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Apple "no longer appears attractive" when classed as a services company

Apple TV+ with Tim Cook
Apple TV+ with Tim Cook (Image credit: Apple)

What you need to know

  • Keybanc's Andy Hargreaves isn't impressed.
  • He believes that tracking Apple isn't attractive as a services co.
  • Apple leans on services more and more with new ones still to come.

Apple's services business may already be larger than Apple was just ten years ago but that doesn't mean everything is all rainbows and unicorns. At least, not if you listen to Keybanc analyst Andy Hargreaves.

In an interview with CNBC Hargreaves argued that if Apple is going to be seen as a services company moving forward, it should be judged as such. And when you do that, things don't look too rosy.

"If we are to call Apple a services company, we should evaluate it on typical services metrics of user growth and revenue and profit per user," he continued. "Apple's user growth is decelerating due to market saturation and its gross profit per user has been declining. ... These are not particularly attractive metrics for a services business."

Hargreaves also thinks that Apple's fiscal 2020 earnings per share will be $12.50, down from the $12.68 that appears to be the general consensus among other analysts.

The important thing to remember here is that while Apple is currently pushing out more services every month, it isn't a services company. It sells millions of iPhones every year. It sells millions of Macs and iPads, too. It's a hardware and services company the likes of which we might not have seen before. For that reason trying to compare it to other services companies might not be the smartest move to make right now.

Oliver Haslam
Oliver Haslam

Oliver Haslam has written about Apple and the wider technology business for more than a decade with bylines on How-To Geek, PC Mag, iDownloadBlog, and many more. He has also been published in print for Macworld, including cover stories. At iMore, Oliver is involved in daily news coverage and, not being short of opinions, has been known to 'explain' those thoughts in more detail, too.

Having grown up using PCs and spending far too much money on graphics card and flashy RAM, Oliver switched to the Mac with a G5 iMac and hasn't looked back. Since then he's seen the growth of the smartphone world, backed by iPhone, and new product categories come and go. Current expertise includes iOS, macOS, streaming services, and pretty much anything that has a battery or plugs into a wall. Oliver also covers mobile gaming for iMore, with Apple Arcade a particular focus. He's been gaming since the Atari 2600 days and still struggles to comprehend the fact he can play console quality titles on his pocket computer.