Doomed: Apple Services grew only 17 percent

The Motley Fool is disappointed.

From James Brumley’s “What Bugs Me Most About Apple’s Q2 Services Revenue” posted Sunday:

Last quarter, Apple’s consolidated top line edged 1% higher, reaching $58.3 billion. Services led the way, with revenue for that segment coming in at a record-breaking $13.3 billion for 2020’s second quarter, up 17% year over year…

Given the circumstances, though, it seems Apple’s services would have grown much more than they did for the three-month stretch ending in March. Millions (more plausibly, billions) have been stuck at home for a good part of the past eight weeks, bored out of their minds. It looked like they were buying a lot more digital entertainment. Apparently, they weren’t buying a great deal more of it from Apple using their iPhones…

Given the backdrop of a record-breaking number of iOS devices in use at a time when consumers were using the daylights out of them, one would have expected a lot more services growth from Apple than the 17% improvement it mustered for the quarter in question.

Indeed, much of that absolute growth is a reflection of the growing number of actively used iOS devices rather than Apple’s improving ability to extract more revenue from iOS users. That puts the iPhone saturation debate back in the spotlight.

Cue the graphic:

Fool disappointed services Q2 2020

My take: Never satisfied.


  1. Fred Stein said:
    Here’s the algo: Say anything controversial about Apple and get attention. Then cherry pick some numbers creating a semblance of intellectual rigor.

    But their numbers suggest active iOS devices went up by only 7%. Surely most of those new active iOS devices are Apple Watches and AirPods.

    Actually 17% CAGR suggests the complete opposite, mainly that Apple Services is NOT reaching saturation.

    Brumley is playing games, when he says, “put the iPhone saturation debate back in the focus.” He counts all iOS devices not just iPhones. He should be challenged to admit a human error, or admit to blatant distortion.

    May 3, 2020
  2. Aaron Belich said:
    TMF’s click bait machine is almost as bad as Forbe’s Contributor Network. They’re coverage of Apple and $AAPL has always been laughably bad. Full disclosure, I’m a TMF Stock Advisor subscriber.

    May 3, 2020
  3. Dan Scropos said:
    We should see a nice spike when the 1 year free trial for Apple TV+ with the purchase of an iPhone last year expires in 6-9 months. That said, 17% with an impending tailwind is pretty darn impressive. CAGR of even 15% for the next 5 years is a staggering amount of incremental revenue. Let him have his day. We have the future.

    May 3, 2020
  4. Jacob Feenstra said:
    That’s why they call it Motley Fool. Some have no problems living up to the expectation.

    May 3, 2020

Leave a Reply