I would add that Apple isn't so much diversifying as it's mostly doubling down on their hardware dependency.
Doubling down? They do that daily and have for nearly 50 years. They're a hardware company, always have been, always will be.
Rising profits from services is great, but their services are primarily a way to enhance their hardware rather than a standalone product.
Some of Apple's services are hardware independent, while others are designed to enhance the hardware. Music and TV+ are aimed at everyone. iCloud is not, for obvious reasons. There'd be no advantage to using iCloud over other options if you don't use Apple hardware.
Apple also keeps Messages and FaceTime proprietary because they clearly believe that these services help them gain/retain customers.
I can't really think of a single service or application that Apple offers (in the consumer space) that offers a significantly better user experience than their competitors.
I prefer Apple Music to Spotify because Apple Music plays nicely with my huge lossless library at home. No other music service supports user files as well as Apple Music.
But, generally speaking, I agree with you. I also think this is by design. As you've already noted, services are a way to support hardware. When it comes to bundled apps and services, Apple rarely tries to match or exceed what third parties offer. They want developers to support their platforms. This has been true for a long time now. Apple's bundled apps and services are designed to satisfy the basic needs of most users, not compete with third parties. iCloud revenue comes from people needing storage space, not people paying for a great note taking service.
Apple Pay may the be one exception simply because it seems to be more widely accepted online, but frankly most people probably wouldn't really know or care about the difference if they had to use Google Pay for their daily transactions.
I agree. All of these pay services are pretty much the same when it comes to user experience.
That leaves Apple entirely dependent on their hardware business.
And this surprises you?? They've always been a hardware company. Hardware IS their business.
As long as they keep making devices that sell like crazy it's a great way for Apple to really push you into their services by locking out the competition in some areas. But, and that's a big hypothetical but, if the iPhone tanks it would probably take most of Apple's service business with it.
Absolutely. Apple's services business is directly tied to the iPhone, be it music in your pocket or storage for all of your photos. But if the iPhone were to tank, I think Apple would have much bigger problems than a decline in services revenue!