Apple Too Dependent On Google For Services Revenue 02/18/20…


Imagine Apple making more from Google Search than it does from its music business. One analyst suggests the Cupertino, California company has become too dependent on Google.

The estimate from Goldman Sachs Analyst Rod Hall suggests Apple earned nearly $9.5 billion in 2018 from Google. That’s how much the company
paid Apple to become its default search engine on the iPhone.

The billions are noted in Google’s traffic acquisition cost, according to Hall. “Within the services line, the TAC
represents a quarter of the revenue, maybe a third of the profits,” he said.

Google could pay Apple as much as $12.2 billion next year and $15.6 billion in 2021, according to
Hall’s model.

Apple’s services business — which it touts as its next growth driver — reached about $37 billion in the company’s fiscal 2018.

The overall growth rate in services
continues to fall for Apple, he said.

advertisement

advertisement

The total is estimated to be 16% in 2019, slowing from about 26% in 2018. The million-dollar question for Apple is what the company will do to keep the
services growth rate from decelerating.

Hall added that the company will likely try to roll out a streaming service this year.

“[Apple] needs to roll out a new services package or
maybe a bundled package that will drive penetration in that install base up,” he said. “We think the install base penetration is just over 10%, maybe 12% if you look at iCloud storage and
music in terms of how many people have adopted things they really pay Apple for, so they really need some kind of a bundled service package that moves the number up.”

Swiftype News

admin

leave a comment

Create Account



Log In Your Account