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Apple’s 5 Most Profitable Lines of Business

Apple Inc. (AAPL), founded in 1976, became the first U.S. corporation to surpass $1 trillion in market capitalization in 2018. Apple’s spectacular growth in sales, profits, and its share price have historically been driven by solid sales of its iPhone products. However, as sales of their iPhone and other technology hardware devices have slowed down, the company has made aggressive efforts to transform itself into one of the world’s leading providers of digital services. Apple’s fiscal year 2019 was characterized by a series of ups and downs, but overall, they were successful in boosting their revenue from services, while their earnings from their most popular products, such as iPhones and MacBook laptops, fell somewhat below 2018 levels.


For the first fiscal quarter of 2020, Apple had forecast revenue between $85.5 billion and $89.5 billion. The company announced revenue of $91.8 billion and profit of $22.2 billion, an all-time record for both net income

Apple’s New Profile

Apple’s services business is led by the App Store and Apple Music. In May 2019, Piper Jaffray analyst Michael Olson claimed that Apple had evolved its service business so much that it was worth $502 billion, using an analysis that assesses the value of each business unit and then combines them together for an overall valuation estimate. At the same time, Olson estimated that Apple’s hardware business was only worth $398.8 billion. This would make Apple’s services business worth more than its hardware business.


In fiscal year 2019, Apple posted sales of $260.17 billion on a net income of $55.25 billion. In the first quarter of 2019, earnings came in at $4.18 on a per share basis; at that time, this was a record high for the company. But in the first fiscal quarter of 2020, earnings per share were up to $4.99.

For fiscal year 2019, the company’s iPhone business accounted for approximately 54.7% of total sales. Apple’s growing services segment made up approximately 17.7% of revenue, ahead of the Mac, which generated 9.8% of total revenue. The wearables, home and accessories segment comprised 9.4% of sales and the iPad accounted for

Here is a more detailed look at Apple’s five most profitable business lines.



Apple’s core product, the iPhone, has ranked amongst the top five smartphone vendors in the world since 2009. For the first fiscal quarter of 2020 ending on December 28, 2019, iPhone sales were $55.96 billion. Overall, Apple’s reported profit and revenue for the quarter were significantly higher than Wall Street analysts had predicted; this was partially due to the popularity of the new iPhone models. The first quarter of the fiscal year is a very important period for Apple because it covers the holiday season and the three most lucrative months of the year–October, November, and December.

In previous quarters, any decline in iPhone sales have been attributed to a slowdown in China, a longer iPhone replacement cycle, and heightened competition in the global smartphone market. Apple’s ‌iPhone 11‌ has become Apple’s best-selling smartphone since it launched.

Regarding Apple’s Q1 2020 holiday performance, CEO Tim Cook said, “We are thrilled to report Apple’s highest quarterly revenue ever, fueled by strong demand for our iPhone 11 and iPhone 11 Pro models, and all-time records for Services and Wearables.”



Apple’s Services segment posted revenue of $46.3 billion in the fiscal year 2019 and $12.72 billion for the first quarter of the fiscal year 2020. In the fiscal year 2019, Apple’s services business posted gross margins of 63.7%, approaching double the 32.2% gross margin of the company’s product sector. As a whole, Apple’s subscription business (including subscription apps) grew 40% year-over-year. This revenue comes from selling a range of services, such as iCloud storage services, Apple Music subscriptions, and AppleCare warranties. According to Apple, there are over 450 million paid subscriptions on Apple’s platform.

In 2010, Apple’s services business revenue generated only $5.2 billion in revenue. Over the next two years, it nearly doubled to $10.2 billion. Quarterly services revenue has skyrocketed since then, and Apple’s CEO Tim Cook has made it a goal to speed up that growth. Recently, there have been several additions to Apple’s services business, including a streaming movie and TV service, a new video game subscription, and the Apple Card, which will compete against other financial payment giants.

The performance of some of these new services, such as Apple Arcade and Apple TV+, are reflected for the first time in the financial results for Q1 2020.


Apple’s personal computer business, built around the Mac, generated sales of $25.7 billion in fiscal year 2019. Mac’s contribution to Apple’s growth has consistently fallen as the personal computer industry has experienced slowing demand worldwide. For the fourth quarter of the fiscal year 2019, Mac products only accounted for approximately 11% of the company’s revenue. However, from a strategic perspective, Apple’s personal computer business is very important for the company because it’s part of a broad, interlinked product family running on the iOS operating system.



When Apple launched its iPad in 2010, it quickly became the first commercially successful tablet computer to hit the market. In the first three months after it was released, the device sold more than three million units. As of the fourth quarter of 2019, the iPad held a 36.5 % share of the global tablet market. In the fiscal year 2019, iPad sales came in at $21.3 billion.

Wearables, Home, and Accessories

Apple’s Wearables, Home and Accessories segment is made up of devices such as AirPods, Apple Watch, and HomePods. The segment posted $24.5 billion in sales in the fiscal year 2019. Apple has been ramping up the release of products in this category. The second generation of AirPods, the company’s popular wireless headphones, launched in the first half of 2019 and the noise-canceling AirPod Pro wireless headphones launched in October 2019.

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