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Revenue in Apple’s Wearable’s category grew from $17B last year to $24B this year, suggesting the health, fitness and communication benefits are dawning on customers. This means that the AW is still a new and growing product, and that’s very important to note. Tim Cook twice mentioned that 3/4ths of Apple Watch buyers are new to the Apple Watch. This three-fold process is typical of Apple business savvy.ĥ. Then, allow the customer to finance new hardware on a more regular basis, generating both hardware and (Card) service revenue. As a first step, make the trade-in program amazingly frictionless. An example of the synergy between hardware and services is the Apple Card and the financing of new Apple hardware. There is no reason why it can’t get much, much larger.Ĥ. Apple’s services revenue of $12.51B for the quarter is the equivalent of a Fortune 70 company. It’s a measure of people’s trust in the hardware and Apple itself that will fuel services growth. So far, I think Apple’s customers agree and enjoy being in a secure ecosystem as they branch out and experiment with new services on their devices. I see services as leveraging hardware, not as a substitute. As we’ve said here at TMO, the way to sell more Macs is to design and launch new models regularly.

Apple got back on the Mac bandwagon in 2018-19 with new iMacs, MacBook Pros, Mac minis, and MacBook Airs. An example of the above was the record yearly sales of Macs. That’s because Apple is fundamentally a hardware company, even as the installed hardware fuels services as incremental revenue-now at 20 percent of Apple’s total.Ģ. At some point product revenue will, I believe, reverse, and return to growth, resulting in even more overall revenue growth for Apple. I don’t expect this trend to continue uniformly for both components. Apple’s revenue for the quarter and fiscal year was down slightly for products, but a significant growth in services resulted in overall, net revenue growth.
