a niche," said game analyst Serkan Toto of Kantan Games. "On smart devices, free to play and will remain a king." Apple Arcade, he says, "is mostly just a new look at courier and pricing."
Maybe the switch to software and services is doomed from the beginning based on core competencies.
"Apple is basically an experienced company that comes from hardware, operating systems and enabling ecosystems, not services," said Patrick Moorehead, chief analyst at Moor Insights & Strategy. a week thereafter
(GOOGL) Google's device has grown and has unveiled an ambitious cloud-driven gaming service.
Apple works in the back of banking and television. It emits branded credit cards, something that most consumer-oriented companies already have, and Apple TV channels that allow users to subscribe to third-party streaming services like HBO in their app.
The most important thing is that Apple's recently announced services will not add significantly to its profits, says Holman Hall. "Although all of these services are interesting from a platform perspective, nobody seems likely in our calculations to have a significant impact on earnings per share in the short term," he writes. "On the one hand, I see that they are really trying to please Wall Street and demonstrate the financial model, and on the other, I'm pretty concerned that they lose their core DNA, which is to create great products that do not exist. "To create markets instead of competing in the markets," he says. The special event turned out to be more disappointing than expected. Apple shares ended last week with 1%, although the S & P 500 rose by more than 1%. The risk now – as investors are turning their focus on Apple's falling iPhone business – is that all profits in 2019 may disappear.
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