To hear market analysts describe Apple Services, you would think it was given to the company by Steve Jobs direct from the afterlife. Services means more revenue and profit but guess where a big chunk of it comes from?
Even with a bad quarter of financial results– which tumbled APPL and Apple Inc from its perch as the most valued stock in the world– the company reported its second best quarter ever, led by… insert the famous Mac360 drum roll right here… Services.
Services is Apple’s future. Or, is it? Can you guess where Services revenue and profits come from? Well, there’s Apple’s share of application sales and subscription fees on the iOS and Mac App Stores. That’s big. What else? Well, AppleCare and the Genius Bar and Apple Music and iTunes bring in some big chunks of revenue and profits, too.
Apple no longer breaks out unit sales but the company is kind enough to market analysts, shareholders, and naysayers that it divulges revenue by major product– iPhone, Mac, iPad, plus Wearables, Accessories, and the like.
Services came in with a whopping $10.8-billion in revenue last quarter; higher than iPad, Mac, and Wearables. Apple won’t say how much profit is in each product line but we can guess that Services does not match the headlines.
Google. Word on the technology streets says Google paid Apple about $9-billion last year for the rights to have Google as the default search engine on Safari– Mac, iPhone, and iPad. That’s $9-billion for about 1.4-billion devices, most of which use the default search engine– Google.
Apple has no cost to go up against that $9-billion revenue so most of it is pure unadulterated profits. On average, about $2.250-billion per quarter. Google pays for more than 10-percent of all Apple profits, and nearly 25-percent of all Services revenue, and definitely the largest contributor to Services’ profits.
Apple’s Services is a big and growing chunk of the company’s business, but thanks to how much Google pays Apple to keep Google as the default search engine, I submit that Services would not be such a stellar financial performer if it were not for the search engine giant’s giant payments of pure profits to Apple.