Apple Services may soon beat hardware

Chris Burns - Apr 27, 2015, 4:43pm CDT
Apple Services may soon beat hardware

It’s Apple’s Q2 2015 and one category stands out to me above all others: Services. While the iPhone has had a 40% growth over this time last year and the Mac has had 10% growth year over year, it’s the Services category that I’m most interested in. Why? Because it contains Apple Pay and all of Apple’s software stores. Because its growth has been far more tempered than any other category on Apple’s basic Product Summary list, and because it’s about to break past two categories for the first time in a long time: iPad and Mac.

Just this afternoon, Best Buy announced that they’d soon be accepting Apple Pay. Apple Pay will soon work with Discover Cards. Apple Pay is likely taking hold while PayPal falls.

Apple Pay is growing, needless to say.

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Apple suggested this afternoon that they achieved an “all-time record performance of the App Store.” During today’s earnings call, Apple CEO Tim Cook suggested that the App Store alone achieved a 29 percent growth year over year.

The Services category as a whole had a 4% growth rate compared to Apple’s first financial quarter of 2015, and had a 9% growth rate year over year.

Services includes revenue from the iTunes Store, App Store, Mac App Store, iBooks Store, AppleCare, Apple Pay, licensing, and other services.

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While the Services category had a revenue of $4,996,000,000 (nearly 5 billion), the Mac category had a revenue of $5.6 billion and the iPad had a revenue of $5.4 billion.

Both the iPad and Mac had unit sales and revenue fall compared to Q1 of 2015, while the Mac grew year over year and the iPad fell year over year.

What do you think will happen first:

1. Apple Pay / App Store are separated from the “Services” Product category.

2. “Services” surpasses Mac and/or iPad.

We wouldn’t be surprised by either possibility.

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