Apple Services: 585 Million Subscribers

As usual, it’s Apple’s Services category that continues to shatter records, and this year it jumped to a staggering $14.5 billion, even despite the fact that Apple is still giving away Apple TV+ for free to most of its customers.

Of course, there’s a lot more tucked into Apple’s “Services” category, and there’s still little doubt that the bulk of this revenue is made up by its $8-$12 billion Google search deal and the 30% commission is takes from App Store sales. In fact, while Apple never breaks down its numbers, most analysts have estimated that these two make up about 50% of Apple’s Services revenue by themselves.

However, these two areas aren’t huge growth markets. The Google deal is mostly a fixed annual rate, and the App Store has been around for long enough that it’s become a pretty stable revenue stream, so it’s the upswing in Apple’s other services that accounts for most of the $2 billion increase over last year’s quarter, which of course came at a time when Apple hadn’t even yet launched Apple TV+ or Apple Arcade.

At this point, Apple now boasts 585 million paid subscribers to its services — an increase from 135 million at this time last year, although it’s unclear what it means by “paid” subscribers in this case.

To be clear, Apple does move numbers around on its balance sheets to account for “free” subscriptions to Apple TV+. Since it’s been giving away Apple TV+ with new device purchases, securities regulations and “generally accepted accounting principles” (GAAP) require them to take a portion of revenue from their hardware categories and apply them to the Apple TV+ category every time somebody takes advantage of the free one-year offer. In other words, Apple’s Services revenue does actually reflect income from all of the users who are currently getting Apple TV+ for free; those users are just considering as having paid $60 less for their iPhones instead.