Over the years, tech giant Apple has continued to innovate and provide customers with new product offerings. The company recently began focusing more on the service segment and based on financial results, the shift appears to be paying off.
Data gathered by Buy Shares shows that between the third quarter of 2015 and the third quarter of this year, Apple’s service segment revenue grew by 161.63%, making it the fastest-growing branch of the company. During Q3 of 2015, the segment’s revenue stood at $5.03 billion while in Q3 this year, the figure was $13.16 billion. In the second quarter of this year, the revenue was $13.35 billion, a growth of about 4.95% from the $12.72 billion revenue recorded after the first three months of this year.
Elsewhere, between Q3 of 2015 and Q3 of 2020, revenue from the iPhone segment dropped by 15.77%. In the third quarter of 2015, the revenue was $31.37 billion while currently, it stands at $26.42 billion. On the other hand, Mac revenue grew by 17.41% between Q3 of 2015 and Q3 of 2020. At the end of Q3 2015, iPad revenue was $4.54 billion which has grown by 44.93% to $6.58 billion in the third quarter of this year. Lastly, revenue from the wearables, home, and accessories segment had a percentage growth of 144.31% between Q3 2015 and Q3 2020 at $2.64 billion and $6.45 billion respectively making it Apple’s second-fastest-growing revenue stream.
Apple’s focus on service segment paying off
The Apple services segment comprises offerings like the App Store, Apple Music, Apple TV Plus, Apple Arcade, Apple News Plus, Apple Pay, and iCloud. With iPhone sales plunging over the years, Apple shifted its focus to services, and the new model appears to be paying off. Apple’s services business mainly encompasses everything from the App Store to licensing deals. Notably, the recent boost in revenue can be attributed to services like Apple Music. The music subscription service enjoys millions of customers offering clear competition to established players like Spotify.
Before focus shifted on the services segment, Apple’s wearables businesses served as bright spots in the company’s earnings reports. The segment is made up of devices such as AirPods, Apple Watch, and HomePods.
The growing revenue from the services segment can also be attributed to the millions the company pumps into research and development. This massive budget goes into hardware developments as well as the establishment of more digital solutions to everyday needs. The research is necessary since it helps the company to keep innovating and improving its product offerings. Apple’s market capitalization is almost $1 trillion, making it one of the most prestigious and profitable companies globally.
Impact of coronavirus on Apple revenue
Notably, Apple’s revenue from other segments was projected to drop in the second and third quarters of this year after retail stores were closed due to the coronavirus pandemic. CEO Tim Cook is on record acknowledging that the company was hit by the pandemic but users now rely on Apple products to stay connected, informed, creative, and productive.
Later this year, the company smartphone and accessories category might get a boost following the release of the second-generation iPhone SE, 2020 iPad Pros, and iPad Pro-Magic Keyboard. The company has provided guidance to restart operations in regions in the U.S. China and South Korea. The company delayed an earlier plan to begin some U.S. reopenings earlier in April. Despite the pandemic, the company’s results can be deemed impressive considering that 2019 was characterized by a series of ups and downs.