Apple as a service: Services offer growth, visibility, and profitability

“Apple Services is the 2nd of 4 pillars to our Apple as a Service thesis. It consists of the App Store, Apple Music, iCloud, iTunes, Licensing/Google, Apple Care, and Apple Pay,” Gene Munster writes for Loup Ventures. “Critical to Services visibility is stable iPhone growth, which we believe is achievable.”

“In CY18, Services should account for 14% of revenue, growing to 20% by CY23,” Munster writes. “Services has grown on average 22% y/y over the past 8 quarters and grew 31% in Mar-18, compared to flat iPhone revenue growth during that period. In 2018, we estimate the annual Services revenue per user to be $34.76, up from $30.16 in 2017.”

Munster writes, “Assuming an average SaaS multiple of 10.1x on CY18 revenue implies an Apple Services valuation of $381B.”

Read more in the full article here.

MacDailyNews Take: That valuation puts Apple Services just ahead of Toyota.

AAPL’s paradigm shift – May 11, 2018
Apple Services: The nitrous in Cupertino’s profit engine – November 27, 2017
Inside Apple’s massive services results – August 9, 2017
Misunderstanding Apple Services – August 7, 2017
Dispelling the Apple Services myth – May 3, 2017
Apple’s Services business: $7 billion in revenue last quarter alone – May 3, 2017
Apple’s Services (App Store, Apple Music, Apple Pay) business is an unstoppable juggernaut that’s still just gathering strength – May 3, 2017


  1. Why does anyone listen to Gene Munster?

    Software as a Service is the same con game that MDN commenters have bitterly resisted from Adobe, Microsoft, etc. I see no reason to trust Apple to offer a better value, especially given how poor Apple software has become. Loss of Aperture and complete mismanagement of Appleworks/iWork shows Apple isn’t a software vendor to trust for the long term. Filemaker users, who enjoy one of the best database programs available, are on pins and needles wondering when Apple is going to unceremoneously pull the plug on them. you know, because Apple thinks it doesn’t make them enough money. Zero concern for long term users or how to migrate legacy data and hardware. Apple thinks everyone would be happy to pay a monthly fee to view your data on an iPad with no guarantee of privacy, availability, or security other than marketing platitudes. Apple would be 100% wrong.

    1. I’d pick Mike for personal home computing. SAAS only makes sense for businesses, and even then it’s often a ripoff.

      Bajarin and other bloggers might push their narratives but computing is not a one-size-fits-all situation. Some people actually need significant computing power and software for occasional use, like when we compile pics and videos annually and play them at our family reunion. Lots of work once a year— no desire to spend a fortune on monthly payments all year to do it.

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