Apple’s revolutionary product: services – WSJ

When Apple Inc. started splitting revenue from app sales, music subscriptions, and payment transactions last year, the accounting change seemed opportunistic. IPhone sales were down and the services provided a growing business to showcase.

The change now appears more than justified.

On Tuesday, Apple said the services – the App Store, iTunes, Apple Pay, iCloud and more – generated more than $ 27.8 billion in revenue for the 12 months ended July 1, making it the equivalent of a Fortune 100 company and greater than Facebook Inc.’s total revenue in 2016.

The company hit the Fortune 100 milestone a quarter earlier than CEO Tim Cook expected, as increased subscriptions to Apple Music, Netflix Inc. and other services boosted service revenue by 22% in the past. during the June quarter to $ 7.27 billion. IPhone is still Apple’s biggest money maker, but services combined with better-than-expected iPad and Mac sales reduced Apple’s total iPhone revenue to 55% over the course of the year. quarter, up from 57% a year ago.

“The company is really impressive when you think about it in terms of scale compared to other publicly traded companies,” said Jeff Dillon, managing director of Dillon & Associates, based in Jackson, Mich., Which has Apple among its largest holdings. “There is a long trail to go there.”

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