Apple’s shift to services tests investor patience

The iPhone maker’s new 4 new digital services unveiled on Monday had disappointing elements


SAN FRANCISCO • Apple Inc’s expansion beyond hardware is taking longer than some analysts expected as the company learns to wrangle new partners outside the technology industry.

Apple unveiled four new digital services at a star-studded event in Silicon Valley on Monday. They all had disappointing elements, such as a lack of details, a later launch or features available elsewhere.

An original video-streaming service and a gaming subscription will launch in the fall and Apple didn’t say how much they will cost. A news subscription service lacked several major newspapers and those that did sign up are potentially withholding some content. A credit card unveiled with Goldman Sachs Group Inc offers rewards similar to rival cards.

The announcements show Apple is serious about being a leading provider of digital services, not just a seller of beautiful, pricey devices. But the shift is pushing the company into new territory where it has less experience.

CEO Tim Cook (picture) is a supply chain expert who spent years negotiating with eager component manufacturers in Asia to assemble the blockbuster iPhone. Now Apple must repeat this feat with Hollywood stars, newspaper publishers, banks and game developers.

Many of these partners are more wary of working with tech giants, or have already teamed up with rivals like Netflix Inc, Inc and Google LLC.

“They’ve established themselves as masters on the component side, but it’s completely different in video entertainment,” said Mike Bloxham, senior VP of global media and entertainment at consultant Magid.

When Apple unveiled its TV+ original streaming service, Hollywood stars including Oprah Winfrey, Steven Spielberg and Jason Momoa showed up to promote the offering and discuss their future projects with the tech giant.

That showed the company can woo top talent with the promise of more than one billion device owners as potential viewers. But, the event fizzled for some analysts when Apple said pr icing would be announced later this year.

“Apple’s introduction of the new Apple TV+ paid subscription service, or more notably Apple’s push into original content, leaves us/investors with more questions than answers,” Aaron Rakers, an analyst at Wells Fargo Securities, wrote in a note to clients.

Apple’s new video service is not going to be a “Netflix killer”, and it won’t materially impact the investing outlook for the Cupertino, California-based company, according to Colin Gillis, director of research at Chatham Road Partners.

Apple shares slipped 1.2% on Monday, while Netflix climbed 1.5%.

The video-streaming market is already crowded, and other big new entrants will appear later this year. Magid’s Bloxham said Apple has to deal with a complex network of pre-existing deals and relationships — and massive egos.

“Apple is just not of this space,” he said. “As other tech companies have found, it’s not easy to structure these relationships.” — Bloomberg