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iCloud is rising as a revenue stream for Apple

by Arye Zucker - October 31, 2018

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Apple recently became the world’s first trillion dollar company (Amazon has since joined the mega-exclusive club) on the strength of its beautiful, nearly-ubiquitous hardware. The technology mega-giant has done nothing but print money for the last decade and a half, and with the release of the new iPhone, that’s a trend they would love to see continue. Hardware is still a major revenue generator for Apple - they charge $999 for a cell phone, for crying out loud - but they are expanding their area of influence. According to Rakuten Intelligence, iCloud revenue has grown 63.7 percent year-over-year, while Apple’s overall iTunes revenue has grown 26.7 percent year-over-year. Not only is iCloud helping the online, non-hardware growth of Apple, it’s driving it.

In the middle of 2016, iCloud purchases made up 4 percent of all of iTunes revenue. As of June 2018, that number is 7 percent.

Apple's push into services is working

As iCloud sales increase in 30 consecutive months

In the middle of 2016, iCloud purchases made up 4 percent of all of iTunes revenue. As of June 2018, that number is 7 percent.

The majority of iTunes buyers now buy iCloud packages as well

Every buyer of Apple hardware is given 5GB of iCloud storage for free, but Apple is banking on (double entendre, anyone?) users needing more space to fill. The conventional wisdom is that there are two ways to make more money: get more buyers, or get buyers to buy more. Apple is doing both, and it’s paying off handsomely. Apple’s plan has been to start making money on more than just the iPhone, and that revenue stream only looks to be growing as iCloud buyers are up 29.2 percent year-over-year.

A record number of iTunes buyers purchase iCloud storage

Up 21 percentage points over the last two years

iCloud buyers are migrating to larger storage packages

Interestingly, in the last 12 months the vast majority of iCloud storage revenue--81.1 percent--comes from purchases of 50GB or 200GB packages. The “entry-level” option of 20GB once accounted for 7.9 percent of iCloud revenue, but now account for just 1 percent, while the 2TB package, which replaced the 1TB option in June 2017, accounts for 18.2 percent.

iCloud buyers favor larger storage options

As 50GB, 200GB, and 2TB plans outsell the others

Apple continues prolonged success thanks to strong iTunes buying

Regardless of how Apple’s hardware is performing, Apple is sitting pretty thanks to the continued success of their non-hardware, online offerings, like iTunes and iCloud. iTunes buyers (excluding iCloud purchases) spend an average of $171.29 each, and iCloud buyers spend an average of $18.51 each. iTunes buyers overall (including iCloud) increased their average spend by 16.2 percent year-over-year to $167.60.

“Software and services have been growing in importance to Apple’s business as consumers become less likely to quickly replace phones that are more expensive and less subsidized by carriers,” said Ken Cassar, principal analyst, Rakuten Intelligence. “iCloud storage is on track to becoming a billion dollar U.S. business by 2019, contributing materially to the company's already robust bottom line.”

About this data

With a panel of over 5.5 million online shoppers, Rakuten Intelligence gives the most detailed, and accurate digital commerce data available, and is reported daily.

Rakuten Intelligence is the only service to measure digital commerce directly from the consumer, across all retailers, at the item level, and over time. Our retailer-independent methodology precisely measures commerce as it happens. By extracting detailed information from hundreds of millions of aggregated and anonymized e-receipts, Rakuten Intelligence can map the entire Purchase Graph, connecting each and every consumer to all their purchases.

Rakuten Intelligence gets its data from e-receipts – not a browser, app or software installed by the end-user – so its measurement reflects comprehensive shopping behavior across multiple devices, over time, which are key in an increasingly omnichannel retail world. Slice Intelligence is the exclusive e-commerce data provider for NPD’s Checkout Tracking e-commerce service.