A Bloomberg report based on a Bernstein analysis suggests that Apple’s newest services have yet to make any ‘meaningful revenue,’ and investors will expect to hear about the company’s plans to address this.
It says that although Apple’s overall Services business is going well, the bulk of this is generated by the App Store and the Google search deal – with Apple TV+, Arcade, News+, and the Apple Card not playing much of a role …
Another interesting snippet in the chart in Bloomberg’s report is that iTunes downloads are now estimated to generate even less revenue than Apple TV+.
Here are the estimated revenues for the current financial year:
When Apple reports results on July 30, investors will be looking for updates on these offerings. Services growth has been a bright spot in recent years as iPhone sales have slowed. For the fiscal third quarter, analysts forecast $13.1 billion in revenue from services, up 15% from a year earlier. Most of those gains will come from existing services, such as the App Store and licensing deals, rather than the new offerings.
That lucrative licensing deal in second place may be under threat from antitrust regulators.
Bernstein analyst Toni Sacconaghi suggested that a rethink may be required for Apple TV+.
Apple already appears to have rethought its Arcade service, canceling some games and focusing more on one particular category.
Apple News+ shows every sign of being a flop. The head of the service stepped down in February, and Apple has failed to provide any update on paid subscriber numbers since a 200k figure last April. The New York Times pulled out of Apple News, and there’s been an increase in News+ free promotions suggestive of some degree of desperation.
It’s unclear how much the company earns from the Apple Card, but estimates of the amount borrowed are low.
Apple is due to report its fiscal Q3 earnings later this week, when we’ll find out just how much the coronavirus crisis impacted both supply and demand of hardware alongside a Services update.
