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Apple Inc. (AAPL) News App Off to Predictably Rocky Start

Apple Inc. (AAPL) News App

Apple Inc. was the butt of jokes in trading circles last week as the stock left the triple-digit trading club to end the week below a $100 trading price. The firm managed to score a 0.53% gain last Friday to close at $96.96 but it appears that the stock will spend some more time under the $100 trading price. The latest event that confirms that Apple might still stay under the $100 trading price has to do with breaking news that the Apple News App is off to a rocky start.

Apple Inc. (AAPL) News App

The market shouldn’t be surprised that the News app is off to a rocky start – CEO Tim Cook has already predicted that the News App is doomed to failure. In June 2015 when Apple revealed its News App at the WWDC 2015, Tim Cook had hinted that the firm was not fixated on breaking into the news market or breaking into the ads market. Apple is mainly concerned about selling its iPhone and the News App is another feature designed to lure more people to buy the iPhone.

Apple News is not living up to the hype

On Sunday, the Wall Street journal reports that the Apple News App is failing to live up to the hype because neither Apple nor the media firms that publish their content on the app knows the actual number of users. User number, user growth, MAUs and time spent online are key metrics in the world of mobile apps. Now, Apple has revealed that it has been making mistakes on the user numbers that it has been passing down to content partners since it launched its app.

Eddy Cue, the Apple’s SVP of Internet Software and Services noted that the firm was in error in the user number that it sent to content partners. He didn’t shed light on how the error was spotted and the degree or damage that might have been done. However, he did say, “we’re in the process of fixing that now, but our numbers are lower than reality… We don’t know what the right number is.”

The Apple News App is a great product that does a good job of delivering news to users – it has a number of high profile publishers such as the New York Times and The Wall Street Journal as content partners.

The problem though is that not all great products end up making financial sense for their creators. To start with, the Apple’s failure to put a hand on the user numbers makes it hard for publishers to sell ads and manage resources effectively. Bob Cohn, chief operating officer at the Atlantic, said he loved the Apple News experience but ad revenues are still a concern. In his words, “the main thing for us is how big of an audience Apple News can generate, and that’s still an open question.”

Apple News won’t push iPhone Sales

Apple is grappling with the effects of slowing iPhone sales especially as the weak Chinese economy has stifled sales in the firm’s biggest market outside of the U.S. Apple created its News app to provide a more robust user experience on the iOS 9. However, users can still find curated news on Facebook’s Instant Articles, Snapchat’s discover, Twitter’s Lightning Posts, and of Google News among others.

Eddy Cue has revealed that 40 million people have used the Apple News App, to date – that number pales in comparison to the installed base of the iOS 9 and it is nothing compared to the number of iPhones and iPads out there.

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Victor Alagbe is a seasoned business and finance writer with a specialty in writing about how to invest for the long-term in healthcare, pharmacology, energy and tech stocks. His long-term focus is on stocks that provide a nice mix of growth and income. For the short term, he passionately writes about trading stock options for the excitement and leverage that stock options offer.