By Stephen Nellis
(Reuters) - Apple Inc rolled out a new virtual fitness service and a bundle of all its subscriptions, Apple One, focusing a holiday-season product launch on services that are the backbone of Apple's growth strategy and that cater to customers working at home during the COVID-19 pandemic.
Apple also introduced a new Apple Watch Series 6 that monitors blood oxygen and will cost $399, and a lower-cost Apple Watch SE for $279.
But the bevy of incremental updates to existing hardware and subscription price tinkering disappointed investors, with Apple share dipping 0.6% by 3:45 p.m. ET.
The Apple One bundle will cost $15 per month for an individual plan or $20 per month for a family plan and include television, music and games. Apple is also offering a bundle for $30 per month that adds news, the fitness service and more storage.
"It's a lot more aggressive pricing than I thought," said Ben Bajarin, principal analyst for consumer market intelligence at research firm Creative Strategies, adding that Apple customers already paying $15 a month for family plans to some of the company's content servers would likely find the largest bundle a "no-brainer."
Apple said both new watches can be pre-ordered starting Tuesday and will be available on Friday. Apple also introduced the Apple Fitness+ service, powered by its watches, that will deliver virtual workouts for $10 per month or $80 per year and be available before the end of the year.
Apple's fitness service puts it closer to competition with Peloton Interactive (NASDAQ:PTON) Inc , which makes connected exercise gear and sells subscriptions to online fitness classes. Apple said that most of its workouts were designed to be conducted with either no equipment or minimal gear such as a set of dumbbells. Peloton's workouts typically require either a bike or a treadmill. Shares of Peloton pared back early gains after the Apple event and were up about 2% in late trade.
The ability of the Apple Watch to monitor blood oxygen seeks to beat a similar feature already available on watches from rival Fitbit (NYSE:FIT) Inc, which Alphabet (NASDAQ:GOOGL) Inc's Google is buying for $2.1 billion. Apple said its watch will be able to take absolute blood oxygen measurements on-demand while the user is still, while Fitbit's devices currently show either variations in blood oxygen levels or a set of measurements taken while the user is sleeping.
Apple also for the first time offered a way to use an Apple Watch without pairing it one-to-one with an iPhone, offering what it calls "Family Setup." Watches with an LTE connection can be set up on one iPhone but then used independently by a family member, for example to keep tabs on an aging parent or a child.
Bob O’Donnell, head of TECHnalysis Research, said watches for children have become a huge business in China, though models there are usually much lower cost than even the most basic Apple Watch.
FASTER IPAD CHIP
Apple added a faster chip to its base model iPad, which it priced at $329 for consumers and $299 for education customers. Apple's new iPad Air will cost $599 and look more like its iPad Pro models and a new A14 processor chip that Apple says will be the first to use a 5-nanometer chip manufacturing process.
An update of Apple's biggest seller - the iPhone - is expected to be announced next month after executives have said its launch will be delayed by several weeks because of pandemic-related disruptions.
Apple said the Series 6 watch's ability to monitor blood oxygen using infrared light should be used for fitness and wellness purposes. Apple said flu investigators in Washington state will study heart rate and blood oxygen data from Apple Watch for potential early signs of respiratory conditions like influenza and COVID-19.
Doctors in India and other countries have used pulse oximeters to remotely check on COVID-19 patients and ensure their oxygen saturation level does not fall too low.
Apple shares (NASDAQ:AAPL) have soared this year even as the virus has crippled economies around the world, thanks in large part to booming sales of work-from-home items.
Apple shares gave up gains to trade flat on Tuesday after climbing more than 50% for the year, well ahead of the 23% gain for the Nasdaq. Even though Apple stock has fallen from a record high earlier this month, it remains near a $2-trillion stock market valuation.
How its new products sell during the holiday shopping season in many markets will largely define how well Apple performs for its entire fiscal year, which started this month.