Is Apple (NASDAQ:AAPL) finally about to introduce new hardware? According to a report from 9to5Mac, Apple will unveil a new device next month at its Worldwide Developer Conference (WWDC). The report doesn't specify which piece of hardware in particular Apple plans to unveil, but there are few notable possibilities, all of which could send shares of Apple moving.
Macbook Air with Retina display
9to5Mac believes this is the most likely possibility. Investors, however, would probably find it disappointing. Although Apple's Mac business has been doing well in recent quarters, steadily growing its market share even in the face of a wider PC contraction, the Mac business is just not materially important to Apple's bottom line.
Last quarter, it generated about 11% of Apple's revenue, a paltry figure compared to much more significant products like the iPhone and iPad, which, cumulatively, accounted for more than 70% of Apple's revenue. iTunes, a secondary function of iOS sales, generated just as much revenue as Macs.
That isn't to say that a Retina display-equipped Macbook Air would be a bad thing -- Apple's competitors in the space are increasingly offering super high-definition displays on their Ultrabooks. The recently unveiled Surface 3, for example, comes equipped with 2160x1440 resolution display, far superior to the Macbook Air's standard 1366x768. Bumping the resolution on the Macbook Air, then, is necessary to remain competitive.
A new product category?
What would be far more exciting, and much more likely to propel shares higher, would be the unveiling of an entirely new product category, perhaps the long-anticipated iWatch.
It's quite clear that Apple plans to release an iWatch at some point in the near future, given the flurry of various media reports on the device, and the long list of health-related experts Apple has hired. Nike's decision to back out of wearable hardware suggests that it knows Apple is planning to enter the space in the near future (Apple's CEO, Tim Cook, sits on Nike's board).
But an iWatch, assuming it interfaces with the iPhone, may require an update to iOS. New iOS revisions, in turn, generally accompany the release of the latest iPhone, an event that usually happens in the fall. Investors may wish for something revolutionary to be unveiled, but shouldn't get their hopes up.
An upgraded Apple TV?
Another possibility would be an upgraded Apple TV. The device is on its third revision, but hasn't seen a major update in more than two years. Several competitors have emerged since then, including the FireTV and the Chromecast, and though the Apple TV is selling well (it did more than $1 billion in revenue last year) Apple may be in danger of being surpassed.
Although it has a bevy of entertainment apps, Apple TV does not offer direct access to Apple's app store, a feature that could completely revolutionize the device. Unveiling a new version of the Apple TV with an operating system that included app store support would make sense at an event that caters primarily to iOS developers.
Past reports about a full-fledged Apple TV have claimed that Apple would introduce the product several months before its release, perhaps in an effort to give developers time to prepare. Even if the next Apple TV didn't offer voice commands or gesture controls, or similar such smart TV features, adding app store support could be a huge opportunity, particularly as iTunes revenue (driven primarily by mobile games) continues to grow at a rapid pace.
Apple needs new hardware
With Apple's brand value slipping, the company may need to unveil new hardware in the near future. Cook has promised to launch several new products in 2014, but so far, nothing major has been unveiled.
If Apple does unveil something revolutionary next month, expect shares to rip higher. Something less interesting, like a revised Macbook Air, should still be welcomed, but is unlikely to garner as much investor enthusiasm.
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Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Apple and Nike. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.