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During today's third quarter earnings call, Apple announced its second consecutive year-over-year revenue drop, but amid the decline, the company's services category saw significant growth based on strong App Store performance.

Services revenue was up 19 percent year over year, and according to Apple CEO Tim Cook, Apple saw its highest App Store revenue ever, setting a new all time high. Compared to the year-ago quarter, App Store growth was up an impressive 27 percent, with iCloud, AppleCare, and Apple Music also seeing notable growth.

App-Store-About-800x369-800x369.jpg

Over the course of the last 12 months, Apple's services revenue is up $23.1 billion, and next year, the company expects revenue from services to "be the size of a Fortune 100 company."

Growth was fueled by Apple's active install base, which brought in $10.3 billion dollars during the quarter, marking 29 percent growth year-over-year. Apple CFO Luca Maestri said the company set a new record for customers making purchases through the iTunes and App Store, and the average amount spent per customer was the highest Apple has ever measured.

App Store revenue has climbed consistently over the last four consecutive quarters and Cook said he expects the services category to continue to grow "very briskly."

Article Link: Apple's Services Revenue Up 19% on App Store, Apple Music Growth
 
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mejsric

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Mar 28, 2013
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They’re taking in more money off fewer iPads sold. Also, the percentage of total revenue generated by iPads grew by 33% year-over-year, which would be more impressive if iPhone sales didn’t fall to help make it happen.

What he means is this article (only this) says iPad revenue is drop.

Apple announced its second consecutive year-over-year revenue drop with falling iPhone, iPad, and Mac sale
 
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jclo

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Dec 7, 2012
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What he means is this article (only this) says iPad revenue is drop.

Post says overall revenue has dropped, not iPad revenue. It does say iPad sales have dropped, which is true. It's obviously not clear enough so I'll rewrite that bit.
 
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sudo1996

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Aug 21, 2015
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Maybe this is the reason investors were happy. Hardware sales definitely don't look good moving forward, but establishing a foothold in markets for online services is great.
 
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vooke

macrumors 6502
Jul 14, 2014
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They should start making intentionally weak products. My second hand iPad Air bought in 2014 has everything going despite daily minimum 6 hours usage.
 
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marvz

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Aug 27, 2012
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Services are of course the future of Apple. Apple Music, Apple Pay, Apple Car (sharing, etc.) and the good old App Store.
 
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WBRacing

macrumors 65816
Nov 19, 2012
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Services are of course the future of Apple. Apple Music, Apple Pay, Apple Car (sharing, etc.) and the good old App Store.
It's a steady income stream that requires little effort & cost, especially when compared to the R&D that goes into hardware & software development.

Thing is though, if people stop buying the hardware, the stream can and will eventually dry up.

Screenshot_2016_07_27_13_32_25.png


Screenshot_2016_07_27_13_32_37.png
 
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jayducharme

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Jun 22, 2006
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The thick of it
Thing is though, if people stop buying the hardware, the stream can and will eventually dry up.
I wonder whether that will be a problem in the future. I think it's more likely that Apple's products last quite a long time (for tech) and carry a premium price. I'd guess that many of the people who want an Apple product already have one, and aren't ready to replace their devices just yet. When USB-C finally becomes a ubiquitous universal standard, I'd bet that people will start upgrading their old hardware and Apple will have a spike in sales.
 
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NT1440

Contributor
May 18, 2008
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Sounds like Apple Pay still isn't that big of a source of revenue for them.
It never was supposed to, what it does do is help facilitate payments into their current and upcoming (via Apple Pay in the browser) services, along with increase the "stickiness" factor of the iOS platform.
 
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tvamvarg

macrumors newbie
Feb 5, 2009
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So "services revenue is up $23.1 billion" over 12 months. And this is on a total services revenue of about $30 bn (13% of $233 bn)? And the services category reportedly grew by 19% between Q3 2015 and Q3 2016.
I think you need to revise or explain that statement.
 
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