Apple’s surprising new $20 billion business

“Apple made $20 billion off of its customers last year — right under our noses,” David Goldman reports for CNNMoney. “With so much focus on how many iPhones, iPads and Macs Apple sells, it’s easy to forget that Apple continues to make a ton of money on its customers even after” the initial hardware sale.

“For the first time ever on Tuesday, Apple pulled back the curtain on its services revenue, revealing that it sold $19.9 billion worth of services to customers in 2015, up 10% from a year earlier.,” Goldman reports. “What Apple loves about its services business is that it compounds as people buy more gadgets — it isn’t tied to the ups and downs of quarterly iPhone, iPad and Mac sales.”

“Apple said its customers are now carrying around 1 billion “active” devices, which are Apple gadgets that people interacted with at least once in the past three months. ‘This is an unbelievable asset for us,’ Cook said Tuesday on a conference call with investors. ‘Because our install base has grown quickly, we have also seen an acceleration in… what has become one of the largest service businesses in the world,'” Goldman reports. “Cook noted that Apple’s services business is now larger than most Fortune 500 companies’ annual overall sales. On its own, Apple’s services would be No. 148 on the list, generating more sales than Southwest Airlines, Starbucks and the Gap.”

Read more in the full article here.

MacDailyNews Take: Apple has a license to print money.

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  1. It’s good that Tim Cooks basically gave the idiot annalists an idiot’s guide on to how to value Apple.

    Will they get it even now that the lens has zoomed out a bit…?

    Doubt it.

          1. Cthulhu needed parents with a better list of birth names… If it had been pronounceable, or even spellable, he might have a shot at taking over. As things stand, he’s a clown show.

  2. So now that Apple has this $20 billion ancillary business based on the fact that a huge number of Apple devices are in circulated, does this mean we can expect them to stop pre-releasing software for those valuable devices so early. I’ve heard you guys say before that some situation or another wasn’t the first flub. But honestly, we haven’t seen one bad launch. 2015 had at least 3 bad launches for one reason or another. Two of those were supply chain and one was software. Many argue that iOS 9 was a 2015 flub as well since it was in fiscal 2015. Is there not some sense that the first sight of that software or the first experience with Apple being for a watch that is back ordered for 1-2 months after the actual realease date actually might cost Apple some customers? I hear ya. Hasn’t happened yet. In fact though, it may be happening right now. I want an iPad Pro. But after the Apple TV, I decided I’d wait on all future Apple products and see if it’s something where I’ll be paying to be a tester for them or where I’ll actually be a valued customer. Yeah, one can say I’m going without the best device and I’ll ultimately buy anyway. Probably true, but coming from sales, I know that a sale on hold for any reason is giving a customer time to change his mind. I may decide that an iPhone 6S Plus, and iPad mini and an iPad Air actually suit my needs. $1049 for Apple up in smoke. They really better get their act together on delivering quality hardware with quality software on a reasonable schedule. If you can’t get those 3 things together, you might have me today but you don’t have my loyalty and that puts your $20 billion back pocket industry at risk of another company realizing that quality delivered on deadline can knock a big bad ass off its pedestal.

    1. “They really better get their act together on delivering quality hardware with quality software on a reasonable schedule”

      Here’s an exercise for you: divide the annouced 1st quarter results numbers into the amount of devices sold. Highlight, Bold and underline those numbers and meditate on them for a while.

      Apples loyalty comes from people who know and understand Apple’s quality, commitment and support over a very long 30+ year period. It’s solid as a rock Mr. Ants in your pants loudmouth.

      1. Thanks for the name-calling and undying loyalty. Like it or not, I speak for a lot of IT professionals who love the UNIX OS and are underwhelmed by what Apple has done lately. Call me what you like but I’m actually rooting for Apple. But I do this for a living meaning I get paid to test stuff. I don’t pay for the privilege. And I consider that customer abuse. So while I root for Apple and acknowledge its today’s big thing. I just would like to see them be tomorrow’s big thing as well in the eyes of those besides the guys who will fight to the death to defend the Apple 2015 release cycle and likely processes underlying it. And, really, is the name-calling necessary when somebody posts a comment you don’t agree with? Just state your case which shows it to be wrong.

        1. If you stopped thumping your self important button, I would not have called you Mr. ants in your pants or loudmouth.

          I got paid too for many years to doing a lot more than “testing products” with the big boys and wouldn’t have the pretense of saying i’m “speaking for anyone” despite my expertise. You ain’t such a much and you certainly don’t have a clue about what it takes to have and deliver quality products with mass appeal , fanfare and appeal.

    2. >They really better get their act together on delivering quality hardware with quality software on a reasonable schedule.

      Where else are you gonna go? Windows? Android? Apple on its worst day is still better at attention to detail, consistency and UI than the alternatives.

      1. Point taken and you made my point. The prevailing attitude is outdo the competition rather that strive for greatness and even perfection, right? Markets and economies shift on the attitude you just put voice to. I addressed in my comments that I’m an Apple customer because they are the best today. But this past year, they have tried and tested my loyalty to the point of utter frustration on my part. Without that loyalty, I would be concerned about tomorrow. That’s what I’m speaking to. I do understand you are loyal. I get it. Will you please try to understand that some of us love Apple because it’s great but we don’t buy stuff because there’s an Apple logo. We are the customers who make Apple prove themselves.

        1. I do understand u…. I feel very similar.
          And my loyalty as a fan and an investor has been pushed to the limit.. Bu i am still hanging in…
          Attributing all these to growing pains…. But i expect things to change fast or i will be pushed over the line.

    3. There is no doubt in my mind that at the least TVOS was a totaly rushed product ….not even half baked… Usability and navigation and discovery features on my time-warner dvr are better at this level.. Sure tvos looks colorful and fancy… But ist not as usable in discovery and organization and centralization…..

      Its a fragmented mess of individual applications.

      It So many years of it being a hobby…and after that the big hype and buzz with Steve saying i have found the answer…and the world waiting for this apple wonder tv product for years …What was delivered?
      Nothing spectacular … Stuff that most other systems have had for a while. Fundamental Organizational tools missing… Half-baked remote implementation…lazy hardware redesign by just making it thicker and ugly ..
      To me it is one of the biggest apple let downs …. And yes they released it knowing all this and choose their loyal customers to be beta testers…
      No.. That’s not what Apple stands for…
      We pay a premium for premume hardware and software… None of that is in the tv4.
      Yet it was such higly anticipatedcproduct .

  3. Apple Music is my biggest disappointment since Apple bought Beats. The new interface is annoying and its idea of having so-called ‘Experts’ pick the best music for me is laughable. Apple needs to break iTunes into pieces. I enjoyed Apples music streaming service before but now I’m listening to Pandora more and more.

    I still love the new iPhones and there amazing cameras but it’s music app blows chunks!

    1. iTunes, Vox, Djay and Djay Pro all have problems when they try to add social to listening to music, many people like to listen to music, not see popup’s all over the place.

      Beats actually made a profit when Apple picked them up, that is always a good pickup.

  4. Apple makes an insanely great result and business is booming in every friggin thinkable front…

    ..and how does Wall Street reward AAPl??

    ..well its -6.21% right now, it’s INSANITY folks, that’s what it is and GOOG is almost on par with AAPL.

    Sick, unfair, stupid, you name it, they must *really* be smoking something in WS!

    1. Wallsteet, their contol of the media and narrative.. And thisecfools who fall for it and sell rather than buy..
      If there were enough buyes unaffected by the bs narrative.. The stock would not have dropped as much. ……
      We are partially to blame for feeding to the fire wallstreets starts off. Imho

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