Apple's services business alone now the size of a Fortune 100 company, beats out Facebook

Posted:
in AAPL Investors edited August 2017
With Tuesday's earnings report, Apple has officially met its projections of its services alone being the equivalent to a Fortune 100 company.




In the third fiscal quarter of 2017, Apple reported $7.27 billion in revenue, up from $7.04 from the last quarter, and $5.98 billion in the year-ago quarter. Apple's services revenue is gleaned from iTunes, iCloud, Apple Music, Apple Pay, Apple Care and the various App Stores.

Apple's last four quarters of service revenue total $27.804 billion. That figure puts it in 97th place ahead of Facebook's entire business at $27.64 billion, and just ahead of Northwestern Mutual's $27.8 billion




Apple's services business division's income has escalated rapidly along with the company's iPhone sales. In 2016, investment bank Piper Jaffray estimated gross margins on Apple's services business hovered at 60 percent for fiscal 2015, nearly doubling the percentage gleaned from the company's hardware -- and there is no indication that the gross margin has decreased.




Analysts predict that services revenue is expected to grow 17 percent per year through 2021, with a growth in hardware revenue of 2.4 percent, with a continuation of about 30 percent annual growth in Apple's App Stores per year. One analyst called the App Store which is currently the prime mover of Apple's services revenue "one of the best business models ever created."

The upcoming "super cycle," releases of the "iPhone 7s" and "iPhone 8" this fall, more acquisitions, and other product launches are also seen by analysts as factors that are likely to bolster services revenue growth.

Comments

  • Reply 1 of 10
    SoliSoli Posts: 7,678member
    1) Remember when Cook said "[The cloud] is just not a product. It is a strategy for the next decade," 5 years ago? I wonder what aspect of their services division involves cloud computing.

    2) I hope this can translate into boosting the default iCloud storage.
    netmagecalicornchip
  • Reply 2 of 10
    Rayz2016Rayz2016 Posts: 3,797member
    Hang on!

    Isn't that the outfit run by that sandle-wearing no-hoper, Eddy Cue?

    So while he's busy doing nothing, he's running a division making more money than the whole of Facebook?

    'Bout time Eddy got off his can!
    Solileavingthebiggpscooter63caliradarthekatwatto_cobraadm1cornchip
  • Reply 3 of 10
    Rayz2016 said:
    Hang on!

    Isn't that the outfit run by that sandle-wearing no-hoper, Eddy Cue?

    So while he's busy doing nothing, he's running a division making more money than the whole of Facebook?

    'Bout time Eddy got off his can!
    👏 Eddie Cue!

    So many people like to criticize Eddie. This won’t change much. Still, seeing Eddie block out the noise and do is amazing!
    lolliverradarthekatwatto_cobracornchip
  • Reply 4 of 10
    There were so many arrogant a**holes who called Tim Cook a liar when he spoke of services growth. They said it wouldn't be possible for Apple to do such a thing. I'm still willing to bet those same people will claim Apple's services growth won't last. I must admit even I had my doubts but I still took a wait-and-see attitude. I wasn't given the power to see into the future, so I figured anything could happen one way or the other. It's just that some people are so adamant that Apple won't survive as a company and it doesn't make any sort of sense at all.

    What I do know is I'm quite relieved that this quarter turned out as well as it did. I would have been satisfied as long as the stock didn't tank hard. The share gains are icing on the cake. I hope these gains hold for a couple of weeks. Netflix and Facebook's share gains have already left Apple in the dust but at least as an Apple shareholder I'm getting my dividends and they're not.
    edited August 2017 Solicaliwatto_cobracornchip
  • Reply 5 of 10
    foggyhillfoggyhill Posts: 4,692member
    There were so many arrogant a**holes who called Tim Cook a liar when he spoke of services growth. They said it wouldn't be possible for Apple to do such a thing. I'm still willing to bet those same people will claim Apple's services growth won't last. I must admit even I had my doubts but I still took a wait-and-see attitude. I wasn't given the power to see into the future, so I figured anything could happen one way or the other. It's just that some people are so adamant that Apple won't survive as a company and it doesn't make any sort of sense at all.

    What I do know is I'm quite relieved that this quarter turned out as well as it did. I would have been satisfied as long as the stock didn't tank hard. The share gains are icing on the cake. I hope these gains hold for a couple of weeks. Netflix and Facebook's share gains have already left Apple in the dust but at least as an Apple shareholder I'm getting my dividends and they're not.
    They left Apple in the dust because investors for those things seems to be sniffing pixie dust cause there is no chance PE's that high make sense.

    If Apple had the pixie sniffing crowd on their side, they'd be a 1.5 Trillion dollar company... And then I'd be worried they'd get off their high and dumped the stock.
    The current situation is probably better in the long run.
    radarthekatwatto_cobracornchip
  • Reply 6 of 10
    radarthekatradarthekat Posts: 2,428moderator
    Services growth will continue due to the growth of iOS device sales, and iOS device sales will get a boost from additional services and the ecosystem lock-in that comes with consumption of Apple-specific services.  This is what most analysts talk about; growth in the iOS installed base being the primary driver of services growth.  But there's more to Apple's future than merely selling more iPhones and iPads and AppeTV boxes.  It's about Apple being, in my words, a platform-building monster.  Everything Apple does is about building new software platforms that are expressed and monetized via additional hardware products.  Here's a previous comment I wrote on that topic...

    Apple is a platform building monster.  They treat everything as a platform, initially closed for internal use but eventually opened in intelligent and controlled ways to leverage their developer community, which ultimately cements the platform as an integral part of an interconnected and growing ecosystem.

    MacOS

    iOS

    iOS+ (on iPad)

    CarPlay

    Siri

    ApplePay

    Watch OS

    TVOS

    Apple Music

    Maps

    HomeKit

    HealthKit

    Metal

    Airplay

    Machine Learning

    AFS (Apple File System)

    ARKit

    NFC

    Apple is leveraging them all to create capabilities no other vendor will be able to beat, or even fast-follow because they haven't done the groundwork.  And it all locks in consumers and sells more hardware and services.

    watto_cobracornchipcali
  • Reply 7 of 10
    Rayz2016Rayz2016 Posts: 3,797member
    Services growth will continue due to the growth of iOS device sales, and iOS device sales will get a boost from additional services and the ecosystem lock-in that comes with consumption of Apple-specific services.  This is what most analysts talk about; growth in the iOS installed base being the primary driver of services growth.  But there's more to Apple's future than merely selling more iPhones and iPads and AppeTV boxes.  It's about Apple being, in my words, a platform-building monster.  Everything Apple does is about building new software platforms that are expressed and monetized via additional hardware products.  Here's a previous comment I wrote on that topic...

    Apple is a platform building monster.  They treat everything as a platform, initially closed for internal use but eventually opened in intelligent and controlled ways to leverage their developer community, which ultimately cements the platform as an integral part of an interconnected and growing ecosystem.

    MacOS

    iOS

    iOS+ (on iPad)

    CarPlay

    Siri

    ApplePay

    Watch OS

    TVOS

    Apple Music

    Maps

    HomeKit

    HealthKit

    Metal

    Airplay

    Machine Learning

    AFS (Apple File System)

    ARKit

    NFC

    Apple is leveraging them all to create capabilities no other vendor will be able to beat, or even fast-follow because they haven't done the groundwork.  And it all locks in consumers and sells more hardware and services.

    Applause. 
    cali
  • Reply 8 of 10
    carnegiecarnegie Posts: 363member
    AppleInsider said:

    ...

    Apple's last four quarters of service revenue total $27.804 billion. That figure puts it in 97th place ahead of Facebook's entire business at $27.64 billion, and just ahead of Northwestern Mutual's $27.8 billion

    ...
    Apple's Services revenues used to be larger than Facebook's total revenues. But that hasn't been true for each of the last 5 quarters. Facebook's total revenues for the last 4 quarters were over $33 billion, a little ahead of Apple's Services revenues over that time period.

    Yes, if you compare the last 4 quarters for Apple Services with 2016 for Facebook, the former would be larger. But just as Apple would move up (and into) the Fortune 100 rankings based on the last 4 quarters, so would Facebook - and it would be ahead of Apple Services.

    Apple's Services revenues are growing quite fast, but Facebook's total revenues are growing faster.
  • Reply 9 of 10
    cornchipcornchip Posts: 1,058member
    Services growth will continue due to the growth of iOS device sales, and iOS device sales will get a boost from additional services and the ecosystem lock-in that comes with consumption of Apple-specific services.  This is what most analysts talk about; growth in the iOS installed base being the primary driver of services growth.  But there's more to Apple's future than merely selling more iPhones and iPads and AppeTV boxes.  It's about Apple being, in my words, a platform-building monster.  Everything Apple does is about building new software platforms that are expressed and monetized via additional hardware products.  Here's a previous comment I wrote on that topic...

    Apple is a platform building monster.  They treat everything as a platform, initially closed for internal use but eventually opened in intelligent and controlled ways to leverage their developer community, which ultimately cements the platform as an integral part of an interconnected and growing ecosystem.

    MacOS

    iOS

    iOS+ (on iPad)

    CarPlay

    Siri

    ApplePay

    Watch OS

    TVOS

    Apple Music

    Maps

    HomeKit

    HealthKit

    Metal

    Airplay

    Machine Learning

    AFS (Apple File System)

    ARKit

    NFC

    Apple is leveraging them all to create capabilities no other vendor will be able to beat, or even fast-follow because they haven't done the groundwork.  And it all locks in consumers and sells more hardware and services.

    And you can see it coming if you look for it hard enough. Just like iTunes laid the groundwork for music downloads & the App Store, AR kit, I believe is a little peak at what's coming for project titan and touch bar will eventually become the entire keyboard. Competitors can do crummy knockoffs with limited functionality, but they won't have close to the refined features because apple will have been building developer adoption for half a decade. apples competitors love to build trains first because they look impressive. Apple builds tracks first and then builds the train slowly between each stop. 
    cali
  • Reply 10 of 10
    calicali Posts: 3,495member
    .....where's Rogifan?
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