Apple’s earnings release overnight talked about its services revenue -$5.5bn USD for the quarter.
While focus is generally on Apple’s products and the sales it gets from IPhones, IPads etc – the services revenue from iTunes, App Store and Apple Pay is huge and high quality. Not only is Apple’s revenue from services as big as all revenue that Starbucks derives, it demonstrates the huge ‘tied’ customer base that Apple has.
While people will talk about how the iPod and iPhone changed our lives, it was the fundamental disruption of the music industry by iTunes that has been at the heart of the change – and also just happens to have created a high quality and huge revenue stream for Apple.
While innovation in products causes disruption, business model disruption, such as seen by Apple in the way we access music, apps for a range of leisure and business uses and increasingly in the way we pay for goods and services, is the key to significant change.