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Apple music appears confused but company seizing big opportunities

Apple has laid out its software road map for the next year across its computers, phones and watches.

Highlighted by a new subscription music service, the occasionally uneven 2-1/2 hour presentation lacked the big bang of some of Apple's new product announcements and more focused keynotes of the Steve Jobs era.

None of the features or products announced had much immediate impact on investors' views of the company.

Apple shares, which have been stuck in a narrow trading range for months, were down 0.5 per cent to $182.02 as the keynote presentation in San Francisco ended.

That's not surprising. Improving the virtual digital assistant Siri, adding mass transit directions to the Maps app and creating a split screen view to see two apps at once on an iPad screen are all the kinds of small improvements that delight users, but don't change Apple's bottom line much right away.

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Some resembled copies of great features from Google or Microsoft but those tweaks, and many others discussed, demonstrate that Apple is still iterating to improve its products, a key strength in its decade-long run of success.

Amid all of the many, many tweaks and minor improvements, several larger points should also emerge as the keynote fog clears.

Watch: Everything you want to know about Apple music


1. Big opportunities

Two of Apple's newest and most promising products, Apple Pay and the Apple Watch, got major improvements likely to attract more users and expand the company's ecosystem in years to come.

Both the watch and the payments service have the potential to make a significant impact even on Apple's already massive bottom line.

That's because even if only 10 per cent or 20 per cent of iPhone users buy a watch or use Apple Pay, the dollars will add up quickly.

With some 500 million or more iPhones in use, 50 million watches could bring in $25 billion of high-margin sales.

And 50 million people using Apple Pay would cement Apple's lead in the fast-growing mobile payments market that could reach $700 billion by 2018, according to Juniper Research.

For the watch, Apple as expected announced a major improvement for third-party apps. Outside developers will soon be able to create apps that actually run on the watch (not just on a linked iPhone) and access the watch's sensors.

That should make apps much faster and more capable, helping kick off the kind of positive feedback loop that boosted the iPhone -- better apps bring more users, who attract even more developers and so on.

For Apple Pay, Apple agreed to allow retailers like Kohl's (KSS) or Starbucks (SBUX) to integrate their loyalty rewards programs into the iPhone's mobile payments app.

That will give customers a much bigger incentive to pay with Apple's service than before. Earning, tracking and spending rewards points can be tedious and complicated, but with Apple Pay the programs automatically just work with each transaction.

Also read: Apple set for 'a massive 2016'


2. Using large resources

Apple is now sounding more like the world's largest tech company, with the resources to cover the full spectrum of promising markets.

The keynote included further plans for Apple to integrate its ecosystem into cars and homes, for example.

These areas are small today but have the potential to become huge as part of the growing "Internet of Things."

Apple's early efforts are low key -- providing software to help carmakers and third-party home security and control device manufacturers. But as Apple learns what consumers want and how best to serve those needs, the company will be well-positioned to make its own foray into the hardware side.

After all, "the car is the ultimate mobile device," Senior Vice President Jeff Williams quipped at last month's Recode conference when he was asked about Apple's rumored interest.

Also read: How to make money if Apple does nothing: Traders


3. State of confusion

On the other hand, Apple may be reaching a point of confusion and loss of focus, to some degree, resembling the years before Steve Jobs rejoined the company.

The presentation for the new Apple Music was rambling and hard to follow at times.

Jimmy Iovine, the longtime music exec who joined Apple as part of the Beats acquisition in 2014, seemed uncomfortable and wooden explaining why the company developed yet another music service.

And the service itself seemed to lack several critical elements of popular platforms like Spotify -- users can't share or swap their playlists.

A new 24-hour global Internet radio service, called Beats One, seemed more appealing to music artists than to regular music lovers.

Overall, the service reeked of the top-down, out-of-touch introduction of Jay Z's competing offering, Tidal.

It's good that Apple has the resources to create new services on such a vast scale now, but the company also must keep in mind a key strength of the past decade: knowing when to say no.

Also read: Fake Apple watch has more features than the real thing