Apple’s Services penetration isn’t high despite years of growth

Apple services

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Analysts say that despite years of steady growth in the services sector, Apple is still seen as a device maker, with customers having only half-hearted access to a variety of non-hardware factors. I believe there is.

Apple’s services business continues to grow year-over-year, with more than 900 million paying users on Apple’s platform as of October. Despite this, Apple’s service is still not well-entrenched in its user base, at least according to Consumer Intelligence Research Partners.

In a report titled “Apple Services – Not as Dominant as Apple Hardware,” analysts point to 60% penetration of paid iCloud storage for users, although some ‘s AppleCare option cuts it down to 4%. It told CIRP that Apple has “clearly had mixed results in selling services to device customers.”

For consumers, CIRP believes they “think of Apple primarily as a hardware manufacturer.”

The most successful element is paid iCloud storage, which is integrated into the use of iPhones, iPads, and Macs, making it “relatively immune to competing services.”

AppleCare, Apple’s extended warranty service, is the least successful, with 4% of iPhone and 7% of iPad customers paying. CIRP believes this is due to “myriad competitors in the extended warranty market.” These competitors also have an advantage in selling the iPhone on services such as mobile carriers.

Among Apple’s other services, Apple Music is said to be used by just over a third of Apple customers. In order to grow in established markets like streaming music, Apple has to “convince customers to switch from existing services.”

Apple TV+ has a penetration rate of 28%, lagging behind Apple Music. Substantial competition is again an issue here, but each service has its own dedicated program, increasing the opportunity for consumers to pay for multiple services.

Two other media services are also gaining customer penetration. Today, about one in five Apple customers subscribe to Apple News, and just over a quarter of them subscribe to Apple Podcasts.

Each also faces stiff competition, with Apple News facing “a wide range of national and local news outlets.” Apple Podcasts now appear the same from Spotify.

Despite a half-hearted view, multiple other analysts say services are a key driver of the company’s growth. has offered to help Apple weather the macroeconomic conditions.

Meanwhile, in July, Morgan Stanley argued that increased focus on subscriptions could increase Apple’s market capitalization by nearly $1 trillion.

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