Apple has been highlighting the robust performance of its service business on its recent earnings calls, as its core hardware sales shrink. Services revenues have expanded by 22% year-over-year over the nine months of fiscal 2016, emerging Apple's second largest business segment, overtaking the iPad and Mac. The cash cow of the services segment - the App Store - saw its highest ever monthly billings during July, with over $50 billion in cumulative developer payments, while newer business such as Apple Music (15 million+ paying users) and Apple Pay have also been performing reasonably well. The reasons for Apple's strong showing on the services front are straightforward. Firstly, device engagement is often higher for Apple products compared to Android. Secondly, iOS users typically have higher disposable incomes and are willing to spend more on paid services. That said, Apple does face some significant risks ahead.

more...