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How Apple Makes Money: iPhone, Services, and Its Other Businesses Explained

iPhone accounts for about half of Apple’s FY2025 sales, while Services is its second-largest and fastest-growing category. Here’s how the five businesses fit together.
From TheFinanceBase Team4 min to read
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Apple makes money by selling iPhones, Macs, iPads, wearables and related devices, and services such as the App Store, iCloud, Apple Music, and AppleCare. In fiscal 2025, iPhone brought in about half of the company’s net sales, while Services was its second-largest category and the fastest-growing of the five. Apple’s latest reported quarter, Q3 FY2026, showed higher sales than the same quarter a year earlier across all five categories.

Apple’s five revenue categories at a glance

Apple reports net sales in five categories. The table uses full-year FY2025 figures; the fiscal year ended September 27, 2025 and covered 52 weeks. Growth rates compare with FY2024. Amounts are U.S. dollars.

Category FY2025 net sales Year-over-year change What it includes
iPhone $209.586 billion Up 4% iPhones, including iPhone 17 family, iPhone Air, iPhone 16, and iPhone 16e
Services $109.158 billion Up 14% App Store and digital content, advertising, AppleCare, cloud services, subscriptions, Apple Card, and Apple Pay
Wearables, Home and Accessories $35.686 billion Down 4% Apple Watch, wireless headphones, spatial computers, Apple TV 4K, HomePod, and accessories
Mac $33.708 billion Up 12% Mac laptops and desktops
iPad $28.023 billion Up 5% iPad tablets

Apple reported $416.161 billion in total FY2025 net sales. iPhone sales were about half that total, calculated from the reported figures. Services was the second-largest category, but Apple does not report Services as a standalone company or report individual margins for each product line. The annual category figures and descriptions are in Apple’s FY2025 Form 10-K.

What Apple sells in each category

iPhone

iPhone is Apple’s largest sales category. Apple said FY2025 iPhone net sales rose 4%, primarily because of higher sales of Pro models. Its filing names iPhone 17, iPhone Air, iPhone 17 Pro, iPhone 17 Pro Max, iPhone 16, and iPhone 16e among the models in the line.

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Mac

Mac sales rose 12% in FY2025, primarily because of higher laptop and desktop sales. Mac revenue comes from Apple’s macOS computers rather than from a separate software-services category.

iPad

iPad sales grew 5% in FY2025. Apple attributed the increase primarily to iPad Air, iPad mini, and iPad, partly offset by lower iPad Pro sales.

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Wearables, Home and Accessories

This category groups together several kinds of products, including Apple Watch, wireless headphones, spatial computers, Apple TV 4K, HomePod, and Apple-branded and third-party accessories. Sales fell 4% in FY2025, primarily because of lower Accessories and Wearables sales.

Services

Services combines a broad range of revenue streams: advertising arrangements and platforms; paid AppleCare support and repair coverage; cloud services; App Store and digital content; Apple Music, Apple Arcade, Apple Fitness+, Apple News+, and Apple TV; Apple Card; and Apple Pay. Services sales rose 14% in FY2025, primarily due to advertising, the App Store, and cloud services.

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How the business mix has changed in the latest reported quarter

Apple’s latest figures in the reporting period covered here are for Q3 FY2026, the three months ended June 27, 2026. They are unaudited quarterly results, not calendar-quarter estimates. Apple reported total sales of $109.417 billion, compared with $94.036 billion in the same quarter a year earlier.

Category Q3 FY2026 net sales
iPhone $54.252 billion
Services $30.739 billion
Mac $10.352 billion
Wearables, Home and Accessories $7.883 billion
iPad $6.191 billion

For the first nine months of FY2026, Apple reported $364.357 billion in sales. Its July 30, 2026 results release described June-quarter records for iPhone, Mac, and Services; exact category amounts are in the Q3 FY2026 Form 10-Q. The company’s release is available in its July 30, 2026 newsroom announcement.

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Why Services can have a higher gross margin than Products

For FY2025, Apple reported a 75.4% gross margin for Services and 36.8% for Products. These are broad category gross margins, not individual margins for iPhone, Mac, or particular subscriptions, and they are not operating or net profit margins. Apple attributed Services’ higher margin percentage to a different mix of services, partly offset by higher costs. A higher gross margin percentage does not by itself show that Services generates more gross profit dollars than Products.

There is also an important accounting distinction within Services: Apple recognizes only the commission it retains on third-party App Store app sales, not the full retail price paid for those apps. Apple says it does not control third-party apps before they are transferred to customers. See the relevant discussion in Apple’s FY2025 Form 10-K.

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When Apple records product and service revenue

Apple generally recognizes product revenue when control transfers to the customer, usually when the product ships. Service revenue is recognized over time as the service is delivered. For iPhone, Mac, and iPad arrangements, Apple allocates part of the transaction value to bundled services such as iCloud, Siri, and Maps; that amount is deferred and recognized over the estimated period those services are provided. This is one reason reported Services sales include some value associated with services bundled with hardware purchases, rather than only separate subscriptions.

Where Apple’s sales come from

Apple reports geographic segments rather than a country-by-country sales table. FY2025 regional net sales and year-over-year changes were:

Reportable segment FY2025 net sales Year-over-year change
Americas $178.353 billion Up 7%
Europe $111.032 billion Up 10%
Greater China $64.377 billion Down 4%
Japan $28.703 billion Up 15%
Rest of Asia Pacific $33.696 billion Up 10%

Apple attributed Greater China’s decline primarily to lower iPhone sales, partly offset by higher Mac sales. Regional labels follow Apple’s reporting definitions, not a simple list of nearby countries: for example, Apple includes India, the Middle East, and Africa in its Europe segment.

Apple sells through its own retail and online stores and direct sales force, and through third-party cellular carriers and resellers. In FY2025, 40% of total net sales came through direct channels and 60% through indirect channels. That is a company-wide distribution split, not a breakdown of which reseller sold each product category. See Apple’s FY2025 Form 10-K for segment and channel definitions.

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What the numbers do—and do not—tell you

  • iPhone remains the main source of Apple’s sales by a wide margin, while Services is a substantial second business.
  • Services grew faster than Products in FY2025, but that does not mean every service grew at the same rate or that Services earned more total profit.
  • Gross margin measures sales less the direct costs associated with those sales; it does not account for all operating expenses, taxes, or other items that determine net income.
  • Apple’s reported category sales are not unit sales: dollar changes can reflect product mix and pricing as well as the number of products sold.

Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.

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