Services: Apple's $100-Billion Growth Engine

Apple's services division, which includes Apple Pay, Apple Music, Apple TV+ and the App Store - among others - reached yet another all-time revenue high in the fourth quarter of fiscal year 2025. Apple’s quarterly services revenue climbed to $28.8 billion in the three months ended September 27, up 98 percent from $14.5 billion five years earlier. Thanks to an installed base of more than 2.3 billion active devices and constant investment in new service offerings over the past decade, Apple has more than one billion paid subscriptions and is making more than $100 billion per year in services revenue.

While traditionally viewed as a hardware company, Apple has made major strides to expand its services business over the past few years. The reason behind the services push is quite obvious: as smartphones, tablets and other devices have matured and breakthrough innovations have become few and far between, replacement cycles have gotten longer, making it harder and harder for a company like Apple to keep growing or even maintaining revenue at its incredibly high level. Enter services, which provide Apple with a steady stream of recurring (high-margin) revenue. Over the past few years, services have emerged as the company's most reliable growth driver during a time when hardware sales stagnated. Between 2015 and 2025, Apple’s annual net sales grew from $234 billion to $416 billion – an increase of $182 billion. Meanwhile, the company’s services sales increased from just under $20 billion to $109 billion – an increase of $89 billion – meaning that services alone drove almost 50 percent of Apple’s sales growth over the past decade.

Apple‘s services are tightly integrated with its hardware, meaning they help with customer lock-in, i.e. binding users to the company’s ecosystem. The fact that customers can now do pretty much anything within Apple’s (in)famous „walled garden“ makes them even less likely to buy non-Apple devices when they‘re in the market for a new smartphone, laptop, tablet or smartwatch.