Tim Cook observed in the company’s Q2 earnings call that Apple’s services business was ‘well on the way‘ to the size of a Fortune 100 company in its own right – and confirmed that it hit this milestone in Q3. Services revenue climbed 22% year-on-year to total $27.8B in the last 12 months. That’s not just a Fortune 100 sized business, but more than Facebook’s total revenue for 2016. Services are now worth more to Apple than either Mac or iPad.
The company added a line about it to its official business strategy […] “The Company believes ongoing investment in research and development (“R&D”), marketing and advertising is critical to the development and sale of innovative products, services and technologies,” Apple wrote in the filing. Previously, the word “services” was not included in that sentence.
Apple also added a mention of services to an paragraph about Apple’s research and development expenses in the same filing. “The Company continues to believe that focused investments in R&D are critical to its future growth and competitive position in the marketplace, and to the development of new and updated products and services that are central to the Company’s core business strategy.”
Services revenue – which includes the App Store, other iTunes sales, Apple Pay, iCloud storage, Apple Music and AppleCare – is growing faster than that from any of Apple’s hardware.