In its last fiscal year, Apple generated $100 billion in revenue that was not tied to what has long been considered its flagship product, the iPhone, CEO Tim Cook told CNBC on Tuesday in a wide-ranging interview with Jim Cramer.
“In this last quarter, if you take everything outside of iPhone, it grew at 19 percent, 19 percent on a huge business,” Cook said on “Mad Money.”
Apple’s services, which include the App Store, iTunes, Apple Pay, Apple Music and iCloud, have been growing rapidly quarter over quarter. In 2017, Cook said he wanted Apple’s services revenue to double by the end of 2020, a sentiment he reiterated in Tuesday’s interview.
That growth, combined with the success of the company’s wearable products and its ventures into health and wellness, could be a sign of what’s next for the consumer technology giant.
Here’s what Cook thinks about what’s next for his company, U.S.-China trade, naysayers on Wall Street, Apple’s ongoing dispute with Qualcomm, and the success of the Apple Watch and the AirPods.
Apple will announce “material” new additions to its growing roster of services in 2019, Cook told Cramer.
“You will see us announce new services this year. There will more things coming,” Cook said in the interview. “I believe it’ll be material over time.”
The new services will be ones that Apple has “been working on for multiple years,” especially in the realm of health care, he continued.
“If you zoom out into the future, and you look back, and you ask the question, ‘What was Apple’s greatest contribution to mankind?’ It will be about health,” Cook said.
Cook was notably reassuring when asked about the prospects of U.S.-China trade talks. He cast the trade-related economic weakness in China as “temporary,” saying it was in both countries’ “best interests” to reach an agreement.
“It is a very complex trade agreement and it needs to be updated, but as I’ve said before, I’m very optimistic that this will happen,” Cook told Cramer.
The CEO also said that Apple’s growing ecosystem of devices and services is “probably underappreciated” by naysayers on Wall Street.
The iPhone maker’s stock has lost roughly 14 percent in the last 12 months as Wall Street soured on its prospects amid reports of iPhone production hiccups. CNBC reported Monday that, among analysts, Apple’s stock is the most “unloved” it has been since 2005.
“In terms of the naysayer, I’ve heard this over and over again,” Cook said in the interview. “I’ve heard it in 2001, I’ve heard it in 2005, in ‘7, in ‘8, in ’10, in ’12 and ’13. You can probably find the same quotes from the same people over and over again.”
Cook ripped into Qualcomm, leaving little chance of a settlement in the companies’ ongoing legal battle.
“The issue that we have with Qualcomm is that they have a policy of no license, no chips. This is, in our view, illegal,” he said.
“And then, secondly, they have an obligation to offer their patent portfolio on a fair, reasonable, and non-discriminatory basis and they don’t do that. They charge exorbitant prices.”
Revenues for Apple’s wearable products, particularly the Apple Watch and AirPods wireless headphones, have exceeded the iPod’s revenues when the music player was “at its peak,” Cook said.
“On a trailing basis, … the revenue for wearables is already 50 percent more than iPod was at its peak,” he told Cramer.
He added that the Watch and the AirPods have each generated between four and six times more in sales than the iPod had generated in the same amount of time since its launch.
These statistics are particularly significant because the success of the iPod was a turning point for Apple, Cook said.
Disclosure: Cramer’s charitable trust owns shares of Apple.
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