Apple Stops Taking Businesses for Granted

Services are a big and growing part of Apple's future. "We had a stellar quarter in services, which generated all-time record revenue of $9.5 billion, fueled by double-digit growth in our overall active installed base," Cook said.

Apple's services category includes both business and consumer cloud services, including such digital content as music and video as well as Apple Pay, licensing and AppleCare product service contracts. Apple is on track to double its 2016 services revenue by 2020, Cook said. Services revenue was $7.17 billion in the quarter ending December 2016.

Services revenue was up 31% year-over-year. Services made up nearly 18% of total revenue this year, compared with 16% in the year-ago quarter.

Paid subscription services from Apple and third parties have now surpassed 300 million, up more than 60% in the past year. "Revenue from subscriptions accounts for a significant and increasing percentage of our overall services business," Cook said. Nearly 30,000 apps offering subscriptions are available in the App Store.

The App Store set a new June-quarter revenue record, as it approached its tenth anniversary this month, Cook said. The App Store has generated nearly twice the revenue of Google Play so far in 2018, based on third-party research evidence, Cook said.

Apple Music revenue grew more than 50% year-over-year, and cloud services revenue grew more than 50% year-over-year, Cook said.

Apple's communications services are hitting record usage, with an all-time high for monthly annual users for Apple Messages and FaceTime calls made, and growth accelerating March to June, Cook said.

Siri requests already exceed 100 billion so far this year, and the number of articles read on Apple News more than doubled year-over-year, Cook said.

Services and the iPhone powered Apple growth, with the iPad and Mac dragging. Apple sold 41 million iPhones in the third quarter of 2018, for revenue of $29.906 billion. iPhone unit sales were up a modest 1%, while revenue was up 20%. On the iPad, Apple sold 11.553 million units, for $4.7 billion revenue, up 1% in unit sales and down 5% in revenue. The Mac sold 3.72 million units for $5.33 billion in revenue, down a painful 13% in units and 5% in revenue.

Apple is losing its domination of a shrinking smartphone market, according to a report Tuesday from IDC. For the second quarter of 2018, smartphone vendors shipped 342 million handsets, down 1.8% year-over-year, and the third consecutive quarter of year-over-year declines, and only the fourth quarter of decline in history. And Huawei topped Apple as the second-biggest smartphone vendor, IDC says.

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— Mitch Wagner Follow me on Twitter Visit my LinkedIn profile Visit me on Tumblr Follow me on Facebook Executive Editor, Light Reading

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kq4ym 8/13/2018 | 8:21:33 AM
Re: Luxury goods Yes, it does seem that moving along that marketing direction has done well for them. Keeping prices high, promoting sleek design, and holding on to their long term buying "fans" while attracting new customers whenever they can had made it a profitable business.
iainmorris 8/1/2018 | 9:30:55 AM
Luxury goods Luxury goods business Apple has yet again shown that milking rich people and fanboys is a more lucrative strategy than selling affordable gadgets to the masses.
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