The soaring services business has been key to the Apple (NASDAQ:AAPL) investing thesis in recent years, helping to drive high-margin revenue growth while also expanding valuation multiples. The company has continued to release more and more first-party services, most recently including Fitness+, while offering discounted bundles through Apple One to strengthen retention.
There's little reason to think that the Mac maker is done introducing new offerings. Loup Ventures recently put out a research note speculating about other areas that could present compelling opportunities for Apple to pursue, potentially augmenting some of its existing first-party apps. Here's what Loup thinks the company might have in store.
Spotify (NYSE:SPOT) has been pushing aggressively into podcasts in recent years, spending hundreds of millions of dollars on acquisitions and exclusive content partnerships. The efforts are working: The Swedish company has already overtaken Apple as the top podcast platform in several key markets, including the U.S. Amazon is even now jumping in, recently acquiring podcast publisher Wondery.
One of the challenges for Spotify's strategy is that it offers access to podcasts for free, including in its ad-supported tier that has weaker monetization than its paid subscription tier. Loup believes that Apple should create a paid tier for its own podcast app called Podcasts+ as a way to bolster demand for its audio services.
There has recently been renewed speculation around Apple jumping into the automotive industry with an autonomous electric vehicle, but Loup argues that investors should consider the notion through the lens of tight integration between hardware, software, and services. A theoretical Maps+ service could help people discover new destinations.
Many automakers have been attempting to expand into paid subscription services for post-purchase monetization. For example, BMW wants people to subscribe in order to use features such as heated steering wheels (the German company previously tried to charge a subscription fee for Apple CarPlay), and Tesla charges $10 per month for a premium connectivity service that includes things like video streaming (while parked) and satellite maps.
It's been over a year since Apple's initial foray into financial services with Apple Card, and there could be an opportunity to push deeper into investing with low-cost brokerage accounts, according to Loup. Robinhood's soaring popularity has demonstrated that there is strong demand from entry-level investors, and investing is a core part of many people's financial health.
While Loup doesn't mention this, it's worth noting that Apple partnered with Goldman Sachs as the issuer for Apple Card. Goldman obviously has the back-end infrastructure to facilitate trading and investing, and the investment bank has been trying to better address average consumers in recent years. The bank is reportedly working on a Marcus Invest wealth management service.
Once unthinkable, paid email apps have become a thing. That notably includes HEY, which had a high-profile fight with Apple last year since the tech giant wanted a cut of the $99 per year that the start-up charges for personal email for individuals.
Loup believes that Apple could offer various automation technologies to handle things like inbox management or task scheduling.
CEO Tim Cook has made no secret of his vision that Apple's "greatest contribution to mankind" will be related to health. Fitness+ could just be part of that strategy, and health is still important for people that don't exercise regularly.
Apple has been building out its digital health platform for years, and it integrates with Apple Watch and third-party data sources. Loup doesn't offer any specific ideas around what such a service could entail beyond noting that Apple already has all of the pieces in place to eventually create some type of unique service to help improve people's lives.