Apple services, "Other" revenue sources impress with massive Q2 growth

Posted:
in AAPL Investors
In a strong second fiscal quarter performance, both services and the "other" categories stand out, with 18 percent and 31 percent growth versus 2016, respectively.




In an earnings report on Tuesday, Apple said services generated $7.04 billion, with other products generating $2.87 billion. While both numbers are down from the holiday quarter, a more meaningful comparison is to the same quarter in 2016, with the company pulling down $5.99 billion and $2.19 billion respectively.

Apple's Services category includes iTunes, iCloud, Apple Music, Apple Pay, Apple Care and the various App Stores. The company's Other category spans sales of Apple TV, Apple Watch, Beats products, iPod and Apple-branded, and third-party accessories.

Apple CEO Tim Cook noted on the earnings conference call after the results were announced that Apple's revenue from wearables, including the Apple Watch, Beats, and AirPods alone would qualify for Fortune 500 status, if broken out.

Echoing statements made three months ago, Cook reiterated that services is on track to become the size of a Fortune 100 company by the end of the year. The growth is also quite stable when compared against the growth rates of other parts of the company, with minimal seasonal variance.

It is likely Apple will continue to see consistent growth in services for quite some time, a belief shared by financial analysts. It is speculated revenue will grow 17 percent every year until 2021, with Ben Schachter of Macquarie Securities calling the App Store, a core component of Services, "one of the best business models ever created."

Comments

  • Reply 1 of 19
    fallenjtfallenjt Posts: 3,982member
    But still doomed?
    watto_cobra
  • Reply 2 of 19
    jungmarkjungmark Posts: 6,719member
    The analysts have said the watch and the AirPods are failures. how can this be?
    watto_cobra
  • Reply 3 of 19
    calicali Posts: 3,495member
    Apple Watch is just getting started.

    the Other category may be the new iPhone(in revenue).
    Watch, Beats, AirPods these are mega hits like Tim said, Fortune 500 status.

    I say Apple pull the big guns on the next Watch and completely take over the industry. Stand alone functions(no iPhone), biometric sensors(diabetes, alcohol levels, hydration), longer battery life, advanced fitness sensors(push ups, sit ups, jumping jacks).

    Don't be surprised if this category jumps another %30+ after the next Watch release.
    lito_lupenawatto_cobra
  • Reply 4 of 19
    calicali Posts: 3,495member
    jungmark said:
    The analysts have said the watch and the AirPods are failures. how can this be?
    Apple bought Beats when the trend was dying remember?
    funny I see more Beats than ever now. 
    watto_cobra
  • Reply 5 of 19
    dasanman69dasanman69 Posts: 12,985member
    cali said:
    jungmark said:
    The analysts have said the watch and the AirPods are failures. how can this be?
    Apple bought Beats when the trend was dying remember?
    funny I see more Beats than ever now. 
    It's psychological, you only notice them more now solely because it's on your mind. Like when you buy a car and then you see them all over the place. 
  • Reply 6 of 19
    freeperfreeper Posts: 77member
    fallenjt said:
    But still doomed?
    Name a single person who has said that Apple is doomed since 2009. Provide a name or a link.
    mac_128
  • Reply 7 of 19
    SoliSoli Posts: 9,388member
    Didn't Watch sales double?
    watto_cobra
  • Reply 8 of 19
    freeperfreeper Posts: 77member
    jungmark said:
    The analysts have said the watch and the AirPods are failures. how can this be?
    The analysts also claimed that Android was a failure because Google was not making any money on hardware (or software licenses, services, app sales or search) and they would never solve the fragmentation or security "crises" that turned out to be less than a hill of beans, or that Samsung should exit the mobile business because their year over year unit sales and profit declines would never stop, or that all of Android's customers would soon exit the platform for Windows Mobile because of Microsoft's superior brand name and their ability to integrate their mobile and PC products in the enterprise and get the huge Windows PC development community to make apps for mobile, and Nokia's hardware was oh so much better than anything in the Android world. Funny how no one among "the world is against us!" Apple fan blogosphere seems to remember stuff like that. Also, the media was not exactly wrong to point out that Apple Watch sales were not on the level of IPhone, iPad or even iPod sales. It wasn't a failure to make money. It was the failure to be "the next big thing" that transforms the industry the way that the iPhone, iPad and iPod did. As for the AIrPod ... who exactly called it a failure again? Give me a name or a link.
    mac_128
  • Reply 9 of 19
    freeperfreeper Posts: 77member
    cali said:
    jungmark said:
    The analysts have said the watch and the AirPods are failures. how can this be?
    Apple bought Beats when the trend was dying remember?
    funny I see more Beats than ever now. 
    No. Apple bought Beats when - and because - their sales and profits were increasing year over year, they were the talk of the tech and music world, was a very popular brand fully embraced by the "urban" hip crowd (athletes, musicians, certain actors) and were expanding their product offerings from merely headphones to speakers and an artist-backed streaming music service (which after the Apple acquisition saw its efforts essentially migrate to Tidal). Prior to the Apple acquisition, Beats' biggest partner was Samsung, who considered buying them but decided against it, but still did a lot of cross promotional stuff such as ads with Samsung Galaxy users wearing Beats headphones - often featuring LeBron James - and automatically preloading the Beats streaming radio app onto all their smartphones. (Despite the fact that Samsung makes and sells their own headphones and had their own music streaming service at the time.) So yes, it is good that Apple has transformed Beats from being an urban product associated with rappers and NBA players to one that is safe for suburbia and exurbia via their upscale brand association and marketing campaigns - which are, er, totally different from what Beats used to run and let us leave it at that - with the increase in sales as a result, but please, no revisionist history. If anything, a lot of analysts speculated that Apple bought - and overpaid in the process - Beats in order to pre-empt Samsung from eventually pulling the trigger (because Beats did want Samsung to buy them and were lobbying them to do so). Apple's buying Beats was also part of their push to get Android - and specifically Samsung - owners to switch platforms. Apple had done market research - as had others by the way - and knew of the cultural/demographic divides between iPhone owners and Galaxy owners. Samsung - or at least Samsung America before the main office forced them out in a pique of nationalist nonsense - knew what they were doing when they signed LeBron James - as opposed to a golf or tennis pro or Peyton Manning if you know what I mean - as their pitch man and cross promoted with Beats as opposed to Sennheiser or Bose. Buying Beats - and as publicly embracing Dr. Dre as possible - was Apple's play for that same market. (If I am correct, that was after the fiasco where Tim Cook tried to force a U2 album on everyone as part of an iOS update only to find out that not everyone was as big a U2 fan as he is.) However, Apple's play for "street cred" failed - ironic since Apple was once considered the artsy, creative, progressive free-spirited upstart to the corporate stuffed shirts at IBM - and Samsung shifted gears when the South Korean office took over the U.S. marketing anyway ... and initially did an absolutely horrible job (the S5 fiasco followed by the "let's make the S6 look as much like the iPhone as possible!" mess that was saved by the S6 Edge, which Samsung didn't even think that it would sell because Samsung's South Korean marketers thought it was TOO DIFFERENT from the iPhone!) before finally righting the ship. So ... there is the way that you choose to remember things and what actually happened. Pick the one that you prefer. As for me, I still wonder what would have happened had Samsung bought Beats and in particular if they had not fired the American marketing team because they were too proud to admit that the American team was performing better than the South Korean one.They were eventually able to right the ship, but at the cost of losing a lot of customers to Apple, Huawei, Xiaomi and Oppo in the 2 years that it took them to start back making compelling products and convincing advertising campaigns. Even now, their current success is due to the new screen designs, first the edge and then the minimized bezels. If their smartphones still looked the same way that they did in 2015, they would still be losing money and market share.
    edited May 2017 mac_128
  • Reply 10 of 19
    linkmanlinkman Posts: 935member
    jungmark said:
    The analysts have said the watch and the AirPods are failures. how can this be?
    The analysts are failures.
    watto_cobra
  • Reply 11 of 19
    jungmarkjungmark Posts: 6,719member
    freeper said:
    jungmark said:
    The analysts have said the watch and the AirPods are failures. how can this be?
    Also, the media was not exactly wrong to point out that Apple Watch sales were not on the level of IPhone, iPad or even iPod sales. It wasn't a failure to make money. It was the failure to be "the next big thing" that transforms the industry the way that the iPhone, iPad and iPod did. As for the AIrPod ... who exactly called it a failure again? Give me a name or a link.
    Pure BS. Then there are no successes if everything is compared to the iPhone. Nothing can match the iPhone. Amazon Echo? Failure. Tesla? Failure. Microsoft Surface? Failure. Windows 10? Failure. 

    Apple watch outsold the iPod using the same timeframe. 

    How about this:
    https://www.theguardian.com/technology/2016/sep/07/apple-airpods-launch-problems-with-wireless-headphones
    Solislprescottwatto_cobra
  • Reply 13 of 19
    brucemcbrucemc Posts: 1,540member
    linkman said:
    Hopefully that will shut him up!  He is trying to be contrarian (there is a similar diatribe in the main Apple earnings thread) where he pushes the case that everyone loves Apple, the media do nothing but blow sunshine up their ass - but it is Android that the analysts and media have been crying as doomed.

    I will say one thing is correct - Apple does get a ton more media coverage than most other companies - but most of it is through the lens of Apple is slipping, Apple has peaked, Apple's best days are behind it, etc.  It might not be literally saying "Apple is doomed", but it is far from praise.
    watto_cobra
  • Reply 14 of 19
    brucemcbrucemc Posts: 1,540member
    Headline memes
    2015: Apple has sizeable iPhone growth due to the iPhone 6 "super cycle" => "Apple is too reliant on iPhone for growth..."
    2016: iPhone declines in sales => "Apple too reliant on iPhone for revenue and it has peaked, Apple's best days are behind it..."
    2017: iPhone revenue stabilizes, Services and Other begin to show strong growth, lessening iPhone reliance => "iPhone unit sales are down again..."

    "shrugs"...
    watto_cobra
  • Reply 15 of 19
    calicali Posts: 3,495member
    freeper said:
    fallenjt said:
    But still doomed?
    Name a single person who has said that Apple is doomed since 2009. Provide a name or a link.
    Almost every media article.

    cali said:
    jungmark said:
    The analysts have said the watch and the AirPods are failures. how can this be?
    Apple bought Beats when the trend was dying remember?
    funny I see more Beats than ever now. 
    It's psychological, you only notice them more now solely because it's on your mind. Like when you buy a car and then you see them all over the place. 

    I've been noticing Beats pre-Apple for various reasons Since they launched. One reason being that I hate Monster Cable and another being I was hanging out with rappers/producers and engineers. Can you provide a link that shows Beats sales have plummeted and it's all an illusion??

    freeper said:
    cali said:
    jungmark said:
    The analysts have said the watch and the AirPods are failures. how can this be?
    Apple bought Beats when the trend was dying remember?
    funny I see more Beats than ever now. 
    No. Apple bought Beats when - and because - their sales and profits were increasing year over year, they were the talk of the tech and music world, was a very popular brand fully embraced by the "urban" hip crowd (athletes, musicians, certain actors) and were expanding their product offerings from merely headphones to speakers and an artist-backed streaming music service (which after the Apple acquisition saw its efforts essentially migrate to Tidal). Prior to the Apple acquisition, Beats' biggest partner was Samsung, who considered buying them but decided against it, but still did a lot of cross promotional stuff such as ads with Samsung Galaxy users wearing Beats headphones - often featuring LeBron James - and automatically preloading the Beats streaming radio app onto all their smartphones. (Despite the fact that Samsung makes and sells their own headphones and had their own music streaming service at the time.) So yes, it is good that Apple has transformed Beats from being an urban product associated with rappers and NBA players to one that is safe for suburbia and exurbia via their upscale brand association and marketing campaigns - which are, er, totally different from what Beats used to run and let us leave it at that - with the increase in sales as a result, but please, no revisionist history. If anything, a lot of analysts speculated that Apple bought - and overpaid in the process - Beats in order to pre-empt Samsung from eventually pulling the trigger (because Beats did want Samsung to buy them and were lobbying them to do so). Apple's buying Beats was also part of their push to get Android - and specifically Samsung - owners to switch platforms. Apple had done market research - as had others by the way - and knew of the cultural/demographic divides between iPhone owners and Galaxy owners. Samsung - or at least Samsung America before the main office forced them out in a pique of nationalist nonsense - knew what they were doing when they signed LeBron James - as opposed to a golf or tennis pro or Peyton Manning if you know what I mean - as their pitch man and cross promoted with Beats as opposed to Sennheiser or Bose. Buying Beats - and as publicly embracing Dr. Dre as possible - was Apple's play for that same market. (If I am correct, that was after the fiasco where Tim Cook tried to force a U2 album on everyone as part of an iOS update only to find out that not everyone was as big a U2 fan as he is.) However, Apple's play for "street cred" failed - ironic since Apple was once considered the artsy, creative, progressive free-spirited upstart to the corporate stuffed shirts at IBM - and Samsung shifted gears when the South Korean office took over the U.S. marketing anyway ... and initially did an absolutely horrible job (the S5 fiasco followed by the "let's make the S6 look as much like the iPhone as possible!" mess that was saved by the S6 Edge, which Samsung didn't even think that it would sell because Samsung's South Korean marketers thought it was TOO DIFFERENT from the iPhone!) before finally righting the ship. So ... there is the way that you choose to remember things and what actually happened. Pick the one that you prefer. As for me, I still wonder what would have happened had Samsung bought Beats and in particular if they had not fired the American marketing team because they were too proud to admit that the American team was performing better than the South Korean one.They were eventually able to right the ship, but at the cost of losing a lot of customers to Apple, Huawei, Xiaomi and Oppo in the 2 years that it took them to start back making compelling products and convincing advertising campaigns. Even now, their current success is due to the new screen designs, first the edge and then the minimized bezels. If their smartphones still looked the same way that they did in 2015, they would still be losing money and market share.

    Nice rant and attempt at advertising the knockoff but many articles and anti-Apple shills were claiming that Apple bought Beats "too late". Jimmy and Dre have wanted Apple to buy them out before their first product.

    sorry buddy but Apple will always be the creative artsy one as long as they continue to lead the way.

    freeper said:
    jungmark said:
    The analysts have said the watch and the AirPods are failures. how can this be?
    The analysts also claimed that Android was a failure because Google was not making any money on hardware (or software licenses, services, app sales or search) and they would never solve the fragmentation or security "crises" that turned out to be less than a hill of beans, or that Samsung should exit the mobile business because their year over year unit sales and profit declines would never stop, or that all of Android's customers would soon exit the platform for Windows Mobile because of Microsoft's superior brand name and their ability to integrate their mobile and PC products in the enterprise and get the huge Windows PC development community to make apps for mobile, and Nokia's hardware was oh so much better than anything in the Android world. Funny how no one among "the world is against us!" Apple fan blogosphere seems to remember stuff like that. Also, the media was not exactly wrong to point out that Apple Watch sales were not on the level of IPhone, iPad or even iPod sales. It wasn't a failure to make money. It was the failure to be "the next big thing" that transforms the industry the way that the iPhone, iPad and iPod did. As for the AIrPod ... who exactly called it a failure again? Give me a name or a link.
    Watch is a gigantic success. Where the hell have you been?? It's doing a lot better than the iPod which took years to reach Watch sales.

    I also believe yearcone Watch sales broke all year one Apple product records.
    watto_cobra
  • Reply 16 of 19
    kevin keekevin kee Posts: 1,149member
    freeper said:
    jungmark said:
    The analysts have said the watch and the AirPods are failures. how can this be?
    The analysts also claimed that Android was a failure because Google was not making any money on hardware (or software licenses, services, app sales or search) and they would never solve the fragmentation or security "crises" that turned out to be less than a hill of beans, or that Samsung should exit the mobile business because their year over year unit sales and profit declines would never stop, or that all of Android's customers would soon exit the platform for Windows Mobile because of Microsoft's superior brand name and their ability to integrate their mobile and PC products in the enterprise and get the huge Windows PC development community to make apps for mobile, and Nokia's hardware was oh so much better than anything in the Android world. Funny how no one among "the world is against us!" Apple fan blogosphere seems to remember stuff like that. Also, the media was not exactly wrong to point out that Apple Watch sales were not on the level of IPhone, iPad or even iPod sales. It wasn't a failure to make money. It was the failure to be "the next big thing" that transforms the industry the way that the iPhone, iPad and iPod did. As for the AIrPod ... who exactly called it a failure again? Give me a name or a link.
    Trying to hypobole the real issues does not make it true. And yes, I wrote hypobole. Every company has their own shares of critics, but when it comes to Apple, the critics tends to go to the extreme. If you can't see that, that is your problem. Also, I do not know where have you been, but prior to Apple bought Beats, every single reviews on Beats headphones are terrible. I suppose you want me to provide the links too?
    watto_cobra
  • Reply 17 of 19
    jony0jony0 Posts: 270member
    freeper said:
    fallenjt said:
    But still doomed?
    Name a single person who has said that Apple is doomed since 2009. Provide a name or a link.

    Some recent ones :

    Peter Thiel says 'age of Apple' at its end
    We've reached – maybe passed – peak Apple: Why the narrative needs to change
    IPhone Demand Drives Apple Profit, but Outlook Is Muted - The New York Times
    "They only have 60 days left to either come up with something or they will disappear," said Trip Chowdhry, managing director at Global Equities Research. Time is ticking for Apple to announce an iWatch, say analysts

    Some compilations :

    Apple Death Knell Counter - The Mac Observer
    The Macalope Special Edition: Fools of the Year | Macworld
    iPad Death Watch
    7 Reasons Apple is More Doomed Than You Think
    6 Reasons Apple Is Still More Doomed Than You Think
    Apple doomed - Bing

    And who could forget :

    Was Mike Daisey right about Apple being doomed?


    Edited to remove huuuge ugly Header 2 format
    edited May 2017 SoliSpamSandwichbrucemcwatto_cobra
  • Reply 18 of 19
    brucemcbrucemc Posts: 1,540member
    Calling @freeper !!!
    watto_cobra
  • Reply 19 of 19
    bestkeptsecretbestkeptsecret Posts: 3,430member
    brucemc said:
    Calling @freeper !!!

    That guy has to stop his bloody verbal diarrhoea. I find it very difficult to read his word salads. I don't try much either, cos, you know, it's freeper.
    watto_cobra
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