Services buys time, what next? – Computerworld

Services income also requires hardware sales, and not every Apple service will be generating anything like these numbers. The accretive nature of this part of the business is a little like the small fish that lives on a larger whale — you can’t have one without the other.

But in Apple’s ocean, Parekh’s revelation that the company has “over 1,000,000,000 paid subscriptions across services on our platforms” shows there’s plenty of fish in its ocean. Even as competition authorities force more competition into those waters, it’s a solid bet that Apple will continue to generate good business from the services segment.

Not playing games

Kicking the raw data Apple provided on its consolidated balance sheet around, you’ll see that services revenue after direct sales-related costs delivered almost half of Apple’s overall net income during the quarter. And if hardware revenue tracks overall hardware margins at 39.1%, then services at 75% is generating more actual net income than any Apple product other than the iPhone. Apple Fitness, indeed. Apple Arcade is not just playing games.

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