With the whole “fiasco” involving the sales of 2018 iPhones, the Cupertino based company should be looking to its services division in a hope of some revenue to keep the company growing. In a previous report from the company, it stated that his revenue in the services segment is expected to grow from 2017’s $30 billion to $50 billion until 2020. According to Apple’s CEO Tim Cook in an interview given to CNBC, during the year of 2018 the company managed to achieve $41 billion in such revenue.
According to some analysts, the company is expected to announce a new quarterly record of $10.8 billion for Service gross during the recently ended fiscal first quarter. The results achieved in this period that started in October and ended in December 2018, should be released by the company during the first week of February 2019. While Apple is really counting on its services business for the company future growth, this category saw lower growth in the fiscal fourth quarter of 2018. The division falls from fiscal Q3 25% to 18.3% by the end of Q4 which ended in September 2018. The services division is basically composed by Apple Music, Apple Care+, Apple Pay and the App Store.
According to an Analyst from Morgan Stanley, the decline in services revenue is nothing more than “temporary in nature”. The Analyst states that a great part of this drop was related to the AppleCare+ service, to be more precise, the service should represent at least $425 million of the $600 million shortfalls in Apple’s services revenue. The service in question adds additional 1-year of warranty for those acquiring any of the newer iPhone models, it costs as high as $199 and is available for the iPhone XS, XS Max, and XR. However, the small amount of owners acquiring the service is easily explainable by the iPhone lower sales.