Apple’s latest financial results highlight a key trend: its services business is expanding at a significantly faster rate than its hardware division. For the fiscal year ending September 28, 2024, Apple’s total revenue grew by 2% year-over-year to reach €391 billion. While Apple iPhone sales remained flat, the Services segment surged by 13%, generating nearly €100 billion. If treated as a standalone company, Apple’s Services division would rank among the Top 40 of the Fortune 500. Apple’s Services segment, which includes revenue from iCloud, the App Store, and other digital offerings, has become its most profitable unit. The gross margin for services stands at an impressive 73.9%, almost double the 37.2% margin of Apple’s hardware business. This explains why Apple is increasingly focused on expanding its digital ecosystem.
Why Apple supports the secondary market
One major reason Apple embraces the secondary mobile market is its win-win impact on services. Through Apple’s trade-in scheme, customers are incentivized to exchange old devices for new ones, ensuring they remain within Apple’s ecosystem. Market surveys show that traded-in Apple iPhones often go to users who would otherwise purchase mid-segment Android devices. This strengthens Apple’s market position without cannibalizing new iPhone sales. Since both new and used Apple iPhones generate similar service revenue, the secondary market ultimately boosts Apple’s bottom line.
Google follows Apple’s trade-in model
Google is set to streamline Android trade-ins with the upcoming Android 16 release. The new system will feature a built-in trade-in option that assesses a device’s functionality within seconds, allowing buyback processes to begin instantly. This initiative is based on three key success factors: a seamless trade-in journey, instant payout, and high trade-in values. Like Apple, Google recognizes that its revenue from services benefits whether a customer uses a new or refurbished Android device.
Regional performance and market trends
Apple’s largest market remains the Americas, generating € 167 billion, or 43% of total revenue. Europe follows with € 101 billion, reflecting a strong 7% growth rate. However, Greater China experienced an 8% decline, bringing in € 67 billion. This downturn is notable given the ongoing geopolitical tensions affecting the region. Despite these fluctuations, Apple's overall performance underscores the increasing importance of services as a revenue driver.
Statistics and infographic: VisualCapitalist
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