Apple’s first new subscription service is unlikely to move the needle towards the company’s lofty goals

Apple’s new subscription service for news and magazines, Apple News+, had over 200,000 people subscribe to a free one-month trial in the first 48 hours it was available, according to the New York Times.

It’s a critical data point to gauge consumer interest in Apple’s new subscription services. Apple News+ is the first of three monthly subscriptions that Apple hopes will transform its business from a hardware maker to a company that makes a substantial amount of money selling services to iPhone users.

While the number sounds impressive on the surface, the revenue generated at this scale is basically chump change for Apple, which makes most of its money on the iPhone. Plus, given the size of the iPhone user base, the initial wave of signups is still pretty small. On the other hand, The New York Times says that 200,000 user number is larger than Texture, the now-defunct app Apple News+ is based on, had during its entire existence.

Apple News+ costs $9.99 per month, or about $120 per year. Assuming that everyone who signed up for the free trial ends up subscribing for an entire year, those 200,000 subs would generate $24 million in sales for the service per year. But Apple would have to pay as much as 50 percent of that revenue back to the publishers that publish to Apple News, according to the New York Times.

Of course, there are a certain number of people who have or will cancel before the trial month ends. And Apple certainly has continued to add new trials after the first 48 hours it was available.

Apple Music, a $9.99-per-month streaming music subscription, grew to over 50 million subscriptions in three and a half years, according to a note distributed on Tuesday from UBS analyst Timothy Arcuri.In context

In 2018, Apple services totaled over $41 billion in revenue, Apple CEO Tim Cook said in January. Apple’s services division includes fees from the App Store, subscriptions like Apple Music, and fees to make Google the default search engine on the iPhone.

Apple CEO Tim Cook has implied he wants the company’s services business to generate $50 billion in revenue by 2020.

Apple had about $265 billion in total revenue in its fiscal 2018, of which about 60% came from iPhone sales.

Apple has about 900 million iPhones in use, the company revealed in January. However, it’s unclear how many of those are from the United States and Canada, the only two regions where Apple News+ is available.

Revenue from subscription services will be bolstered by the other subscription apps that Apple announced last week, including a streaming video service, and a video game bundle. However, both services won’t be released until later this year. Apple hasn’t announced pricing for either of those services.

UBS estimates that the realistic number of iPhones that Apple could sell services to is 500 million to 600 million devices, based on geography. Apple says it has 330 million paid subscriptions, which includes subscriptions to apps distributed through the App Store.

Apple did not immediately respond to a request for comment.

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