Apple makes money off of Apple News

Apple is making billions with these services

We have already spoken several times here on the blog that the company is striving to put its future on a completely different footing. “Different legs” means that you no longer want to hope that the iPhone will sell as well as it still does forever.

This is also a really good idea, because the smartphone markets are increasingly saturated, top Android handsets have long been as good as iPhones and, as the devices are getting better across the board, the cycles in which the smartphone -Owners purchase new devices.

It is indeed smart to expand into other business areas, because the giant from Cupertino will not be able to compensate for Macs and tablets if the iPhone numbers develop increasingly negative in the next few years. For Apple it is clear that you have to rely on the services in order to be successful in the future. These services already include a wide range of services from Apple Music and AppleCare to the App Store and various license agreements.

I recently wrote on the subject that Apple is tinkering with the post-iPhone era and the service division is vital for this plan. In this article, we want to shed some light on the subject and list the various services that are involved - and how Apple can earn money in the respective sectors. Unfortunately, Apple is not known to be very revealing with this information, so that we can hardly give any actual figures, but I think you can at least guess the potential of this service division.

Table of Contents

Apple Music

As is so often the case, Apple has also launched its streaming portal, which is simply titled “Apple Music”. In Cupertino, people like to take a lot of time and then try to create something better out of good ideas from the competition. At this point, I don't want to rate whether they succeeded in doing this with Apple Music, but they are definitely the only music streaming offer that can keep up with Spotify in terms of user numbers. The Financial Times reported at the end of 2018 that Apple Music had 56 million users, while Spotify was approaching the 100 million milestone with 96 million users.

Apple makes money here mainly with subscription fees, but also with carrier partnerships. We cannot determine exactly how much coal Apple makes with this service because the tariff structure does not allow it. There are users who only use the free trial months, students who are there for five dollars a month and family plans that require 15 dollars. In this case, the normal price of 10 dollars should also be the guideline that we use as a guide.

So let's just calculate with a thumbs up at 10 US dollars per user, that would be about 6.72 billion US dollars per year that rush into the Apple coffers. After all, that's about a quarter of what the company makes annually with its Macs

Apple Pay

Even if Zalando suggests otherwise: Apple Pay is finally picking up speed in Germany, after the German launch was a long time coming. With its mobile payment service, Apple earns money through transaction costs that are due to customers and banks. Customers are free of charge of three percent of all funds sent with Apple Pay Cash that are tied to a credit card.

With Apple Pay you pay contactless in retail, but you can also go shopping online with this service. There are no fees for you, but for dealers, although Apple does not give any figures here. Therefore, we cannot calculate here how much the company is bagging itself with this payment service, but at least we can state that there were 1.8 billion transactions in the last quarter.

Apple Pay is certainly not a big item when it comes to sales, but it is a very important building block for customer loyalty.

Apple App Store

The App Store is one of Apple's service classics that has been around for over ten years. We incur costs here in different ways, depending on the content we buy. So it can be purchase prices for applications, but also in-game purchases or subscription amounts for services like Netflix.

As of June 2018, Apple has already paid out a total of over 100 billion US dollars to developers. Assuming that in most cases Apple collects 30 percent fees, we would get a mountain of around 42 billion US dollars that Apple has collected over the course of the decade through these fees alone.

However, Apple threatens hardship in the form of antitrust complaints from various companies. They accuse Apple of operating a monopoly and gaining an advantage in its own services. Netflix and Spotify have already publicly commented on this or even filed a cartel complaint with the EU, and Kaspersky recently also voiced criticism.

iTunes

Another classic from the Apple workshop. In recent years, iTunes has crumbled a bit, because it used to be a pure shopping paradise for content of all kinds. In times when many millions of people stream series and films on Netflix, Amazon, etc. and music on Spotify, Fewer series, films and songs or albums are now sold.

Nevertheless, iTunes is always in focus, especially for users of Apple hardware, and iTunes is now also represented on Samsung Smart TVs. Apple Books under the iTunes roof is still one of the largest book shops and is therefore absolutely relevant. We cannot give you figures on the income here, but Apple also earns on iTunes from the fees that are incurred for the products and subscriptions.

As an end user, you will of course not notice any of these fees, but you will notice the costs for iTunes Match, which can be booked at just under 25 US dollars if you do not use Apple Music, which also includes iTunes Match.

iCloud

The iCloud may not be as important as Dropbox or Google Drive, but for owners of Apple hardware it is important because everyone has 5 GB of free iCloud. It is stupid, however, that these 5 GB have to become tight quickly, because not only photos etc. are stored there, but also your backups for iOS devices.

That means: If you reach your limits here, backups are no longer possible. But in fairness Apple offers upgrades for quite little money, so the volume in the iCloud can be increased with ease.

If 50 GB is enough, you only pay 99 US cents a month. It is three US dollars at 200 GB and if you pull off even a ten per month, you can look forward to a mighty 2 TB of storage space. Here, too, it is again true that Apple does not give out any figures as far as the exact income is concerned.

With over a billion iOS devices worldwide, there is inevitably a very high number of iCloud users. However, we don't know how many of them will switch to the paid version. Those who are content with 50 GB pay a total of only 12 US dollars per year, but as the saying goes: small cattle also make crap and with the countless users of iPhones and iPads, it should also be many millions of people who opt for one of the subscription plans and make the Apple tills a little fuller.

AppleCare

For example, AppleCare + is Apple's extended warranty service. It offers you extended warranties, discounted repairs and better support. The costs for this vary depending on the product, for the iPhone, for example, they are between 129 and 199 US dollars.

License income

Even if it's not a service that is aimed directly at us: Apple also makes a lot of money with licenses. Years ago, for example, it became known that Google would transfer over a billion US dollars to Apple so that Google would be the standard search function on iPhones. According to the latest estimates by analysts, this cost pool should now be significantly higher, namely at 9 billion US dollars. This has not been verified, but would be a massive building block in Apple's service construct if it is correct.


An event will take place on March 25th at which Apple will present two more services. On the one hand about the long-awaited supposed Netflix competitor, on which Apple wants to bundle various TV services, but also has its own shows produced and broadcast. There is also a “Netflix for News”, a journalistic offer. We don't really know many details about either, but these services will continue to ensure that the company's service division becomes fatter and fatter.

As we said earlier, Apple doesn't really have to worry much about the future when it comes to losing the iPhone. The boys and girls from Cupertino are broadly positioned and even if we could not give a few absolute figures in this overview, you will understand that this service area of ​​the group is already a real gold mine and will continue to grow.

via The Verge