No, Apple is not ‘becoming a services company’

“The narrative surrounding Apple Services has taken on a life of its own. While many people think Apple is moving to embrace a more services-oriented culture in response to slowing iPhone sales, the reality is much different,” Neil Cybart writes for Above Avalon. “It’s time to dispel the myth that Apple is becoming a services company.”

“Apple Services was thrown into the spotlight this past January when it became apparent that Apple would soon report its first year-over-year decline in iPhone sales. In an effort to get Wall Street to focus on something other than slowing hardware sales growth, management began to weave a new Apple narrative involving terms such as “installed base related revenue” and “installed base related purchases.” Apple’s goal was to provide Wall Street with a different way to think about Apple’s business,” Cybart writes. “However, many company observers misinterpreted the change in narrative as Apple looking to pivot into a services company.”

“The Apple Services myth was born. We have gotten to the point where seemingly every report chronicling iPhone sales declines quickly turns to Apple’s supposed push into services,” Cybart writes. “Apple isn’t turning into a services company. The narrative that Apple management tried to sow earlier this year with Wall Street wasn’t meant to foretell a shift to new recurring revenue streams. Instead, Apple wanted to give investors a different way to think about Apple hardware sales. Apple can still grow the installed base despite year-over-year hardware sales declines.”

Much more in the full article – recommendedhere.

MacDailyNews Take: Services revenue is just a side benefit for Apple executing properly. That Apple’ services business alone will be ‘Fortune 100’ size next year is meaningful for providing perspective on the immense size of Apple’s overall business.

If you do something and it turns out pretty good, then you should go do something else wonderful, not dwell on it for too long. Just figure out what’s next. — Steve Jobs

Note: Apple’s services business includes revenue from Internet Services, AppleCare, Apple Pay, licensing and other services. The Milwaukee-based life insurer Northwestern Mutual is currently 100 on Fortune’s list with $28.111 billion in annual revenue and 5,530 employees.

SEE ALSO:
Tim Cook’s Babe Ruth moment: Calling services biz ‘Fortune 100’ over a year in advance – July 27, 2016
Tim Cook: Apple’s services business alone will be the size of a Fortune 100 company by next year – July 26, 2016

12 Comments

  1. Meanwhile, mac worldwide market share drops a whopping 23% (from 9.57% to 7.37% in world wide share) between April ’16 to August ’16. Windows 10 is up to 23% total world wide share and all windows 90.52%.

    Source: http://netmarketshare.com/

    Wtf, Apple!

    23% drop in four months is just ridiculous! The Mac brought you to the dance, Apple, now dance with it!!

    1. The truth is, it doesn’t matter if it’s 10% or 2%. Because even if everyone who currently has a mac upgrades to the nee machines to be announced, Apple can’t possible climb any higher than 10-15% of market share due to cost. Businesses face a choice: Equip hundreds, or even thousands, of employees with a $250 Windows desktop or a $1,500 mac desktop, and they are going to go with economics more often than not.

      However, if they equip them with ipads, then its a different story. However, an iPad is no mac.

      1. It’s pretty clear what my agenda is… Do you even need to ask?

        The mac’s market share dropped by 23% worldwide in four (4) months. Wow. I mean Wow!!! LINUX IS CATCHING UP for crying out loud!

        I’ll keep posting this because it’s the truth. Mac users deserve the truth.

          1. Let’s all just ignore the 10,000 pound rose gold elephant in the room here: Apple need to put more effort in the mac. But if you want to call everyone a tool for having an opinion, then you can just suck my left ball bearing.

  2. No, it’s not becoming just a services company, but it is becoming an information appliance and services company. Their view of technology is one of decreasing reliance on the local device and increasing reliance on services. It’s obvious in their promotion of the iPad, lack of promotion of Macs, Macs becoming smaller, thinner, less ports, etc.

    It’s not a bad plan, from a consumer electronics company.

    Apple is handing over the general purpose computing and high performance computing arena to people like ASUS, Dell, HP, ACER and so on.

    I’m looking at a new ACER laptop right now with a 21″ Curved Display, 7th generation intel core I7, and 2 (count’em) two GeForce GTX 1080 graphics cards. (Yes, I said Laptop).

    Look at the current Razer Stealth and it’s more powerful than the projected upcoming MacBook Pro.

    Apple is on a different path. Some of us are going to have to choose. Do we go with computing versatility (no matter how painful losing the Mac OS is), or do with stick with the very non-techie appliance world of Apple.

    I also don’t think Apple realizes that I’m not invested in the iPhone or AppleTV or iPad or WatchOS, or Services. I’m invested in the macOS. Take that away, and I have no more loyalty to Apple.

    If all I wanted out of a computer was what the 90% want, Apple would be fine. But I want more. And I’m in the minority. The other thing that they should consider however is that those of us in the minority, tend to influence the purchases of others.

    1. If you want to choose Windows or Linux, go for it. More macs for the rest of us who understand Apple’s path and realise that the path less trodden is the more exciting, more adventurous path than the one so trodden by Windows users that the path is severely deteriorating.

  3. Apple has to continue to sell hardware/devices in order for its services sector to continue growing. The hardware feeds the services. The services feed the hardware. Neither one can grow substantially in the face of a decline in the other.

    Thus, this Apple is becoming a services company is total BS. What is true is that the Apple ecosystem is maturing and Apple is gradually finding ways to monetize the services side of that ecosystem. As a result, services revenue is growing in absolute terms and as a percentage of total revenue. Nothing surprising there.

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