Apple's $65 Billion Side Business

 


When people think of Apple, they think of hardware first. iPhone, iPad, MacBook and iMac – those are the products that made Apple what it is today: the most valuable company in the world. Despite having always emphasized the advantages of its hardware and software working seamlessly together, the latter was long considered a means to an end at Apple, rather than a worthwhile business opportunity in itself. Over the past few years, however, that perception changed to some extent, as software and services have come to play a larger role than ever in Apple’s business.

Last year, Apple doubled down on its services ambitions by announcing Fitness+, a Peloton-like subscription service for online fitness classes, and Apple One, which bundles Apple's subscription services into different packages ranging from $14.95 to $29.95 a month. With Apple TV+, Apple Music, Apple Arcade, as well as iCloud and Apple Care, Apple’s services and subscription business has become a beast of its own in recent years. According to its latest earnings report, the company now has 700 million paid subscriptions across all of its services, nearly four times the total of four years ago. As our chart illustrates, services revenue increased more than fourfold since 2013, growing from $15.3 billion in the twelve months ended June 2013 to almost $65 billion in the twelve months ended June 2021.

While $65 billion in annual revenue is beyond most companies’ wildest dreams, it can still be considered a side business for a company of Apple’s size. With product sales amounting to $282 billion in the twelve months leading up to June 2021, the hardware still accounts for more than 80 percent of the company’s total revenue.

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