Apple, Inc. Likely to Unveil New Beats Products Alongside iPhone 7

By Markets Fool.com

Apple's (NASDAQ: AAPL) annual iPhone event is almost here. The company has an event scheduled on Wednesday where it is expected unveil its iPhone 7. While the iPhone will almost undoubtedly be the main focus of the event, the tech giant may give one of its newer brands some love, too. One rumor points to an unveiling of new Beats by Dre products.

Continue Reading Below

Beats headphones. Image source: Beats.

Why new Beats headphones are likely

Apple's plans to unveil new Beats products at the event were discovered by iGeneration (via MacRumors) in an email accidentally sent by Beats public relations team. After posting a screenshot of the email, iGeneration was quickly asked to remove it, reports MacRumors' Juli Clover.

While the email didn't specify which Beats products would be unveiled at the event, they are likely to be headphones. Not only is Beats primarily a headphone company, but Apple has incentive to launch new headphones if rumors about the company ditching the headphone jack with iPhone 7 really are true.

Speculation about Apple eliminating the headphone jack on iPhone 7 also suggests the company plans for headphones to connect either wirelessly or with the iPhone's Lightning connector. Since Apple owns Beats, Apple presumably plans to update its Beats headphones to work with a Lightning connector.

Continue Reading Below

Interestingly, however, if iGeneration is right about Apple planning to debut new Beats products at the event, any new headphones deserving of meaningful time during the company's keynote will likely include more than a simple change to the adapter. Perhaps new Beats headphones will feature a design overhaul. If Apple does overhaul its Beats headphones, the move could be the first major update for the headphone lineup since the tech giant acquired Beats in 2014. While Beats headphones have evolved during the past few years, the changes have arguably only been incremental.

It's worth noting that if Apple does give its Beats headphones a major update, it could help the company demonstrate why eliminating the headphone jack makes sense. Apple wouldn't be the first company to highlight the advantages of Lightning-connected headsets; Cirrus Logic recently announced a headset development kit for Lightning-based audio accessories, arguing the technology enables high-fidelity audio and better interaction with iOS apps for custom audio experiences.

Beats headphones. Image source: Beats.

Of course, it's also possible that new Beats headphones will be mentioned during the keynote, but only briefly. With the limited information iGeneration received, this is definitely possible. And if this is the case, changes to the headphones may only be incremental.

Does it matter?

New Beats headphones might be more important than investors think -- at least in the near term. Sure, Beats products likely only represent a sliver of Apple's revenue; Beats products, along with Apple TV, Apple Watch, iPod, and Apple-branded and third-party accessories all fall under the company's "Other Products," segment, which account for just 5% of the company's revenue. But Apple's move to ditch the headphone jack could spark a surge in orders for new, compatible Beats headphones.

Still, it would be nothing more than speculation to predict Beats headphones will become meaningful to the company's business. Chances are they will remain mostly unimportant to operating results. And even if there is a surge in Beats headphone sales after the launch of an iPhone 7, higher demand likely won't be sustainable, as other headphone makers will probably quickly make their own Lightning-based headphones.

Ultimately, of course, where Apple needs to shine is the iPhone itself. At about 64% of the company's revenue in the trailing 12 months, it's the primary driver of the company's business.

A secret billion-dollar stock opportunity
The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here.

Daniel Sparks owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.