By Aaron Pressman
June 6, 2017

Apple opened its annual “World Wide Developer Conference” on Monday with a keynote address that packed in dozens of announcements of interesting new products and software features. But with many of the top WWDC surprises already leaked, the news deluge had little impact on Apple’s stock price, which has risen less than 1% since the keynote.

Apple’s new $349 music speaker cum digital assistant, dubbed the HomePod, drew the most attention from Wall Street analysts. Many noted that Apple is trailing Amazon’s (amzn) Echo and Google’s (googl) Google Home speakers in the new market for voice-controlled digital devices.

“The most important announcement was Apple’s entry into the smart speaker market with the HomePod,” Goldman Sachs analyst Simona Jankowski wrote. But the higher price than competitors and integration only with Apple’s own music service, not rivals like Spotify and Pandora (p), could limit the initial appeal of the speaker, Jankowski noted.

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However Apple often trails the competition in introducing new products and then wins down the road with a better conceived solution, Steven Milunovich at UBS pointed out. The HomePod announcement was more focused on music, where Apple is strong, and less on the use of digital assistance to look up information or send messages, where Apple seems to be behind, he noted.

“Apple is behind but the company rarely is first yet still won in music players, smartphones, and tablets,” Milunovich wrote. “Net net, Apple appears to be playing defense but needed to enter this category with a twist.”

That weakness in services, along with Apple’s dependence on selling expensive hardware for most of its profits, had Andy Hargreaves at Pacific Crest Securities concerned about Apple’s long-term future.

“This highlights a broader issue for Apple as consumers’ interaction with computing becomes even more fragmented,”Hargreaves wrote. “Services in which Apple is weak are likely to drive the bulk of consumer value. At the extreme, this trend risks devaluing both mobile operating systems and hardware, which could create risk to Apple’s smartphone pricing power over time.”

Software upgrades

Apple also announced new software tools to help app developers in two of the hottest areas, artificial intelligence and augmented and virtual reality.

Fostering “killer apps” apps for the Apple software market with more of those features could become increasingly significant over the next few years, according to Katy Huberty at Morgan Stanley. If developers enhance Apple-compatible apps in those areas, it “will expand iPhone user spend, improve customer stickiness and drive the 19% [year over year] services growth required to hit the company’s target of doubling Services revenue by 2020,” she wrote, referring to Apple’s sales from apps, media and online storage.

In yet another section of the jam-packed keynote address, Apple announced it was adding the capability to its messaging app to send money from one person to another, mimicking PayPal’s (pypl) popular Venmo service. If the service takes off, it could prompt Apple to create its own debit-card like service for storing and sending cash, analyst Rod Hall at JPMorgan noted.

“Importantly, this makes it necessary to now store credit in a virtual card on the phone which we could see Apple converting to a physical debit card in the not too distant future,” Hall wrote. “To the extent that this allows Apple to participate more fully in payment economics this could foreshadow a large additional earnings opportunity for the company.”

PayPal probably doesn’t have much to fear, especially in the short-term, Cowen & Co. analyst George Mihalos said. “Fears of a ‘Venmo killer’ are likely overblown,” he wrote.

Still, some analysts dismissed the bulk of the Apple (aapl) announcements as less than earth-shattering. Abhey Lamba at Mizuho Securities dubbed the Mac and iPad hardware upgrades “largely evolutionary in nature” and most of the software updates as “incremental in nature.”

Lamba remains laser focused on the expected next round of iPhone updates, likely arriving in the fall, as the most important factor driving the company’s success. And there was no news on Monday about the new phones.


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