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Since when did Apple become a services company?
A close look at , presented on , 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, …
