Munster: Services To Contribute 20% Of Apple's Revenue By 2022

Apple Inc.’s AAPL Services arm contributed 11.6 percent of total revenue in 2016 and almost 18 percent of profits. By 2022, the Services business could account for 20 percent of total revenue and 30 percent of profits, Loup Ventures’ Gene Munster said in a report.

Apple Services And AR Through 2022

Apple has been reinventing itself through Services and augmented reality. While Apple Services is expected to grow at an annual rate of 15 percent through 2022, the company’s hardware sales are expected to grow at around 5 percent, Munster stated.

Apple Services will likely grow from an estimated $30 billion in 2017 to $60 billion in 2022.

“This growth will in part be maintained by App Store revenue from Apple’s advancement of augmented reality (AR) that will be the company’s next major development platform,” the analyst wrote.

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Munster expects AR to be “a key feature” in Apple’s upcoming iPhone X release, which would gradually build “developer enthusiasm for AR apps.”

Apple should be able to reach its target of the Services business becoming a Fortune 100 company sometime in 2017, Munster mentioned.

Beyond 2022, Services will likely grow at a steady pace of 10 percent and account for ~75 percent of Apple’s overall growth.

“This will be driven primarily by the App Store, Apple Music + Content, with all three areas strongly benefitting from the addition of AR,” the analyst added.