Apple’s Services Continue to Dominate
Not only does Apple’s services business remain in second place to only the iPhone for overall revenue, but it grew by almost a third over last year’s quarter, with $17.5 billion in revenue that suggests it could soon break the $20 billion mark. In fact, it’s already approaching half the revenue from all iPhone sales worldwide.
Apple CEO Tim Cook gave much of the credit for the services boost to the Apple One bundles, saying it’s “a great ramp for services.” However, CFO Luca Maestri suggested that he considers the large bump to be an anomaly, and says that services will continue to grow well, but not quite at that rate.
Apple launched paid Podcast Subscriptions during Q3, and Spatial Audio likely also drew in new Apple Music subscribers. Apple noted that it set new records for music, video, the App Store, and AppleCare, but as usual, the company didn’t offer any specific numbers other than revealing that there’s been a double-digit increase in paid accounts overall.
While the bulk of Apple’s overall services revenue still comes from its App Store commissions and its multi-billion search deal with Google, the revenue from this side of its business is relatively static, so it’s fair to say the majority of the $4.3 billion increase in Apple’s services really has come from new subscribers jumping on board.
It’s also worth noting that even though Apple’s free one-year Apple TV+ subscriptions only came to an end on June 30, Apple has also been counting those extended free trials in its services revenue from the very beginning, moving the appropriate amount of money over from the hardware sales revenue for every customer who opts in to the trial.