Without a doubt, Apple’s biggest cash cow right now is the iPhone. The company sells an absurd amount of smartphones every year resulting in healthy revenue quarter after quarter. However, even Apple knows its growth is slowing down, which is why it has other sources of revenue as a fallback.
One of those is its “services” category, which comprises of Apple Music, iCloud and App Store, among others. Which, by 2022, is expected to make more money for Apple than the iPhone. According to Morgan Stanley analyst Katy Huberty, over the next five years, as iPhone sales slow down, Apple’s services will continue to grow to the point where they become the company’s biggest revenue maker.
Currently, Apple’s services only account for 23-percent of its revenue while iPhones occupy a whopping 86-percent. But Huberty believes by 2022, the roles of the products will reverse.
A key inclusion in this “services” category is the Apple Watch. As the wearable’s popularity rises, so will its impact on the services category. This, coupled with the continued growth of Apple Music, Apple Pay, iCloud and other services, will lead to the category supplanting the iPhone as Apple’s main money maker.
As promising as Apple’s services category is, a lot of dominos still need to fall for it to achieve its potential. Right now, only 2.9-percent of Apple customers are subscribed to Apple Music. Apple Pay usage is also low even though it’s been around for going on four years.
If Apple can continue to grow its services branch, the iPhone’s reign as the Cupertino company’s main revenue will come to an end sooner than expected.