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Apple Looks To Services To Drive Stronger Future Growth

Apple later today will report is second quarter earnings, with many observers looking to see if the tech giant is beginning to diversity away from its iPhone and Mac sales and into services.

Apple’s Services segment currently generates less than one third of the amount of revenue produced by iPhone sales. But analysts quoted by The Street online news service say the business could serve as a means for Apple to diversify its revenue away from being solely hardware-driven and toward subscription-based sales.

The Street quotes Loup Venture analyst Gene Munster, who has observed Apple for many years, as saying the company’s iCloud and Apple Music services could help pave the way.

“[Services is] their future wheelhouse,” Munster said. “It’s twice as profitable as their hardware business and it’s predictable, unlike hardware.”  Other Apple Services operations include App Store, iTunes and Apple Pay.

Sales from the division jumped 18pc to $7.2 billion in Q1, and are expected to grow even more rapidly in the next four years, according to Apple CFO Luca Maestri.

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