Apple’s services business is now bigger than IBM – & growing

Don’t underestimate Apple’s razor

Have you noticed how Apple often likes to compare some of its business segments to Fortune 500 companies?

Apple has several big businesses

During its recent financial calls, Apple has made several comparisons of this kind, including these extracted from transcripts online:

• Apple’s Wearables business has doubled in three years and is nearly the size of a Fortune 100 business. (Q2 22). (It was the size of a Fortune 120 business in Q1 21).
• Services was the size of a Fortune 50 company in the 12 months into Q1 22.
• Mac and iPad combined were the size of a Fortune 50 company in Q3 21.

I hope you get the idea.

We can’t know why Apple does this. I would imagine it’s an outlook that shows how the company already has a backup plan in the event it is ever forced to divide itself into different business units.

And competitors might argue that these results suggest the market power Apple now must enable itself to build and enter new business segments, but I feel this is driven by user experience and trust more than by market status.

[Also read: Apple buys smart UK credit reference start-up, Credit Kudos]

Apple Pay dominates its industry

Apple services have become the 115th biggest global firm

But one thing that puts all these claims into an interesting new perspective is that if you add it all up, Apple’s Services would be the 115^th largest company on the global Fortune 500 listings.

The unit earned around $75.1 billion in the fiscal year ending March 22, that’s a huge rise since 2013, when services raised $14.5 billion, according to Bankless Times. It may stagger some readers to learn this part of Apple’s business outperforms IBM ($57.4b).

Apple now has around 825 million services customers and continues to introduce and extend the services it already provides in an initiative that seems to extend across the corporation.

Apple Business Essentials is a service that shows this, and the company’s potential pans to extend Apple Card and add BNPL schemes to Apple Pay will further extend its reach. App Store revenues also continue to increase.

Analysts at Evercore anticipate services will reach $100 billion in revenue by 2024.

Those services give the company a more predictable revenue, help keep consumers using Apple products, and provide valuable cash with which to subsidize research & development at the firm.

The latter will be important as the company moves to introduce the innovations it has been quietly working on within new product families and continues to maintain the lead it has built with its most innovative recent product, Apple Silicon.

I think it would be unwise to ignore the significance of all of this.

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