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Summary:

Services have historically been Apple’s weak spot and not much of a direct factor in its financial health. But that’s definitely changing as more people use iCloud, iTunes and the App Store.

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The iPhone is still Apple’s biggest business, followed by the iPad. But as the laptop and desktop market continues to decline, Apple’s content sales business is showing signs of becoming its third-largest business, according to the company’s fiscal third-quarter earnings report delivered yesterday.

itunes-icloud-musicIn addition to an update on the company’s finances and hardware sales, Apple executives laid out in some detail how the company’s software and services business is doing. It’s historically been Apple’s weak spot and not much of a direct factor in its financial health. But that’s definitely changing, both in terms of use and in revenue from content delivered by those services:

  • iCloud signups grew at almost a 30 percent rate since the beginning of the year: Apple said 320 million people have registered for iCloud accounts — which is necessary for Apple since iCloud is key to more than a dozen of its services.
  • People aren’t just signing up, they’re using Apple’s online services: in total 900 billion iMessages have been sent and 125 billion photos have been uploaded. 
  • iTunes revenue continues to grow: at $3.99 billion for the quarter, it’s continuing to creep up on the slowing Mac business, which generated $4.89 billion in revenue for the company last quarter.
  • 900,000 apps available are making money: they’ve delivered $11 billion in revenue paid out to developers in the last five years — this is $1 billion more than Apple announced at WWDC just a little over a month ago.

Apple Maps directionsDespite these data points, there’s still much we don’t know about the health of Apple’s services: Apple did not, for example, talk at all about its Maps business. We know it’s still working on improving the data and features — it has augmented those efforts recently through purchases of Locationary and HopStop.

iTunes Music has been around for a decade and the App Store for half that long. iCloud is just barely two years old. It would be good to get an update on Maps though — knowing how many people are regularly engaged with and using the nearly year-old service even after its rocky debut would tell us a lot about Apple’s success in growing new services.

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  1. Thanks Erica for the insights – agree iTunes has great potential and ‘needs work’. Asymco has a nice info graphic: (from May)

    http://www.asymco.com/wp-content/uploads/2013/05/Screen-Shot-2013-05-12-at-5-12-8.12.30-AM.png

  2. Jordan Gehman Thursday, July 25, 2013

    hello there

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