Tim Cook: Apple's services business will be 'the size of a Fortune 100 company by next year'

Apple CEO Tim Cook tells CNBC that by this time next year, the company's services business - which includes Apple Music, the App Store, and iCloud - will be "the size of a Fortune 100 company by next year."

Cook was on the air to celebrate Apple's solid third quarter, beating Wall Street expectations on both earnings and revenue.

As for services specifically, Apple reported revenue of $5.976 billion, down slightly from $5.991 billion the quarter before, but up 19% from the same period in 2015.

And while there's been some skepticism about the very hardware-focused Apple suddenly finding a groove in cloud-based services, Cook is apparently optimistic about the segment's future earnings potential.

In related news, Apple sold 40.4 million iPhones last quarter, ahead of expectations.Even with that high number, iPhone sales are down 14.9% from the same time last year, a trend that has analysts a little worried. That's why Apple is investing so much in its services business: If you can't sell more iPhones and iPads, then the logical next step is trying to make more money off the customers you already have.

So the challenge for Apple going forward is for Cook to put his money where his mouth is and keep showing some real growth in the services business.