Is Apple’s push to release ever-larger iPhones anything to do with the growing success of its Services division? That’s the theory put forward by the Wall Street Journal.
Drawing on Kantar data, the report notes how larger screens are linked with greater usage of everything from apps to watching videos. It would also explain why Apple is seemingly in no rush to upgrade its 4-inch iPhone SE, despite the fact that some users love it.
The report suggests that users with smartphone screens that are 6 inches or bigger use twice as many apps as those people with 5.5-inch displays, are twice as likely to watch regular videos, and are 62 percent more likely to play games.
“The bigger the device, the more people are getting out of it, and the more opportunity there is for Apple to generate money from them,” Jennifer Chan, analyst with Kantar Worldpanel, told WSJ.
Apple’s growing Services division
It’s an intriguing observation — and one that, at least anecdotally, makes a fair bit of sense.
Apple’s Services division has been growing larger and larger for some time, to the point where it’s now considerably bigger than Apple’s individual Apple Watch, iPad and Mac businesses. While we hesitate to put too much stock in causation vs. correlation, this growth has largely taken place over the same timeframe that Apple has really embraced phablet handsets.
Earlier this year, analyst Katy Huberty wrote that:
“Services is fast becoming Apple’s primary growth driver. Apple revenue grew at an 8 percent [compound annual growth rate] over the last five years, driven in large part by sales of its flagship iPhone. But as device replacement cycles extend and device installed base growth slows to single digits, we believe Services will pick up the growth baton and account for ~67 percent of Apple revenue growth over the next five years.”
In 2017, Apple officially added Services to its official description of growth areas it works in. Services includes everything from the App Store to Apple Music.
This year, Apple is set to release three new iPhones, including 5.8-inches, 6.1-inches and 6.5-inch (!) models. Will this be the biggest year for Services in company history? We’ll have to wait and see — but the signs are certainly looking good.
