Here's Apple's Next Great Business

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Tim Cook

AP

Apple is primarily a smartphone company.

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They have other wonderful products, but the iPhone is steadily growing as a source of the company's revenue and earnings.

But at least one major bank sees huge upside in other Apple products next year.

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"We believe 'services' is an area within Apple that has strong potential to grow with other yet to be announced initiatives that have close to 100% margins," wrote Barclays analyst Ben Reitzes.

In particular, Reitzes says that Apple Pay will be a massively profitable business, which will help margins if Apple can expand it. Reitzes also expects a subscription video service, similar to the Beats service for audio which Apple is reportedly going to push to all iPhones next year.

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"A more comprehensive media service to integrate TV and subscriptions seem like a no brainer at some point," says Reitzes.

Barclays also expects Apple's margins to benefit from the Apple Watch, which will have some high-priced options, and as phone and tablet buyers shift to bigger-screened devices, like the iPhone 6 Plus and the full iPad (rather than the iPad mini). Barclays is particularly bullish on the iPad 6 Plus in China next spring.

Barclays raised its price target on Apple to $140 from $120 per share, a whopping vote of confidence in the company's plans for 2015 and beyond.