Since when did Apple become a services company?
A close look at Apple’s latest quarterly results, presented on August 1, raises some interesting questions about the growing role of services in its income statement.
The graph shows the company’s net revenue by category: although it continues to be heavily dependent on its flagship product, the iPhone, which accounts for 46% of its revenue, the numbers of its services division continue to grow quarter by quarter, and in the most recent, they already represent 28% of revenue.
But turnover, in this case, is only part of the story, because what really stands out about services is their profitability: the average margin that Apple extracts from its products is a fantastic 35% (something impressive in the consumer electronics category and way ahead of its rivals), but the average margin of its services is a hefty 74%.
What services are we talking about? From boring insurance (Apple Care) and commissions from the App Store, iCloud or Apple Pay, to content such as music, movies, series, news, a sports monitoring service, and so on.
If we add up the profits generated by all those lines, it turns out that we get about $18 billion, compared to the $22 billion generated by its products. These two figures have never been so close: for the first time in its history, Apple could soon earn more from…
