Apple's transformation from primarily a hardware company to a services powerhouse is evident, as its services segment generated $26.3 billion in Q1 FY25, accounting for nearly 20% of total revenue. This shift emphasizes the higher profitability of services, with a staggering 75% gross margin compared to hardware. Offering a mix of subscriptions and monetizing the App Store, Apple is strategically building its ecosystem with services like Apple Music and Apple TV+, further entrenching consumers in what it offers, making it a long-term growth driver.
Apple's services business alone generated $26.3 billion in Q1 FY25, nearly 20% of total revenue, highlighting the shift from hardware to services.
With a 75% gross margin on services, which don't require factories or supply chains, Apple is prioritizing this segment as a core part of its long-term strategy.
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