This afternoon Consumer Intelligence Research Partners (CIRP) released analysis of the results from its research on Apple, Inc. services for the fiscal quarter that ended March 31, 2018. CIRP found that Apple's service offerings have highly variable success in penetrating its US installed base.
For instance, iCloud has the greatest penetration, with 43% of Apple customers in the March 2018 quarter reporting using a paid iCloud account (Chart 1).
For Apple Care extended warranty, under 5% of iPhone and iPad buyers report purchasing this service.
For Apple Music, it falls between, with 25% of iPhone buyers using iTunes, and 16% of iPhone buyers using the Apple Music streaming service.
Josh Lowitz, CIRP Partner and Co-Founder stated for the report: "Apple has created a comprehensive services business, which becomes more important as hardware sales reach their limits. It seeks to sell a range of services to its considerable installed hardware customerbase, with varying success.
We analyzed three services, iCloud storage, AppleCare extended warranties, and the two music offerings, legacy iTunes and more recent Apple Music streaming service.
Other services, Apple Pay and App Store sales, which we did not analyze here, could be also considerable."
Mike Levin, CIRP Partner and Co-Founder stated for the report that "iCloud has the greatest penetration. It's well-integrated into the Apple operating systems, so users store and access data, photos, music, video, and other files across all Apple devices. Thus, iCloud compares well to established competitors, such as Dropbox and Google Drive."
Lowitz added that "AppleCare warranties have much lower penetration. Warranty sales depend greatly on the retailer where a consumer buys a product. At Apple stores, Apple sells only AppleCare, while other retailers sell their own warranties. Since Apple stores have a relatively low share of iPhone and iPad sales, AppleCare's penetration and market share among extended warranties reflects that low share."
Among music services, 15% of iPhone buyers use the Apple Music streaming service, much lower than the Pandora and Spotify free streaming services, about the same as the paid Spotify Premium, and greater than the paid Pandora Premium (Chart 2).
Levin added that "Not surprisingly, free versions of streaming music services are most popular. Of the free versions of Pandora and Spotify, Pandora has three times the penetration and Spotify has twice the penetration of Apple Music among iPhone owners. Among the paid streaming services, Spotify Premium has about the same penetration as Apple Music, while PandoraOne has about a third of the penetration."