Several new software updates were introduced during June 7’s WWDC 2021 keynote presentation. However, at least one specific item caught the Apple Maven’s attention: Apple (AAPL) – Get Report has announced important new features for FaceTime, iOS’s exclusive video-link platform.
Among them, (1) FaceTime will now be available outside the Apple ecosystem, such as Android- and Windows-powered devices, and (2) the new SharePlay function will allow users to share content from third-party apps, including Disney+, Hulu, NBA and others, during a call.
Following the announcements that make Apple’s video application more competitive, could FaceTime be the next big thing in services that helps to propel Apple stock price higher?
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The video platform market
First, let’s start with the big picture. The video link market currently generates more than $9 billion in revenues globally and is projected to grow to $22 billion by 2027.
Due to the COVID-19 pandemic, many companies, government agencies, schools and universities adopted a “stay-at-home” protocol, suddenly driving growth in video conference platforms like Zoom and Microsoft’s Teams. Both combined, for example, had more than 2.2 million new users in 2020.
This market is now globally dominated by Zoom, with approximately 49% market share, followed by Google Meet with 21%, Microsoft Teams with 14% and Microsoft’s Skype with 6%. See table below.
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What could change for Apple?
The FaceTime updates may signal a new opportunity in services to be explored by Apple, in a video platform market that has been dominated by Zoom. Much of Apple’s service revenue comes from the App Store today, which has recently been the target of anti-trust discussions, generating some uncertainty for the future.
The $9 billion video conferencing market may seem small for Apple. The Cupertino company reported revenues of $17 billion in the services segment alone, in fiscal second quarter 2021. See chart below.
However, with products like FaceTime, Apple could boost its growth opportunities and add another component to its recurring subscription model. The services segment has been crucial as a complement to the iPhone and Mac, two businesses that will likely mature at some point.
Today, FaceTime is a free service and does not add any monetary value to Apple. However, perhaps the recent updates can be the first move into a new market that Apple may look more carefully at, one that may offer further revenue growth opportunities for its services segment.
Read more from the Apple Maven: 3 Key Takeaways From WWDC 2021
Apple’s WWDC was packed with software updates, but light on hardware news. Which of the following, out of the developers’ conference, do you think is most likely to be meaningful for AAPL’s investment thesis? Leave your vote below and follow @AppleMaven on Twitter!
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