👉 Background: Apple started in the mid 1970's with their big chunky computers and evolved iPods, iPads and of course iPhones. Consumers buy the hardware...and the software came included. But along the journey, they started to build out its 'services' portfolio too. We're talking iCloud, Apple Music, Fitness+, Apple TV+, and Apple Pay... All largely software services.  

👉 What happened: In Apple's third quarter results, it announced that it added 150 million paying subscribers over the past 12 months to this division. And, this takes its total customers in the Services business to over 1 billion paying subscribers.

👉 What else: This comes at a good time for Apple, because it kind offsets its lagging iPhone sales, which dropped more than 2.4%—its third largest revenue drop since 2016.

What's the key learning?

💡Not all revenue streams are created equally. And luckily for Apple, its sexier revenue stream is booming while its more boring revenue stream is softening.

💡Apple's services business is critical for shareholders because it has stronger margins than hardware products. In fact, Apple's gross margin for its services business in the June quarter was 70.5%. That's almost double the 35.4%margin for all of Apple's hardware products.

💡Investors like the services revenue stream as it is more predictable and it provides more ways for Apple to make money from its installed user base of over 2 billion devices.

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