Services Nearly Eclipse Everything Except the iPhone
Apple’s Services category is the one area in which the company has been seeing continual growth, and it’s grown 16% since last year despite Apple not launching any meaningful new subscription service offerings in 2023.
Significantly, at $22.3 billion, Apple’s Services are getting close to overshadowing most of its hardware business outside of the iPhone, which for this quarter only added up to $23.4 billion across Mac, iPad, and other hardware products the company produces.
Services is a complicated category since it includes not only earning from Apple’s customer-facing subscription services like Apple Music, Apple TV+, iCloud storage, and AppleCare+ plans, but it’s also where Apple’s 15-30% commission of App Store sales gets recorded, along with revenue from its multi-billion search deal with Google — an arrangement that’s now estimated to be approaching $5 billion per quarter on its own.
However, Cook told CNBC that “every main service hit a record,” and Apple CFO Luca Maestri added that Apple’s installed base of devices also hit an all-time high during the quarter, which heavily contributes to services growth as new iPhone, iPad, and Mac users are more likely to sign up for iCloud+, Apple Music, or other services.
Although Apple recently raised prices for some of its services, these increases are only starting to take effect in the next few weeks for existing subscribers, and even the announcement came after Q4, which ended on September 30. However, the year-ago price increases or Apple Music and Apple TV+ likely had some small impact on the rise.