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Apple Targets a $100 Billion Services Revenue Goal by 2025

Apple's service revenue is poised to surpass the milestone of $100 billion by 2025, a milestone the Cupertino, California-based company can reach despite facing legal and regulatory challenges. It accounts for a quarter of its total revenue, according to a new report released Tuesday by market reporting firm Counterpoint Research.

The market research firm also predicted that Apple, driven by the growth of its hardware and services sector, is expected to surpass the $400 billion revenue mark for the first time by 2024. Although lawsuits filed in antitrust litigation in the US and the EU pose a significant risk, analysts believe any long-term impact is unlikely.

“We know there’s a risk, but it’s just the beginning now. So, we don't expect any impact on embedded iPhone manufacturing costs, at least not in the medium term," Jeff Fieldhack, research director, of Counterpoint Research, said in a recent regulatory and policy briefing that Apple faces in the US EU.

“As regards Apple’s relative silence around its AI strategy, well, that has now changed with the big hint dropped on Tuesday around the announcement for June 10 WWDC. Am I expecting to see something special?  I wouldn’t be surprised – that’s Apple’s M.O.," Fieldhack added.

Apple's expanding installed base, which now stands at more than two billion devices, has been a catalyst for the growth of its services business. The report highlights the critical role that Apple Store, Apple Care+, Apple Music, and advanced Apple One subscriptions play in driving expanding device adoption.

From its launch in 2023, Apple One is expected to emerge as a major contributor to service revenue. Analysts expect iPhones to maintain its position as a cornerstone of the company's ecosystem, accounting for a portion of its revenue.

Additionally, the report suggests that iPhone growth in emerging markets will spur future expansion in other Apple products, as new users entering the iOS ecosystem could increase their spending at Apple. The cost of new products has increased as these customers become more dependent on their iPhones. Their spending on Apple products is expected to increase accordingly.

Apple's iPhone will continue to account for half of Apple's revenue and remain an important part of Apple's ecosystem. Premiumization growth and continued growth in emerging markets benefit Apple's iPhone business, offsetting several downturns seen in China this year iPhone growth in emerging markets also supports future growth of new Apple products in because more consumers will be new users entering the iOS ecosystem.

As these consumers rely more on their iPhones, they are likely to spend more on other Apple products.

Conclusion: Apple’s goal of achieving $100 billion in industry revenue by 2025 is an important milestone in its business strategy, reflecting the growing importance of digital services in the tech industry in the future.