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Apple's movie push is late and it needs to act more like Amazon, says analyst

If Apple wants to be a serious player in movies and music, it needs to think like Amazon, a bearish Apple analyst said.

"Look at Amazon, they sell their hardware basically at cost — their tablets, their Echo devices," Colin Gillis, senior technology analyst and director of research at BGC Financial, told CNBC's "Power Lunch" on Thursday. "But they have a whole commerce business, as well as a thriving advertising business, as well as their digital consumption of music and movies that they pull in through their entire ecosystem...so [Apple] could just focus on bolstering those things."

The Wall Street Journal on Thursday reported that Apple is building a "significant new business" in original television shows and movies. Citing unnamed sources, the Journal said the new content would come as part of Apple Music by the end of 2017.

"It remains to be seen whether this is a meaningful move into original content, a space where you've already got firm No. 1, Netflix, and Amazon pouring in billions of dollars," Gillis said. "Apple clearly is late."

Britney Spears joins James Corden for Carpool Karaoke on 'The Late Late Show with James Corden,' Airing Thursday, August 25th 2016, on The CBS Television Network.
CBS | Getty Images
Britney Spears joins James Corden for Carpool Karaoke on 'The Late Late Show with James Corden,' Airing Thursday, August 25th 2016, on The CBS Television Network.

Apple announced in July it wouldpurchase the rights to stream an original version of viral late-night series "Carpool Karaoke," but otherwise mostly focuses on music video-related documentaries. Initiatives like Apple Pay and Apple Music "really needs some beefing up," before Apple can accomplish the goals outlined by the Journal, Gillis said.

"Let's get a video streaming service, let's focus in on getting more adoption for Apple Pay...let's get Home Kit rebooted and make sure we're on track for home automation," Gillis said. "When you look at the PC market, it's declined for five years in a row now. It's entirely possible this could happen to the smartphone market."

Gillis has a "sell" rating on the stock with an $85 price target, well below the $132.65 average on Wall Street, according to analysts surveyed by FactSet.

"Not only are we concerned about Apple missing big trends like artificial intelligence, augmented reality, virtual reality, automation, but the services layer that everyone points to is a little bit lackluster," Gillis.

Apple's services have hit some major milestones. December was the best month ever for the App Store, and Andrew Murphy of Loup Ventures posited on Thursday that Apple is moving toward augmented reality with "baby steps," training its customers and building its production capability.

But Gillis is not alone in his criticisms — PayPal co-founder Peter Thiel concurred with a New York Times reporter this week that "the age of Apple is over."

"We know what a smartphone looks like and does," Thiel said to the Times. "It's not the fault of Tim Cook, but it's not an area where there will be any more innovation."