As world waits for iPhone X sales, Apple Services has become a Fortune 100 business

Services revenue will probably exceed $31 billion for calendar 2017, not including payments to iOS developers.

As world waits for iPhone X sales, Apple Services has become a Fortune 100 business | DeviceDaily.com

There are numerous reports coming out from financial analysts arguing that iPhone X demand is “soft” or that the company may even discontinue production of the first-generation device before the end of the year. Apple will report its holiday quarter earnings on February 1, 2018, and we probably won’t find out how many iPhone X units were sold, but we will get overall iPhone sales figures.

Last year over the holiday 2016 quarter, Apple sold more than 78 million iPhones for revenues of $54.4 billion. That was record revenue at the time. This year, expectations are tempered by some of the bearish forecasts coming out, although Apple said in late October that demand for the iPhone X was “off the charts.”

A new consumer survey (n=500 US adult buyers of Apple products) from Consumer Intelligence Research Partners (CIRP) found the following breakdown of iPhone sales in the 2017 holiday quarter compared with a year ago.

iPhone sales mix (holiday quarter)

As world waits for iPhone X sales, Apple Services has become a Fortune 100 business | DeviceDaily.com

CIRP said that the iPhone 8 and 8 Plus were responsible for 61 percent of total US iPhone sales in the final quarter, while the iPhone X drove 20 percent. Earlier models comprised the remainder. The previous year the iPhone 7 dominated sales. This year, however, many iPhone buyers purchased the somewhat less expensive iPhone 8 and generally had more options.

Over the 2015 holiday quarter, Apple sold roughly 75 million iPhones, generating $52 billion in revenue. Accordingly, the range of iPhone sales last quarter was probably between 75 and 78 million. It’s possible the company will exceed last year’s unit sales totals.

If we assume 77 million iPhones sold in the holiday quarter and that the CIRP numbers are accurate — 20 percent of that total is iPhone X sales — then Apple would see roughly $17 billion in iPhone X sales alone.  The average revenue per user is higher for iPhone X than for lower-priced models.

While much of the focus will be on Apple hardware sales when the company announces revenues on February 1, Apple’s Services revenue (including its App Store business) has quietly grown to be the equivalent of a Fortune 100 company. Asymco’s Horace Dediu reminds us that Apple paid its developers $26.5 billion in 2017.

The total size of Apple Services’ revenue, which includes the App Store, Apple Music, Apple Pay and iCloud, will probably come in around $31 billion (excluding developer payments) for 2017.


About The Author

Greg Sterling is a Contributing Editor at Search Engine Land. He writes a personal blog, Screenwerk, about connecting the dots between digital media and real-world consumer behavior. He is also VP of Strategy and Insights for the Local Search Association. Follow him on Twitter or find him at Google+.

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