Apple’s Services category covers everything from paid iCloud storage tiers to Apple Music subscriptions, and it’s been clear for some time that this recurring revenue is becoming increasingly important to the company’s bottom-line. Just how important was revealed in yesterday’s earnings report: in Q4, Services revenue was larger than each of iPad and Mac sales …
Services accounted for 13% of quarterly revenue, compared to 12% for Mac and just 9% for iPad. iPhone naturally still made up well over half the total, but it’s not difficult to imagine a time when that will no longer be the case.
Of course, Mac revenue is likely to spike this quarter, thanks to both the brand new MacBook Pro models due to be revealed tomorrow and the usual holiday season sales. I’m sure by the time Apple reports its Q1 2017 financials, Mac sales will be worth considerably more than Services – but this milestone is notable just the same.
The great benefit of Services revenue to Apple is that it represents income which is relatively evenly spread throughout the financial year. Much of it takes the form of monthly recurring subscriptions, helping to smooth out cashflow in a company which traditionally sees a huge chunk of its revenue occurring once a year as it launches new iPhones.
Chart: Six Colors (via Daring Fireball)