What you need to know
- Apple's services category is now bigger than Apple itself was ten years ago.
- The category now accounts for 21% of Apple's revenue.
- It played a big part in Apple hitting $53.8 billion in quarterly earnings in Q3 2019.
During its third quarter earnings call earlier this week, Apple delivered good news as it beat estimates and saw revenue reach a new June quarter record. Chief among the reasons it did so was its services category which continues to grow exponentially. In fact, the services category is now bigger than Apple was as a whole ten years ago according to Horace Dediu.
Apple's services category now accounts for 21% of its business, marking the biggest slice of revenue the category has ever held for the company. That comes as good news as the iPhone dipped under 50% of Apple's for the first time since 2012.
In total, Apple's services category is now worth more than Apple was in third business quarter of 2009, back when the iPhone hadn't hit its stride and the iPod was still a big seller. This all led to Apple hitting $53.8 billion in quarterly revenue, up 1% from year-to-year.
With iPhone sales slowing down and Apple redoubling on services with the more services coming this fall, Apple certainly sees this category as a way to offset curving iPhone demand. So far, it has worked out very well.
Wall Street is not impressed with Apple's Services revenue. Apple is still considered The iPhone Company. Wall Street's cry is, "What have you done for me lately?" Whatever Apple had ten years ago has been long forgotten. Apple was just a company with potential ten years ago and now it's just a dying company with no growth potential. Things change but remain the same for Apple.
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