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Is Apple Inc. (AAPL) Transitioning To a Service Focused Company?

Apple Inc's Apple Store NASDAQ:AAPL

Apple Inc. ’s annual developer conferences are not very hyped usually, but the iPhone maker may make an exception next week. Often the iPhone making firm is criticized by analysts for failing to develop recurring revenue streams and for depending too much on the sales of the iPhone for profits. But, next week, the firm could address these criticisms with at least two substantial changes. A new revenue-sharing plan with app developers will be deployed by the iPhone maker. It will just take 15% rather 30%, provided the app works on a subscription model instead of a one-time payment. The subscription-based revenue will be open to all apps in the store, said Phil Schiller, senior SVP of worldwide marketing, in an interview with The Verge. Previously, subscription-based revenue was available only for the specific kinds of apps.

Apple Inc (NASDAQ:AAPL) iPhone 7

For the first time, the tech giant will enable search ads in the App store, a potentially significant revenue source. As of June 2015, the App Store hit 100bn downloads. The iPhone maker will be revealing more next week at WWDC, its annual Worldwide Developers Conference.

Siri – a very important tool for Apple

Amazon, Google and other firms have boasted about their heavy instruments in AI (artificial intelligence). Now, Apple Inc. has to show what Siri can do. Next week, the tech giant will present new ways to make products supporting its watch, phone, computer and TV OS.

Amit Daryanani – analyst at RBC Capital Markets – notes that Siri software developers kit could open up third-party apps, and MacOS – currently OS X El Capitan – could see stronger Siri integration. In a note, Daryanani wrote that a “smarter” Siri could be integrated into Apple TV or the firm may come up with a stand-alone Siri device, similar to Amazon Echo. Even, the date of WWDC was revealed on Siri.

What more could Apple come up with?

WWDC comes after Recode’s annual conference and Google’s developer conference, where tech executives like Jeff Bezos and Sundar Pichai influenced people with their AI accomplishments. Raefer Gabriel, CEO of Delvv, said, “It’s a time when Apple has to deliver in a major way in order to reestablish their leadership position.”

Gabriel believes they (Apple) need to have a really stable position on how the app experience and AI-driven experience connect together, and with that vision they need to bring developers on board. “It’s a uniquely critical time for Apple in the history of the iOS platform.”

Analysts at Stifel note that Apple Inc. is not known for software, but software is slowly becoming attached to the future of the iPhone – Apple’s flagship product. Gene Munster – senior research analyst at Piper Jaffray – said others on the Wall Street are looking for a revamp Apple Pay. Gabriel believes Apple Pay is an area where Apple’s strong security gives it an advantage.

Apple might unveil iOS 10, tvOS, watch OS and OS X10 and probably provide a redesigned interface for Apple Music at Monday’s event, predicts Daryanani.

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Aman is MBA (Finance) with an experience on both marketing and Finance side. He has work as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, playing PC games and cricket.

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