Apple’s Growing ‘Services’ Revenue ⇥ sixcolors.com

Jason Snell, Six Colors:

Last quarter, Apple made about $22 billion in profit from products and $18 billion from Services. It’s the closest those two lines have ever come to each other.

This is what was buzzing in the back of my head as I was going over all the numbers on Thursday. We’re not quite there yet, but it’s hard to imagine that there won’t be a quarter in the next year or so in which Apple reports more total profit on Services than on products.

When that happens, is Apple still a products company? Or has it crossed some invisible line?

The most important thing Snell gets at in this article, I think, is that the “services” which likely generate the most revenue for Apple — the App Store, Apple Pay transactions, AppleCare, and the Google search deal — are all things which are tied specifically to its hardware. It sells subscriptions to its entertainment services elsewhere, for example, but they are probably not as valuable to the company as these four categories. It would be disappointing if Apple sees its hardware products increasingly as vehicles for recurring revenue.