On Monday, tech giant Apple (NASDAQ: AAPL) sent out invitations to a media event. “It’s show time,” the invites read. The tagline for the event hints that Apple will unveil its long-awaited subscription-based TV service. The launch of a potential TV service would represent yet another way the tech giant is beefing up its services business, as its iPhone unit sales appear to have peaked. But a TV-based subscription offering may not be the only service unveiled during the March 25 event, according to rumors.
Investors will be watching the event closely to see if Apple’s new services can help the company’s second-largest segment maintain its strong momentum.
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Could Apple launch two new services?
Given Apple’s obvious tagline for the event, a new TV service is all but certain. Reinforcing this speculation, the company is believed to be working on over two dozen original shows for the service. Little is known about the service other than it will likely feature original content and resell premium subscription services as add-ons the same way Hulu and Amazon do.
Though Apple is expected to pull back the curtains on its TV service during the special event later this month, investors shouldn’t expect it to launch yet. In fact, it “may not launch until the summer, or even fall,” according to Variety.
In addition to a TV service, Apple is also rumored to be launching a new subscription option for its Apple News app, allowing customers to get access to multiple magazines and newspapers through one monthly subscription fee.
If the company packages these services in a compelling way, both services could be a boon for Apple. The tech giant’s Apple News app has 85 million monthly active users, according to an update earlier this year. In addition, Apple has demonstrated customers’ willingness to pay up for an Apple-branded subscription service with its more than 50 million paying Apple Music subscribers.
A key catalyst
Apple gave investors good reason to turn attention to the company’s services segment earlier this year when CEO Tim Cook told investors in a Jan. 2 letter to shareholders that its fiscal first-quarter revenue would be significantly below its initial guidance for the period. iPhone unit sales, particularly in China, failed to live up to expectations, Cook said.
If iPhone can’t deliver, Apple’s services business represents investors’ next-best option to drive the company’s next leg of growth. Services accounted for 15% of Apple’s trailing-12-month revenue, making it the company’s second-largest segment. In addition, the segment is growing fast, with trailing-12-month revenue up 27% year over year.
For Apple to keep up its robust growth in services, the tech giant is going to need to keep investing in its current service offerings while bringing to market new, compelling services.
Apple’s event will take place on March 25 at 1 p.m. EDT at Apple’s Steve Jobs Theater in Cupertino, California. While services will likely be the main focus of the event, it’s always possible that the tech giant could use the platform as an opportunity to unveil a new product as well. But investors shouldn’t get their hopes up.
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