Ringing in 2020, Apple (NASDAQ:AAPL) this week celebrated the wildly successful 2019 that its services segment enjoyed by sharing selected metrics around parts of that business. Services revenue hit $46.3 billion in fiscal 2019, which ended in September. Rewind back to 2010, when services generated just $5.2 billion, and it's clear why investors are so impressed with that highly profitable segment's growth.
"2019 was the biggest year for Services in Apple's history," services chief Eddy Cue said in a statement. "We introduced several exciting new experiences for our customers, all while setting the standard for user privacy and security."
Booming App Store sales
The App Store, which is currently under antitrust scrutiny from regulators and lawmakers, continues to enjoy booming sales. Between Christmas Eve and New Year's Eve, Apple says App Store sales jumped 16% to a record $1.42 billion. New Year's Day saw sales jump 20%, from $322 million last year to $386 million. It seems Apple products were popular gifts over the holidays.
Apple's installed base is still growing, albeit at decelerating rates, since it's already over 1.4 billion. That figure should soon hit 1.5 billion -- if it hasn't already -- and the tech giant's emphasis on services is designed to bolster post-purchase monetization through digital content sales and subscriptions.
Apple News hits 100 million users
Over the past year, Apple News has added around 15 million monthly active users (MAUs). Apple says its news aggregation service has now hit 100 million MAUs, up from the 85 million MAUs it said it had last January.
To be clear, those are not Apple News+ subscribers. There are merely an estimated 200,000 Apple News+ subscribers, which is around how many Texture had when Apple acquired the start-up that would transform into Apple News+. The service simply isn't growing, and most publishers are unimpressed with the revenue they're collecting from the platform, according to a recent report from Digiday. Magazine giant Conde Nast still doesn't know what to think about Apple News+.
Due to Apple's restrictions on privacy and ad targeting, monetizing all that traffic with ads is relatively less effective than other ad platforms.
Still the king of podcasts
Spotify (NYSE:SPOT) is in the midst of challenging Apple's dominance in podcasting. The Swedish music-streaming leader has spent $400 million on acquisitions intended to augment its podcasting capabilities, and hopes to leverage its strengths in content discovery as a key differentiator.
In terms of sheer content quantity, Apple has over 800,000 podcasts available on its platform, giving it a lead over the 500,000 shows that Spotify offers. With podcasts available in 155 countries, Apple still has broader reach compared to the 75 countries where Spotify distributes podcasts.
It's still early in the competition, but Spotify has noted that podcast engagement drives a "virtuous cycle" that helps convert free users to paid subscribers.