“When Apple reported its second-quarter results yesterday, one of the first things it touted was the ‘strong momentum’ of its Services business, which includes iTunes and Apple Music, the App Store, iCloud, Apple Pay and more,” Rani Molla reports for Recode.
“Apple’s Services segment generated $7 billion in revenue last quarter, its ‘highest revenue ever for a 13-week quarter,'” Molla reports. “It was the second quarter in a row that Services revenue passed $7 billion. And ‘it’s well on the way to being the size of a Fortune 100 company,’ CEO Tim Cook said during the company’s earnings call.”
“For context, that’s a much bigger business than other notable internet services, such as Netflix [$2.64B] and Amazon Web Services [$3.66B],” Molla reports. “Services revenue grew $1.05 billion, or 18 percent year over year. That represents almost half of Apple’s $2.3 billion in overall revenue growth.”
Read more in the full article here.
MacDailyNews Take: As we just wrote this morning, Apple’s Services business is a tremendous machine that hasn’t yet even begun to gallop.
SEE ALSO:
Apple’s Services (App Store, Apple Music, Apple Pay) business is an unstoppable juggernaut that’s still just gathering strength – May 3, 2017
MacDailyNews presents live notes from Apple’s Q217 conference call – May 2, 2017
Apple Q217 earnings beats on EPS, misses on revenue – May 2, 2017
What’s amusing is that apparently Apple’s service has blown past Amazon’s AWS and yet Amazon continues to get all the praise over its cloud business. AWS’s constant praise from Wall Street really fooled me into believing that the cloud business was some unlimited high cash-flow business. That’s what Wall Street is always saying. Google and Microsoft’s cloud businesses make less money than Amazon’s cloud business, so what’s all this praise over what cloud businesses are making in revenue. Apple’s services revenue is nearly double what Amazon makes, so why the constant praise for AWS and almost nothing for Apple services.
Apple should try to develop a Netflix-type video service and even if it just worked on Apple products it would seem that Apple could make a lot of money from it. I honestly don’t understand why Apple isn’t taking advantage of such opportunities. Instead, Netflix gets a P/E of 204 and constant share price gains while Apple misses expectations. Seriously, Apple’s apparent lack of aggressiveness makes no sense to me.
What’s also amusing is that Amazon profits from Apple services because Amazon _is_ Apple services. Apple’s iCloud is just an Apple-branded wrapper on AWS.
That’s why Amazon is rewarded and Apple is questioned on Wall Street. A wise investor makes money by backing the shovel makers and the whiskey distillers, not the individual gold miner.
If Apple’s iCloud stood on its own, outperformed the competition, and served more than just Apple customers, then maybe it would be looked on as a large growth potential.
“Amazon profits”
oxymoron alert
Not so fast wise guy. Amazon is rewarded by Wall Street precisely because it plows every dollar it makes into building its businesses. It avoids taxation not by hoarding cash offshore like Apple, but by improving &expanding its offerings, many of which are not consumer. Apparently you didn’t notice but Amazon just destroyed half of the retailers in the USA.
Apple is successful today thanks to the iPhone and before it a whole array of products with the Mac as the center. But tomorrow, what will Apple offer for growth? Music Services? Video productions? I think not. Apple should not become the next Sony. If Apple doesn’t reinvigorate the Mac and the array of peripherals around it (airport, displays, pro programs, ipods, and new stuff that makes the Mac a must have device once again competitive, then Apple really will be a one trick pony, prosperous only until the company makes a mistake on its big seller.
I only wish Apple had leadership that cared more about changing the world through new user delighting, empowering products unstead of camping on its wealth and playing Wall Street games.
Lack of aggressiveness? More like lack of diection and innovation.