Apple promotors want investors to believe that Apple is a Services company. That is not reality. “Services” accounted for only 20% of revenue in AAPL’s most recent fiscal year (see our table below).
If Apple were to “bundle” certain hardware products into a version of its Apple One subscription (see our header photo), the company would not transform into a “Services” company overnight. Apple would gain more revenue visibility under such a scenario, but those bundled hardware products would not magically capture Services margins. Cloud-based Services – whether they be Enterprise Software offerings, Data & Analytics offerings or various forms of Entertainment content – benefit from the “build in once, sell it many times” principle. Hardware products don’t enjoy this benefit. Thus, whether it be the iPhone, the Mac, the iPad or Wearables, Apple’s hardware products will perpetually remain in the 30% Gross Margin range or below, never to capture the 60-70%-plus Gross Margins that Services offerings enjoy.
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