Over the past few years we’ve seen a meteoric rise in Apple’s “Services” business, as the company expanded into streaming video, gaming, and news, and analysts are now speculating that the next set of Apple’s services may be “hiding in plain sight” as it prepared to expand into new areas to generate even more services revenue.
Apple divides its revenue into five broad categories: iPhone, iPad, Mac, Wearables/Home/Accessories, and Services, and over the past few quarterly reports, its Services revenue has been eclipsing everything but the iPhone. For example, last quarter Apple’s services accounts for $14.5 billion, or 22 percent of its total revenue — almost as much as the Mac and iPad combined.
So, it’s no surprise that as Apple continues to move into the post-iPhone era it’s going to be looking for ways to bolster that side of its business even more, and while only Apple Music has really taken off so far among its consumer-facing media services, Apple is a company that plays the long game, and it’s been making massive investments in services like Apple TV+ and Apple Arcade, so it’s clearly expecting a payoff.
Of course, as any investor knows, it’s important to have a diverse portfolio, and even though Apple makes the lion’s share of its services revenue right now from App Store commissions and its multi-billion dollar search deal with Google, both areas are under attack by big developers and antitrust regulators.
Apple Services: The Next Generation
So, needless to say Apple isn’t likely to sit still on the services it already has. Apple TV+ and Apple Arcade will almost certainly pay off in the longer term, and Apple recently added Apple Fitness+ to the mix while also introducing new Apple One bundles to encourage people to go in for the full treatment.
Now in a new report, Loup Ventures analyst Andrew Murphy suggests that Apple could be planning to monetize a few more services that are already familiar to most iPhone users, effectively creating paid “Plus” versions of things like Stocks, Mail, Podcasts, Health, and even Maps.
According to Murphy the move in this case would be similar to what Apple did with Fitness+, taking an existing concept and adding unique value to it.
It’s fairly obvious in hindsight that Apple renamed the “Activity” app to “Fitness” last year to prepare for the new service, which clearly takes the standard Fitness app, with its self-guided independent workouts, and ties it into a collection of enhanced workouts that integrate with the Apple Watch ecosystem in the same way.
Although Peloton digital and other workout offerings have long existed within Apple’s ecosystem, Fitness+ goes beyond what these digital workout platforms can deliver through Apple’s GymKit API, and offers more than the base Fitness app.Andrew Murphy, Loup Ventures
While it hasn’t been nearly as successful, Apple’s News+ service followed a similar model from a content perspective, adding a premium tier of news and magazines within the same app that already delivers curated, ad-supported news from most sources for free.
Podcasts+ and Stocks+ could follow the same trend, adding original podcasts and more in-depth financial reporting as part of paid subscription plans, and Murphy suggests that Stocks+ could go even further by offering actual trading and personalized robo-advisory services.
Some of Murphy’s other suggestions are a little far-fetched, however, including the idea that Apple might release Mail+ with more sophisticated inbox management, scheduling, and automation akin to how many other popular third-party mail apps work. Similar, the idea of Maps+ seems even more unusual, with Murphy suggesting that Apple could monetize it by “suggesting the best destination based on your desired outcome.”
Perhaps the most interesting among Murphy’s suggestions, however, is Health+. Since Apple has been putting a lot of time and investment into health technology, it does seem like a natural area of growth for the company, but monetizing it might also go against Apple’s more altruistic aims for HealthKit.
One possibility, however, which was suggested a couple of years ago by Murphy’s boss, Gene Munster, is the idea of an Apple Health subscription for medical professionals, rather than end users. In the vision that Munster shared at the time — which came only two weeks before Apple unveiled its whole new services portfolio — he envisioned a subscription that would be taken out by doctors to allow them to access and monitor their patients’ data in near real-time.
In this case, the goal would be to create a more productive relationship between care providers and patients, essentially expanding Apple’s earlier move into Health Records into a situation where patients dealing with a variety of health and fitness conditions could have more proactive monitoring and feedback by their doctor or other care provider without having to make regular in-person visits.
Sadly, it’s a service that could have been particularly welcome over the past several months, although there’s no evidence that Apple was ever working on it in the first place, and of course dealing with all the myriad privacy issues and getting buy-in from the medical community would not be insignificant hurdles to overcome.
Either way, Loup Ventures predicts that it’s Apple’s continued and stronger push into services that will drive the company toward its next major landmark — a $3 trillion market cap.