Apple’s services - Where will Apple’s next trillion come from?

Apple's revenue sources break up

55% of Apple’s revenue 📈 comes from iPhone but sales have saturated. To hit the next gear, the company is focusing on 3 broad growth strategies

✅ Bringing the iPhone prices down for developing markets by manufacturing locally

✅Shifting the focus to complementary products like wearables

✅ Building a suite of services

Apple Music

📵 Yearly innovations in Smartphones have stopped - meaning users now refresh their iPhone once in 3 years instead of 2.

Apple iCloud

📱 Instead of publishing iPhone sales numbers, Apple now publishes the no. of active iPhones in the market. This is not just to make investor presentations look pretty but represents a change in their growth outlook.

App Store

🎧The revenue from complementary products/services is proportional to the no. of active iPhones.

💰 Apple’s services posted revenue of $46.3B in 2019 and are growing at a 40% YoY growth. Moreover, gross margin from Services is 63% as compared to 32% from Products.

Apart from services, Apple is also looking to add VR set & AR glasses to its product collection.

Apple Pay

In one of our post, Apple Vs Samsung Electronics we talked about who will win the Smartphone war, it appears that Apple is moving beyond this warfare into areas cultivating the next level of organic growth.