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Apple (AAPL) May Launch Services Bundle as Early as October
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Apple (AAPL - Free Report) is planning to release a range of subscription bundles alongside its new iPhone 12 series in October, according to a Bloomberg report. Notably, the bundles are being referred to as Apple One and are said to work with Apple's Family Sharing system that provides access to a maximum of six people for each service.
Notably, last month, a code in iOS 13.5.5 update referred to both a bundle offer and bundle subscription, and in 2019 the company experimented with a bundle for students, packaging together Apple Music and Apple TV+.
Apple One bundles are expected to help the company push services adoption and boost service revenues and paid subscription growth to aid growth in Apple’s services business. The segment delivered $13.16 billion in revenues during Apple’s fiscal third quarter, up 14.8% year over year.
Apple has more than 550 million paid subscriptions across the services on its platform, up 31% year over year. The company is aiming to reach 600 million paid subscriptions before the end of 2020.
Details of Apple One Offerings: A Game Changer
Apple plans to package services such as Apple New+ ($10/month), Apple Arcade ($5/month), Apple Music ($10/month), and Apple TV+ streaming service ($5/month) and iCloud storage into different plans that provide consumers a discounted package.
Apple News+ and Apple TV+ are not as popular as Apple Music, so a bundle could drive top-line growth and also keep users even more tied to its ecosystem.
Reportedly, the tiers of bundled offering will include a basic combination of Apple Music and Apple TV+, while the more expensive bundles will have Apple Arcade, then Apple News+ at the next tier followed by an extra iCloud storage offering for the tier above that.
Meanwhile, with millions of Americans choosing to exercise at home, demand for fitness apps is surging. Apple One’s higher-end bundles will also reportedly include an additional fitness subscription service that will offer virtual classes and workouts for subscribers accessible through an iOS app and on Apple TV, similar to services from Nike and Peloton (PTON - Free Report) .
While Peloton crossed 1 million subscribers in May, Nike added 25 million new members in the fourth quarter across its platforms, thus encouraging Apple to include the newest service addition.
Per Bloomberg, in addition to these bundles, Apple plans to start offering new software and hardware combinations, like including a free year of Apple Arcade with purchases of an Apple TV streaming box.
Apple Follows Amazon, Google Footsteps
Apple has been increasingly focused on recurring revenues from its services business in recent years, particularly as sales from iPhones remain volatile.
Markedly, Amazon’s (AMZN - Free Report) Prime membership program that combines free shipping/early shipping, early access to online sales on Amazon.in, video streaming and Amazon Music has been successful in locking customers into the company’s ecosystem. Apple’s subscription bundles could do the same for its services and hardware.
Similarly, Google has bundled YouTube Premium and YouTube Music Premium subscription together. Earlier, the bundle included Google Play Music subscription as well but now the service is being discontinued reportedly due to the success of YouTube Music.
Moreover, Disney+ streaming service has been benefiting from Disney’s (DIS - Free Report) bundle offering that comprises ESPN and Hulu. The service has quickly gained more than 50 million subscribers despite stiff competition from Netflix and Amazon prime video. This is encouraging for Apple.
Meanwhile, this Zacks Rank #1 (Strong Buy) company has already been pushing its services business with tempting offers like free Apple TV+ for one year on new iPhone/iPad purchases. This offering could further drive that effort. You can see the complete list of today’s Zacks #1 Rank stocks here.
We believe that Apple’s bundled services offering in an affordable package could also boost the appeal of its upcoming iPhone 12. Not only will Apple fans get a new iPhone, potentially with a 120Hz refresh rate display, more power, and an upgraded camera system, they will also get access to loads of services that will complement the iPhone 12 models when they arrive by the end of the year.
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This outperformance has not just been a recent phenomenon. From 2000 – Q2 2020, while the S&P averaged +5.5% per year, our top strategies averaged up to +51.7% per year.
Image: Bigstock
Apple (AAPL) May Launch Services Bundle as Early as October
Apple (AAPL - Free Report) is planning to release a range of subscription bundles alongside its new iPhone 12 series in October, according to a Bloomberg report. Notably, the bundles are being referred to as Apple One and are said to work with Apple's Family Sharing system that provides access to a maximum of six people for each service.
Notably, last month, a code in iOS 13.5.5 update referred to both a bundle offer and bundle subscription, and in 2019 the company experimented with a bundle for students, packaging together Apple Music and Apple TV+.
Apple One bundles are expected to help the company push services adoption and boost service revenues and paid subscription growth to aid growth in Apple’s services business. The segment delivered $13.16 billion in revenues during Apple’s fiscal third quarter, up 14.8% year over year.
Apple has more than 550 million paid subscriptions across the services on its platform, up 31% year over year. The company is aiming to reach 600 million paid subscriptions before the end of 2020.
Details of Apple One Offerings: A Game Changer
Apple plans to package services such as Apple New+ ($10/month), Apple Arcade ($5/month), Apple Music ($10/month), and Apple TV+ streaming service ($5/month) and iCloud storage into different plans that provide consumers a discounted package.
Apple News+ and Apple TV+ are not as popular as Apple Music, so a bundle could drive top-line growth and also keep users even more tied to its ecosystem.
Apple Inc. Price and Consensus
Apple Inc. price-consensus-chart | Apple Inc. Quote
Reportedly, the tiers of bundled offering will include a basic combination of Apple Music and Apple TV+, while the more expensive bundles will have Apple Arcade, then Apple News+ at the next tier followed by an extra iCloud storage offering for the tier above that.
Meanwhile, with millions of Americans choosing to exercise at home, demand for fitness apps is surging. Apple One’s higher-end bundles will also reportedly include an additional fitness subscription service that will offer virtual classes and workouts for subscribers accessible through an iOS app and on Apple TV, similar to services from Nike and Peloton (PTON - Free Report) .
While Peloton crossed 1 million subscribers in May, Nike added 25 million new members in the fourth quarter across its platforms, thus encouraging Apple to include the newest service addition.
Per Bloomberg, in addition to these bundles, Apple plans to start offering new software and hardware combinations, like including a free year of Apple Arcade with purchases of an Apple TV streaming box.
Apple Follows Amazon, Google Footsteps
Apple has been increasingly focused on recurring revenues from its services business in recent years, particularly as sales from iPhones remain volatile.
Markedly, Amazon’s (AMZN - Free Report) Prime membership program that combines free shipping/early shipping, early access to online sales on Amazon.in, video streaming and Amazon Music has been successful in locking customers into the company’s ecosystem. Apple’s subscription bundles could do the same for its services and hardware.
Similarly, Google has bundled YouTube Premium and YouTube Music Premium subscription together. Earlier, the bundle included Google Play Music subscription as well but now the service is being discontinued reportedly due to the success of YouTube Music.
Moreover, Disney+ streaming service has been benefiting from Disney’s (DIS - Free Report) bundle offering that comprises ESPN and Hulu. The service has quickly gained more than 50 million subscribers despite stiff competition from Netflix and Amazon prime video. This is encouraging for Apple.
Meanwhile, this Zacks Rank #1 (Strong Buy) company has already been pushing its services business with tempting offers like free Apple TV+ for one year on new iPhone/iPad purchases. This offering could further drive that effort. You can see the complete list of today’s Zacks #1 Rank stocks here.
We believe that Apple’s bundled services offering in an affordable package could also boost the appeal of its upcoming iPhone 12. Not only will Apple fans get a new iPhone, potentially with a 120Hz refresh rate display, more power, and an upgraded camera system, they will also get access to loads of services that will complement the iPhone 12 models when they arrive by the end of the year.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through Q2 2020, while the S&P 500 gained an impressive +44.0%, five of our strategies returned +50.9%, +93.8%, +122.2%, +153.0%, and even +156.8%.
This outperformance has not just been a recent phenomenon. From 2000 – Q2 2020, while the S&P averaged +5.5% per year, our top strategies averaged up to +51.7% per year.
See their latest picks free >>