Don't look back PayPal; Apple Pay is gaining on you
Apple is targeting $50 billion in Services revenue for 2020
Apple also is expanding the number of transit systems that use Apple Pay. It has already added support for TriMet, Portland’s mass transit system, and has started rolling out support for the massive New York City transit system. Later this year, Chicagoans will be able to use the system to cover fares when commuting.
“In the United States, in addition to successful integration into Portland’s transit system in May, we’re beginning the rollout of New York City transit, and will launch in Chicago later this year. In China, Apple Pay launched the payment card for Didi, the world’s largest ride-hailing provider. As I’ve said before, transit integration is a major driver of a broader digital wallet adoption, and we’re going to keep up this push to help users leave their wallet at home in more and more instances.”-Tim Cook, CEO, Apple
After Apple iPhone shipments worldwide peaked at 231.22 million units in 2015, the manufacturer decided the next year to focus on its Services unit. This was a good idea because much of the revenue in this segment is recurring such as subscriptions for Apple Music and Apple News+ (and soon, Apple Arcade). Also in this category is AppleCare, iCloud, the App Store and more. The company set a goal of $50 billion in Services revenue for 2020, double the amount it garnered in 2016. This part of Apple’s business is dependent on the number of active iPhone units (900 million at the beginning of this year). As a result, growth in shipments is nice to have but is not nearly as important. Based on the firm’s fiscal third-quarter report, the Services unit is currently generating revenue at a rate of $46 billion on an annual basis. But $50 billion in gross next year can be achieved if Apple Pay and Apple Music continue to grow and if Apple Arcade captures the imagination of mobile game players.
Overall, Apple reported fiscal third-quarter revenue of $53.81 billion up from $53.27 billion. Net profits decreased from $11.52 billion during the same period last year to $10.04 billion. Earnings per share decreased to $2.18 from $2.34 during the 2018 quarter.