Shiny new Apple (AAPL 1.07%) smartphones and smartwatches are coming, but the market is yawning in the consumer tech giant's direction. The stock actually inched lower as it was making its iPhone 7 presentation yesterday. A modest rally late in the day lifted the shares out of negative territory, but the ultimate 0.6% gain on the day isn't going to set a bullish heart aflutter.
There was no shortage of upgrades to the iconic iPhone that accounts for the lion's share of Apple's sales. Doing away with the headphones jack is going to either alienate potential buyers or generate a lot of wireless AirPods sales. The water-resistant nature of both the iPhone and the Apple Watch may eat into future replacement sales as devices that get wet will survive, but it may also spur a fresh wave of upgrades as a preemptive measure.
There are major implications and ramifications with every tweak in the iPhone 7, but at the end of the day, the changes didn't move the stock because they didn't take the market by surprise. Tech blogs and analysts have been talking up the changes for weeks, and they were pretty much on the nose. The days of Apple fretting the loss of a prototype at a beer hall are over. News and leaks travel fast.
Call in a plumber
One development that did take the marketplace by surprise was Nintendo (NTDOY -0.47%) joining Apple onstage, announcing that Pokemon Go would be playable on the Apple Watch and that a new Mario game -- Super Mario Run -- would be coming to the iPhone.
Nintendo's stock soared 29% yesterday because the news was unexpected. The market was braced for a laundry list of positive developments out of Apple so that stock went nowhere. Nintendo's news, on the other hand, provided the real head-turning moment that got investors excited.
However, there's one largely ignored morsel in the Super Mario Run announcement, and it's one where Apple really stands to benefit. Super Mario creator Shigeru Miyamoto said the game would sell at a "set price so you won't have to worry about continuing to pay."
In short, the game that will initially run exclusively on iOS devices after its December rollout won't be a free-to-play game. Unlike Pokemon Go and many of the other popular gaming apps, this won't be a title that's available to play for free, backed by either advertising or in-app purchases. Gamers will have to pay up front to play the full game, and that has to be a dinner bell for Apple.
App to the stars
Apple collects a piece of every App Store transaction. There's money to be made in skimming money from in-app transactions, but it would be sweet if Nintendo's mobile gaming partner can get away with charging a pretty ransom through Apple's virtual storefront.
The most popular premium gaming apps for iOS devices are priced between $0.99 and $2.99. There's no way that Super Mario Run will be that cheap. It would eat into its flagship business if Nintendo handheld and console game systems were far more expensive than App Store downloads.
This is no longer about a single transaction. If Nintendo is able to get $10 or $20 out of gamers for unlimited access to a hot game, why won't they be willing to pay that much, if not more, in the future? This single game can train the next generation of players to shell out big money for good games for their mobile devices. The game will be a game changer and a bar raiser, even if Apple and its investors don't see it just yet.