uploads/2018/02/7-14.png

What Apple Needs to Double Its Services Revenue by 2020

By

Updated

Services targeting $48 billion in revenue

Based on a quarterly services revenue run rate of $8.5 billion, which is what Apple (AAPL) generated in services revenue in fiscal 1Q18 (December quarter), Apple’s 2018 services revenue could be $34 billion. Since Apple is aiming for at least $48 billion in services revenue by 2020, $34 billion in services revenue in 2018 would leave it with a gap of $14 billion to cover in two years.

The target of $48 billion in services revenue by 2020 is double the $24 billion in services revenue Apple generated in 2016. Based on Apple’s 2017 services revenue of $30 billion, Apple is $18 billion short of its services revenue target.

Article continues below advertisement

Over $890 million in App Store sales in one week

Growing the services segment into a $48 billion business by 2020 will depend on how fast Apple can drive growth in its Apple Music, Apple Pay, and App Store operations.

App Store is one of Apple’s larger service businesses. Apple said it was able to record over $890 million in App Store gross sales in just seven days last December following a redesign of the app distribution center. Apple closed 2017 with over 30 million paying customers on its Apple Music service.

Apple Pay launching in Brazil

Late last year, Apple stepped up its push into the mobile payment market with the launch of a peer-to-peer cash transfer service, Apple Pay Cash. It recently said that the cash transfer service was off to terrific start, with millions of people adopting it in the United States. Apple Pay is accepted by businesses such as JetBlue (JBLU), Macy’s (M), and Rite Aid (RAD). However, retailers Walmart (WMT) and Target (TGT) offer rival services. Apple is planning to launch Apple Pay in Brazil in the coming months.

Advertisement

More From Market Realist