Apple's December Press Event on Its Favorite Apps and Games of 2019

Apple’s hardware might have taken its business to new heights over the past decade, but a press event scheduled for December 2 will shine a bright light on software. More than anything, it’ll shine a light on how things have changed in Cupertino.

On December 2, Apple will hold a press event in New York City where it plans to discuss “our favorite apps and games of 2019.” The invite it sent to press outlets on Monday featured a tagline that read, “Loved by millions. Created by the best.”

Hyperbole aside, Apple’s own acknowledgement that software, and not hardware, will take center stage at the event is at the very least surprising. Just a couple of years ago, the thought of Apple holding a press event focused on apps and games would have been laughable.

The company holds an annual software event for developers called the Worldwide Developers Conference (WWDC), but that’s an opportunity for Apple to showcase the new operating system software experiences it has planned for its hardware. And in many cases over the years, Apple’s biggest WWDC announcements centered on hardware it announced alongside its software improvements. This year, the company unveiled its Mac Pro desktop and Pro Display XDR monitor at the show.

Seemingly aware that hardware was the most interesting topic—and driving much of its sales—Apple has historically used the few press events it holds each year to focus on new iPhones, Macs, and iPads, among other devices. Those events score more headlines—and interested viewers.

But 2019 was a decidedly different year for Apple. In March, the company used a press event not to talk about hardware, but to discuss its new streaming services, including Apple TV Plus and Apple Arcade. With its event in December, it’s once again going back to that focus with talk of apps and games. In years past, Apple would issue press releases in early December presenting its “Best Of” awards for apps and games. Now, the company believes an event is warranted.

“I’m a bit surprised with the whole notion and timing of the event,” Moor Insights president and analyst Patrick Moorhead says. He’s not sure why Apple feels it necessary to hold the event, but suggests it could be because Apple’s apps and games businesses aren’t “performing as expected, and this is intended to improve that.”

Ovum analyst Daniel Gleeson is similarly surprised by Apple’s event decision, but says the move could center on boosting Apple Arcade, the game-streaming service Apple released earlier this year.

“Given the recent launch of Apple Arcade, it has very good reason to push certain games as being ‘must see content’ to help drive subscriptions,” Gleeson says. “This will also be part of its strategy to woo developers of all kinds of apps and to convince them to keep focusing on Apple’s platforms, devices and customers.”

Wooing app developers and customers to streaming offerings like Apple Arcade is becoming an increasingly important component in Apple’s business.

Late last month, Apple released its financial results for the fiscal year ending September 28. Revenue was down $6 billion, due to a nearly $22 billion year-over-year drop in iPhone revenue. That decline was offset by gains with Apple Watch, iPad, and Mac sales, along with Apple’s Services business, which includes Apple Music, Apple Arcade, and Apple TV Plus, that grew revenue from nearly $40 billion in the prior year to $46 billion last year.

“The iPhone consistently makes up 60% of the company’s revenue; but this is declining and not just due to the growth in Services,” Gleeson says. “The premium smartphone market is completely saturated which limits growth opportunities for iPhone. This means Apple needed to look beyond its golden goose for future growth.”

Gleeson says Apple’s Services business is critical to the company’s future. And the event may reflect both internal and external factors affecting Apple.

“This is a showcase event which speaks to, directionally, the company is focused on driving Services,” Wedbush analyst Dan Ives says. He adds that this standalone event will aim at highlighting the company’s all-important Services business without worrying about hardware releases that would “overshadow” Services.

So, does all that mean that fundamentally, Apple is changing? Is the seemingly ancillary event planned for December 2 a suggestion that things are changing? Will hardware, once the focus of Apple press events, no longer carry so much weight in Cupertino?

Moorhead won’t go that far. But he did say that he believes Apple is no longer a hardware company. Instead, he calls Apple “a solutions company that puts equal effort into hardware, software, and Services.”

Gleeson disagrees. He notes that Apple’s “iPhone and other hardware remains the foundation of the company.” Without it, he says, Apple’s Services business wouldn’t grow to the degree that it has.

“These services are built on the back of the loyal and high spending customer base Apple has built up with its hardware,” Gleeson says.

Even if Apple has high hopes of boosting its app and gaming business next month by shining a brighter spotlight on it, don’t read too much into the move. Services are becoming more important to Apple, revenue is jumping, and the company clearly thinks that events focused on them are warranted. But that doesn’t necessarily mean next month fundamentally changes what Apple is.

“For now,” Gleeson says, “I very much will still be calling Apple first and foremost a hardware company.”