Apple's services business alone now the size of a Fortune 100 company, beats out Facebook
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.
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
2) I hope this can translate into boosting the default iCloud storage.
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!
So many people like to criticize Eddie. This won’t change much. Still, seeing Eddie block out the noise and do is amazing!
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.
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.
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.
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.