“Apple has been outspending Alphabet, Microsoft, IBM and even Amazon.com on cloud over the last year. This had many Apple bears, and even bulls like myself, ringing alarm bells over the short-term earnings outlook,” Dana Blankenhorn writes for Seeking Alpha. “We were wrong.”

“The lesson of Apple’s third quarter report, which sent shares soaring today, is that CEO Tim Cook knows what he is doing. Services really can drive earnings forward.

What’s needed to be a player in cloud is cash flow that can sustain an immense capital investment, where $1 billion/quarter is an ante to the game,” Blankenhorn writes. “Amazon got it from the store, Google from search, Microsoft from software, and Apple from its devices.”

“With its cloud investment Apple has put itself in position to host the next Pokémon GO, the next augmented reality hit, wherever it might come from,” Blankenhorn writes. “It has put itself in position to go after the computing contracts of other Fortune 500 enterprises, and to make itself independent of IBM except as a sales force.”

Read more in the full article here.

MacDailyNews Note: Apple’s Services revenue includes Internet Services, AppleCare, Apple Pay, licensing and other services.

Tim Cook: Apple’s services business alone will be the size of a Fortune 100 company by next year – July 26, 2016