Apple Reportedly Trims Fitness+ Team, Pivots Focus to Foldable iPhone and AI

Apple Inc. (AAPL) is re-evaluating the future of its Fitness+ subscription service and has laid off a number of employees in the division, according to media reports. The move signals a potential strategic pivot to concentrate resources on higher-growth initiatives, including the company's new foldable iPhone and its overarching artificial intelligence strategy.

Strategic Shift at Fitness+

The recent staff reductions reportedly affected a small number of employees working on audio content for Fitness+, such as the "Time to Walk" and "Time to Run" features. While these audio programs are not being eliminated, the frequency of new content releases is expected to decrease, according to people familiar with the matter.

This adjustment is viewed internally as part of a broader effort to optimize resource allocation and potentially integrate Fitness+ more deeply with the Apple Health app. Apple has already announced a revamped Health app powered by Apple Intelligence, which aims to connect user health data with personalized insights and educational content. A tighter integration could streamline content investment and enhance the value derived from Apple Watch data, thereby increasing user engagement and subscription retention.

Foldable iPhone and AI Take Center Stage

The strategic realignment appears to prioritize two key catalysts for future growth: a high-end foldable iPhone and the expansion of Apple's AI ecosystem. The company's recently announced iPhone Duo, with a reported starting price of $1,999, marks Apple's entry into the premium foldable market.

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The device, which reportedly features a 7.6-inch internal display, is positioned to leverage Apple Intelligence by offering a larger screen for multitasking, such as viewing information on one side while interacting with an AI-powered Siri on the other. Analysts believe this combination of a new hardware form factor and advanced AI capabilities is designed to stimulate a new iPhone upgrade cycle.

Market and Analyst Perspective

Wall Street is closely watching these developments as potential drivers for Apple's next phase of growth. The introduction of a premium-priced foldable phone could significantly lift the iPhone's average selling price (ASP), while AI features could create new revenue streams. Apple has indicated that some server-based AI functions may eventually be offered as paid services.

Several analysts see significant upside driven by this strategy. Wedbush and TD Cowen have both reportedly cited price targets around $400 per share. Wedbush's Dan Ives has suggested that commercializing AI services across Apple's installed base of approximately 2.5 billion active devices could add around $15 billion in annual services revenue in the coming years. TD Cowen's analysis focuses on the company's pricing power, upcoming hardware upgrades like 2-nanometer chips, and the foldable's role in providing a new rationale for high-end device upgrades.