Apple now makes more money from services than by selling Macs

“Apple now makes more revenue from its services than it does from selling Macs,” Tom Warren reports for The Verge. “Revenue from services like iTunes, the App Store, other internet services, and licensing has increased 20 percent year-over year. It’s a shift that means Apple can now generate a steady stream of revenue from existing devices that are accessing its internet-based services that the company controls.”

“The overall shift means Apple’s services unit is now the company’s second largest category during the recent quarter,” Warren reports, “ahead of Mac and iPad sales but behind dominant iPhone sales.”

“While services are now ahead of Mac revenue, that doesn’t mean the Mac is failing,” Warren reports. “Mac sales dropped 12 percent year-over-year, but Maestri believes the company ‘grew market share” despite a “challenging quarter for personal computer sales across the industry.’ Mac sales generally outperform the rest of the PC market, but sales have declined in both of Apple’s 2016 quarters.”

Read more in the full article here.

MacDailyNews Take: Again, here’s hoping Apple has big plans for Mac (software and hardware) at WWDC this June.

SEE ALSO:
Why Apple needs more hardware hits – And, has Tim Cook lost his focus? – April 29, 2016
The iPhone 6s has been a major disappointment for Apple – April 27, 2016
Analyst: Apple to dump ‘iPhone 7s’ and jump straight to iPhone 8 next year – April 22, 2016
Apple services now reach 124 million U.S. adults as user base expands – April 21, 2016
Analyst cuts Apple price target, says ‘iPhone 7’ doesn’t look like a must-have upgrade – April 20, 2016
Apple’s services business saw massive 60% profit margins in 2015, more growth expected – April 20, 2016
Why the 2017 iPhone will be made of Liquidmetal – April 18, 2016
Ming-Chi Kuo: Apple’s 2017 iPhone to feature new ‘all glass’ enclosure – April 18, 2016
75 percent of teens say their next phone will be an iPhone – April 13, 2016
Credit Suisse: Apple’s underappreciated services business could be growth engine – April 4, 2016
Mossberg: Apple’s iPhone 7 had better be spectacular – March 23, 2016
Apple highlights services in search of Wall Street’s love – January 26, 2016
Apple reaps $18.4 billion quarterly profit, the largest ever recorded by a single public corporation – January 26, 2016
Apple beats on earnings; sets all-time records for revenue, net income, and EPS – January 26, 2016
MacDailyNews presents live notes from Apple’s Q116 Conference Call – January 26, 2016
Apple beats Street with all-time record quarterly earnings – January 26, 2016

[Thanks to MacDailyNews Reader “Dan K.” for the heads up.]

14 Comments

  1. Hardly a shock since services are used by people who have any/all of Apple’s devices and people can effectively be paying for stuff day in day out if they need/want to. People buy a device every x years. It would be a shock if services hadn’t eventually overtaken Mac sales. In other news Apple makes more money from selling iPhones and Macs than they do from selling iPhones or Macs.

  2. More revenue, perhaps, but could be very different on the which makes more profit, given Apple’s legendary net markup on hardware – something much harder to achieve in the very competitive services arena, where Apple doesn’t have the same degree of premium rep….

    ….anyway, would be interesting to know.

    Other companies that used to mostly “sell things” are (if in some fits and starts) making decent headway in the “software as a service” arena, e.g., Adobe and Microsoft…

    …and Amazon Web Services generate a lot of revenue too…

    …while Google and facebook are making beaucoup bucks “giving” software away….

  3. Okay, okay, so there isn’t much money in selling Mac Pro boxes or trash cans. I understand. So, all the better for you, APPLE, since there is so little pressure now on you to create the world’s coolest looking circular workstation, why not just get a few engineers to saw the old box in half, weld on a new latch (just move the old) and then plug in a bunch of SSD drives, cards and CPUs and call it a day. Keep an updated trash can and add the box, pointing out to the press that you are the FIRST computer company to design and offer both a rectangle and circular tower systems. Maybe offer the “new” box in aluminum AND black aluminum for the cool effect. Also, create a new line of micro-CPU blades for adding to the box, that way people can go bonkers adding CPUs, turning their new Mac Pro sawed-off box (code name options: ‘half pint,’ ‘ball buster,’ or ‘Cupertino Crunch’) into a super cluster.

    The whole exercise would be fun, a certain segment of the market will love it and the cost of design and engineering will come well under whatever budget you allocated for the trash can.

    Keep the trash can and add a sawed-off tower. APPLE will come to be characterized by the press as “SMART. MOVING FORWARD BY GOING BACKWARDS. And FRUGAL!”

    1. Not really; a few thousand extra Macs sold is a microscopic drop in the ocean. Mac computers already offer features that 95% of computer users wand and need, while offering none of those they don’t need. Anyone who’s been following Apple for the past years knows this: Apple mercilessly removes features that nobody uses: from floppy disk, SCSI connector, ADB connector, analogue modem, wireless remote for the Front Row, to ExpressCard slot, VGA, DVI, MiniDVI outputs, optical audio output, optical disc drive, Firewire 400, Firewire 800… There are many more on that list, and it proves that Mac line thrives when the feature set is as minimal as the user base wants it.

      Eventually, for us who need more, choices may become very hard.

      1. Yes! And one more reason to offer a side-open box allowing users to easily plug in those extras that don’t make economic sense for APPLE to build into the “average” system.

        APPLE should offer a “LEGO” system box so they and others have a third party market opportunity for creating specialty plug-ins.

      2. Apple doesn’t do focus groups.

        I tend to think of Apple’s relentless march to technological glory not as perverse minimalism but as practical farsight— that is, an expression of their private and exclusive DeLorean time machine.

        Thus, because Apple is always a little AHEAD of everyone else, I’ll alter your original sentence thus:
        Apple mercilessly removes features that everyone uses; and
        Apple mercifully removes features that nobody uses.

        Every Apple removal has generated bitching, from those who soldier on through well-known practices, accustomed to bulging backpacks; but also praise, from those who shouldered others’ burdens for too long through higher costs.

        No company wants to disturb their customer base for fear of losing sales, but Apple has done it time and again and thrived. It unnerves everyone; but the DeLorean device has proved itself every time. They always know something we don’t know, because we think normally and can’t access the future. And we hate them for that, and want them to be wrong for once, just to justify our feelings.

    2. if they would update the MBPro they would get my money today…come on guys! (ps I dont need it thinner…) gimme lots of power, lots of ports and all the battery you can cram in the same form factor and I will give you 3K…Ive been waiting a year!

  4. Apple services revenue depend on hardware sales unless Apple wants to concentrate more on providing for Android and Windows (like iTunes). Shrink hardware sales and services revenue drops.

    Macs made more money than iPads last quarter.
    For those saying don’t bother with Macs (like make that mid Tower people are clamouring for as not a single Mac today has an upgradable video card) then should they then ALSO not bother with iPads?

  5. All this means is sales of Macs have decreased. I cannot envision how less people purchasing Macs is a good thing. It is easy to understand. Apple had fallen behind designing Macs at the cutting edge of technology. It is a sad time in Cupertino but Tim Cook couldn’t care less or hasn’t a clue how to reverse this trend. It disturbs me that the current state of Apple is blasé.

Add Your Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.