Apple's services division, which encompasses App Store purchases as well as subscriptions like Apple Arcade, iCloud, and Apple Care, now accounts for more quarterly revenue than the iPad and the Mac. In fact, it generates more quarterly revenue than any Apple product other than the iPhone.
In Apple's fiscal first quarter of 2020, services generated $12.7 billion in revenue, while the Mac division generated $7.1 billion and the iPad was responsible for $5.9 billion. When Apple's iPhone revenue saw several consecutive quarterly declines over the course of 2018 and 2019, Apple's services and wearables divisions were a bright spot.
Now, with the acquisition of Dark Sky (which costs $3.99 in Apple's App Store) the company has yet another possible revenue stream to add to its burgeoning services division.
It's unclear precisely what Apple plans to do with Dark Sky, but there are plenty of possibilities. Apple already has premium apps — either developed in-house or through acquisitions — for many popular app categories. These include music (Apple Music), news (Apple News Plus), streaming entertainment (Apple TV Plus), personal finance (Apple Card), and gaming (Apple Arcade).
Adding weather to the portfolio seems like a sensible addition, especially considering Apple is rumored to be working on a bundled offering that would include multiple services for the one price. A subscription that provides a premium weather app along with the news, for instance, seems like a natural pairing.
There's also the possibility that Apple could use data from Dark Sky simply to bolster its existing core iPhone apps, like the weather app and Siri. Apple's stock apps have been the focus of its major iPhone updates in recent years, so it's plausible to think that Apple could use Dark Sky as part of planned improvements to the weather app in iOS 14 and beyond. Last year's iOS 13 update brought major upgrades to other Apple apps like Health, Reminders, and Photos.
Regardless of Apple's plans, the acquisition likely won't bode well for its reputation as it relates to concerns over potentially anticompetitive business practices. Over the last year, large firms like Apple, Google, Amazon, and Facebook have come under scrutiny from lawmakers who have argued that the size and influence of these tech giants hampers competition.
Apple has been in the spotlight because it runs the iPhone's App Store while also offering its own services that compete directly with those found in the store. Buying Dark Sky has given Apple another asset in competing with third-party apps, an addition that probably won't assuage recent antitrust woes.
Last year was a milestone era for Apple services, and if the Dark Sky acquisition reveals anything, it's that Apple isn't slowing down anytime soon.
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