Apple (AAPL) has reported its first-quarter fiscal 2018 results on Feb 1. Courtesy of a robust product portfolio that is driving subscriber base expansion The services segment is expected to be the key catalyst.
Apple’s Services segment includes revenues from Internet Services, App store, Apple Music, Apple Care, Apple Pay, licensing and other services. In fourth-quarter fiscal 2017, segment revenues jumped 34% year over year to $8.5 billion.
Much of the growth comes from App Store, which has more than 210 million subscribers. The App Store reported strong sales during the week which began on Christmas Eve, with customers spending more than $890 million. This is likely to drive the top line growth in the soon-to-be-reported quarter.
Apple Music has witnessed phenomenal growth with over 30 million subscribers. The acquisition of music recognition app Shazam allows Apple to offer features like television show recognition and augmented reality (AR) brand marketing service to App store users.
According to the report, China is one of Apple’s biggest markets. In the fourth quarter, the company saw improvement in iPhone, Mac, iPad and Services segment in the region, leading to a 12% increase in revenues to $9.8 billion. This represented 16% of total revenues, after Americas (44%) and Europe (25%).
Apple ramped up investment in the country. According to sources, the company has collaborated with local Internet services companies to establish its first data center in China. This was to ensure compliance with the country’s newly implemented cyber-security regulations.
Apple also appointed Isabel Ge Mahe to the newly-created post of vice president and managing director of Greater China. The creation of the post of managing director for China operations also underscores the importance of the market.
However, anticipated slower iPhone X sales along with stiff competition from the likes of Oppo, Vivo and Xiaomi can hurt the company’s top line.
Apple remains keen on India as it is predicted to become the second largest smartphone market. In the last reported quarter, Apple sales in India doubled year over year.
The company has partnered with Reliance Jio and Bharti Airtel in the country and has also set up its first manufacturing unit in Bangalore, Karnataka. The company has teamed up with Wistron Corp. from Taiwan to take care of the assembly of the iPhones, mostly SE models.
