Apple’s New Services Are Fueling iPad Growth

Image credit: Apple

The more hardware Apple sells, the more people sign up for services. But the opposite may also be happening. Services also drive iPad sales in new ways.

For reference, here’s Apple’s Q4 2019 “CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS.”

It’s just a theory, slowly forming in my mind, that Apple’s services revenue explosion has been more merit based than simply a reflection of Apple’s overall growth. Key to this is service breakdown. Apple customers have been very pleased with Apple Music, likely iPhone-centric but Apple TV, Apple News+ and Apple Arcade are likely iPad-centric. It’s just a hunch.

There are three related factors in this analysis. The first is that Apple customers love their hardware. They find it easy to use and trustworthy. The company also places considerable emphasis on user security and privacy. Second, that trust means that customers can subscribe to Apple services with confidence. They also know they can unsubscribe without a terrible hassle. Third, we know that iPads are excellent content consumption devices. And they’re set to get a boost from Apple TV+.

Apple has been working to make the iPad a better content creation device. But services are the ultimate in content consumption and reign supreme on an iPad.

I believe that that, as a result of the above, the services revenue which grew year-over-year at 18% was driving the iPad’s corresponding sales growth by 17%.

I also think that because iPad sales have never been spectacular since the initial peak in 2014. While there’s been a recent, mild upturn, I attribute that to a more modern, complete, exciting product line. So there are multiple factors at play.

No doubt, these two things, iPad sales and services, feed on each other. But I think Apple is onto something here. Consumers are generally done hoarding apps, many of which have engaged in unsavory practices under the hood to support themselves. But appealing, trustworthy services from Apple on an iPad know few bounds.

It’s a glorious synergy.

The Week’s News Debris

• We’re pretty sure the 2020 iPhone 12 will have 5G capabilities. But there could be even more goodies inside. Slashgear explains. “2020’s 5G iPhone could have more than one big surprise inside.

• Apple TV+ will be free to purchasers of qualifying Apple hardware bought after September 10, 2019. Bud did you know it’s also bundled another way? The Verge reports. “Apple TV Plus is now bundled with Apple Music student plans.

Apple doesn’t usually like giving things away for free, or even at discounts, so the addition of Apple TV Plus to the student plan is somewhat surprising. It’s a smart addition, though. Apple needs to reach a mass of viewers if it wants to make the service into a truly profitable, sustainable business. One way to do that is to get people hooked on series that they’ll have to pay for later.

iPhone 11 reveal

ZDNet wrote up a very interesting comparison between a conventional digital camera (of equivalent cost) and an iPhone 11. With side-by-side photos. “iPhone 11 portrait mode vs plain-old digital camera: Love or hate all the photo fakery?” This is not a presentation of a winner. Rather it’s a treatise on the strengths and weaknesses of computational photography. It’s a good read.

• We’re geting close to the launch of the 16-inch MacBook Pro. MacRumors writes: “Apple Said to Receive 16-Inch MacBook Pro Shipments This Quarter, Launch Timing Remains Unclear.

Apple receiving volume shipments of the 16-inch MacBook Pro in the fourth quarter does not necessarily mean the notebook will launch in the fourth quarter. Apple may simply be planning to stockpile the 16-inch MacBook Pro ahead of the U.S. government’s proposed 15 percent import tariff on an additional round of Chinese goods, including notebooks, slated to take effect December 15.

• Finally, how does Apple TV+ fare when compared to other streaming services? That is, if one ignores the quality of the content. USA Today used four metrics: Cost, original content, depth of library and kid-friendliness. On that basis, here’s the ranking. “Ranked: All the major streaming services, from Netflix to Apple TV+ to Disney+.

You may not agree with the four metrics, but the ranking might help make a decision for the family on how to budget limited subscription funds.


Particle Debris is a generally a mix of John Martellaro’s observations and opinions about a standout event or article(s) of the week followed by a discussion of articles that didn’t make the TMO headlines, the technical news debris. The column is published most every Friday except for holiday weeks.

4 thoughts on “Apple’s New Services Are Fueling iPad Growth

  • John:

    The correlation between the services revenue growth of 18% and the iPad sales revenue growth of 17% is indeed intriguing, and while not central to your argument, cannot be assumed without more data to be causally linked or explanatory for the iPad’s growth rate. One helpful piece of data would be something that Apple undoubtedly have, namely Apple TV app use case, specifically hardware. Is most of the consumption on the Apple TV hardware or on other devices, like the iPad? Indeed, how have Apple TV hardware sales fared post advertisement/release of Apple TV+? I will concede that, at least in our home, most of our TV consumption occurs on one of our several iPads – for everyone except my daughter who consumes most of her content either on her iPhone (preferred device) or iMac. Our home theatre gets use primarily around releases of new blockbusters (eg Avengers Endgame) or when we have company. Without doubt, most Apple TV consumption in this household is iPad-mediated. However, to establish the relationship across the platform, more data would be helpful.

    There is a troubling aspect to your thesis, at least if you’re Apple. This would be the tacit acknowledgement that for the user base, the iPad remains primarily a consumption device, or at least that iPad sales are driven, still, primarily by a content consumption use case. It would be a concession that the user base has yet to migrate, even conceptually, to a predominantly or even equivalent productivity and consumption use case for the iPad. It would be tantamount to a repudiation of the expanded utility of iPadOS over iOS, at least insofar as it enables productivity on the iPad over the iPhone or iPod Touch by the Apple user base, if despite those gains in utility, iPadOS is still used primarily as a consumption platform. Perhaps the data would show some increase in productivity uses by the consumer, but would be of cold comfort to Apple if it remained overwhelmingly a consumption platform.

    I am inclined to believe that productivity is being increasingly done on the iPad. Admittedly, this is limited to my personal observation in a profession dominated by productivity professionals where an ultraportable device is extremely useful, thus observation bias cannot be dismissed. It is also based on my observation of the number and range of productivity apps that are being offered on iPadOS that can specifically take advantage of the power of the iPad Pro, including some that are discipline-dedicated (eg patient care/patient monitoring). Then there has been the explosion of keyboards dedicated to the newer iPads Pro, designed to enhance productivity. In my personal use case, the iPad Pro is my main go-to device. Even in the absence of hard data, these empirical observations would suggest an uptick, however modest, in productivity usage. Indeed, I can see progressively fewer advantages for the MS Surface or other touch-enabled PCs over the iPad Pro post iPadOS release, particularly for common uses, like MS Office or iWork suites and pdf manipulation.

    A parting word on iPad keyboards, given the oblique reference above. Having played with a few of them, I have come to appreciate the brilliance of the Apple Smart Keyboard for iPad. While I like the feel of both the Brydge and Logitech Bluetooth keyboards for iPad Pro, I had to replace my original iPad Pro 11” due to the screen damage (micro fractures on the screen at the hinge points) from my Brydge keyboard, and have decided that any keyboard that applies stress to the screen should be avoided (as that is the functional interface of the iPad). I also note the latency and the uneven performance of these Bluetooth keyboards, not to mention that they require separate charging for utility. The posterior surface magnetic attachment of the Smart Keyboard both protects and leaves untouched the iPad’s touch interface. There is no key stroke latency. I can actually type faster on this keyboard than on my MBP’s keyboard. The only limitation is that the keys are not backlit, however the keys are visible in the dark from the screen’s light (front-lit keyboard?). Perhaps Apple will eventually enable a backlit version that uses minimal power from the iPad (if Apple don’t develop a haptic tactile feedback foldable keyboard device first – like a foldable iPad Pro).

    Regarding the USA Today review, I believe that it was fair, and used appropriate asset metrics, although these were not linked to actual performance. We watched For All Mankind this weekend, and enjoyed it. The USA Today review notwithstanding, I think that the platform has potential, and the price point makes a compelling case for those driven to subscribe primarily for one show (eg those signing up to CBS All Access primarily for Star Trek). I am reminded of the scorn and dismissiveness applied to iTunes movie offerings when they first started, and how this could never compete with titans like Blockbuster, with their vastly superior inventory. Apple was given little chance by the pundits. Apple are just getting started, and if past is prologue, it’s more than a little premature to rule them out of the race.

    Duty calls.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.