Report: Apple's Services Division Surpasses Tesla's Revenue
Analysts believe that Apple can further expand its services business with the App Store, iCloud, Apple Music & Co. Tesla, Disney, and Tencent will be beaten.
An Apple logo: making a lot of money with services.
(Image: Sebastian Trepesch)
Analysts expect Apple to achieve an annual revenue of 100 billion US dollars in its rapidly growing Services division for the first time. This is reported by the Financial Times. According to a forecast by Visible Alpha, which the newspaper quotes, the total for the fiscal year is expected to be 108.6 billion dollars, an increase of 13 percent compared to the previous year. Apple reports its quarterly figures on Thursday, which also conclude the fiscal year that ends in September. The report caused good spirits on the US technology exchange NASDAQ: Apple briefly managed to surpass a company valuation of four trillion dollars for the first time on Tuesday, something only Nvidia and Microsoft had achieved before.
Massive division with high profits
For context: If the whisper numbers are correct, Apple's services business alone would generate more revenue than the e-car specialist Tesla or the entertainment group Disney. Previous estimates assumed that the Services division, which operates under the long-time manager Eddy Cue, the Senior Vice President of Internet Software and Services, would account for a quarter of Apple's revenue and deliver up to half of its profits. The margins are extremely lucrative.
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Apple's services include, in particular, the App Store with its high commissions, but also the subscription service iCloud+, the streaming offerings Apple TV and Apple Music, the support and service department AppleCare, the payment service Apple Pay, as well as smaller offerings like the video game service Arcade or the news service News+. In addition, there are revenues such as those paid by Google for placement in the Safari browser—that alone is likely over 20 billion dollars per year.
Apple is under pressure
The fact that revenue continues to grow so strongly is remarkable because the App Store business is under pressure in many parts of the world. For example, the EU is forcing Apple to open its platform to include alternative app marketplaces and requires Apple to allow alternative payment methods. Regulators elsewhere are acting similarly—from Japan to Brazil. There are also repeated complaints from app providers, including disputes with the gaming giant Epic Games fought worldwide.
Finally, at times it looked like Apple might lose its search revenue from Google, but a US court then decided differently in an antitrust case. Meanwhile, Apple is not making an additional cent from its troubled child, Apple Intelligence. The AI system is a free part of the operating systems, while chatbot companies like OpenAI or Anthropic charge high monthly fees of 20 euros and more—albeit for significantly better performance.
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