Apple’s secret weapon

“Apple’s secret weapon within the Services segment is its ability to rapidly ramp up the subscription business,” Bluesea Research writes for Seeking Alpha. “In the latest quarter, Amazon reported $3.6 billion in subscription revenues with over 50% YoY growth rate. At the current pace, Amazon’s subscription business is projected to hit a whopping $30 billion mark by 2020. Other giants like Alibaba are also focusing on their subscription business to extract the maximum leverage from their enormous ecosystem.”
“Apple has a much bigger user base within its tight ecosystem compared to Amazon or Alibaba,” Bluesea writes. “Earlier this year, Apple reported 1.3 billion devices on its platform. In a recent report, CIRP has shown that Apple’s iPhone user base is growing at a double-digit rate. Within the US alone, the total user base has increased to over 180 million. Hence, even with stagnant unit sales, Apple should be able to deliver good growth in subscription revenues with its growing user base.”
“Apple can leverage its enormous user base to build a strong subscription business. Apple Music has over 50 million subscribers. Bundling of various media services could increase this subscriber base to 237 million by 2025 with a total revenue of $37 billion,” Bluesea writes. “The conservative valuation of this vertical would be $111 billion to $148 billion. Newer services built around the subscription model would further increase the growth runway of this vertical.”
Read more in the full article here.
MacDailyNews Take: Yup.
Apple’s Services are an unstoppable juggernaut! — MacDailyNews, July 16, 2018
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